Annapolis aldermen lay out FY26 budget priorities; budget staff warn of tighter reserves and flat grant funding

City budget staff told the Annapolis City Council at a Jan. 16, 2025 virtual work session that the city faces a tighter fiscal picture for FY26 and asked council members to prioritize preserving essential services as they prepare budget amendments.

Jake Trudeau, the city’s budget manager, said the city projects a one-time reserve of $4,390,000 at the end of FY25 and a capital reserve of $5,810,000. “We believe that the theme this year is to preserve,” Trudeau told the council, and he warned that grant funding remains flat while expenses continue to increase.

Trudeau and acting city management staff flagged variables that could affect the FY26 outlook: potential state funding shifts, a projected transportation-fund deficit, lower interest income on cash reserves, and staffing and inflation pressures. Trudeau also said American Rescue Plan Act (ARPA) funds are fully committed as of December 2024; he said the ARPA total, including accrued interest, is “over $7,000,000” and that roughly $2,000,000 of that had been earmarked for fleet and a fire-boat project, while about $1.96 million had been programmed to cover a transportation shortfall.

Council members used the session to list priorities they want the mayor to consider for the FY26 proposal. Common themes across members included sidewalk maintenance and snow/leaf clearing, pedestrian and bicycle safety (including complete-streets standards and deployable downtown bollards), capacity and customer-service improvements for planning and permitting, and addressing a possible transportation fund gap so service cuts can be avoided.

Several aldermen urged more staff capacity. Council members discussed the need for a dedicated grant-compliance or grant-administration role to manage tracking and federal requirements, a zoning/text-amendments position in Planning and Zoning, and additional council support staff to assist with constituent services and follow-through on passed amendments. Alderman comments emphasized that implementation — not just passage — matters: members asked for better tracking of one-time amendments and requested updates on how prior amendments were being spent.

Other items raised included stormwater and drainage projects, workforce housing seed funding to help employees and other residents buy homes, an assessment of city resilience and emergency preparedness, economic-development follow-up for downtown commercial vitality, and requests for reporting on opioid-settlement funds. Trudeau said the city has been placing opioid-settlement receipts into a separate fund and that about $148,000 was currently budgeted for FY25 in that fund.

No formal votes were taken during the priority-setting session. Council members and staff agreed to provide more detailed information and tracking on amendment implementation, transportation-fund history and projections, ARPA commitments, and grant-compliance capacity to inform the mayor’s proposed FY26 budget and the council’s amendment process.

The session included a wide-ranging question-and-answer period; budget staff encouraged council members to submit proposed amendments as soon as the mayor’s proposed budget is released so departments have time to plan and implement changes effective July 1.