Frostburg posts clean FY25 audit; council introduces FY27 budget with proposed 19% water-rate increase

Phillips, the city's finance lead, told the Frostburg mayor and council that auditors issued an unqualified (clean) opinion on the FY2025 financial statements and found no material findings. "They issued an unqualified or a clean opinion," Phillips said, adding that the audit and single-audit documentation will be posted on the city website.

The council then introduced the FY2027 budget ordinance on first reading and set a May 19 public hearing. The draft includes a 3% pay increase for staff (reduced from an earlier mayoral request of 5%) and proposed water-rate increases staff said were necessary to cover rising operating and contract costs. Under the proposal, in-city customers would pay $7.39 per 1,000 gallons for the first 50,000 gallons and $14.14 per 1,000 gallons for usage above 50,000; out-of-city rates would be higher.

Finance staff told the council the city calculated a breakeven need of about a 27% increase but is proposing 19% now. The largest single budget pressure cited was an approximately $60,000 increase in the contract with the Maryland Environmental Service that operates the water treatment plant. Phillips said the budget maintains current tax rates while adjusting user fees and some permit and registration charges.

Council members emphasized that the rate change will be revisited after key debt-service items are paid down and that grant support and loan forgiveness are factored into major capital projects elsewhere on the agenda. The ordinance was introduced; the fiscal ordinance and water-rate changes will return for public comment on May 19.