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Hagerstown reviews $75.6 million FY2027 general fund budget; fund balance to cover $3.88M
Summary
City staff presented a $75.6 million FY2027 general fund budget that relies on $3.88 million of fund balance and projects a $211,000 surplus. Council and staff warned the underlying structural deficit will require policy choices over multiple years.
City staff presented the proposed FY2027 general fund budget, which budgets $75.6 million in revenues and matching expenditures and assumes use of $3.88 million in fund balance.
The plan projects property tax revenue of $50.4 million and a small $211,000 surplus for FY2027. Wages and benefits are the largest expenditure category at $45.8 million; public safety is the single largest functional expense, with police at about $22 million and fire at about $13.8 million. Staff noted several drivers of higher costs this year, including Workday implementation, rising maintenance agreements and sharply higher utility expenses.
City administrator Scott Niceworner and budget staff told the council that the city’s unassigned fund balance would remain above policy this year—projected at about 31.4% of operating budget versus a 17% policy target—but cautioned that continuing to draw down savings to cover operations is not sustainable. “If your checking account requires you to use savings every year to pay bills, that’s not a healthy long‑term path,” Scott Niceworner said, urging earlier conversations with the county and state to address structural gaps.
Council members and staff pressed for follow-up analysis on revenue assumptions and for a multi-year plan to reduce recurring deficits. Staff highlighted items for deeper review, including ongoing utility inflation, the increase in public safety costs, and support‑service contract expenses. Budget documents attached to the presentation show FY27 assumptions such as a 27–28% rise in interest income assumptions due to high cash balances, a 27% increase in expected building permit revenue, and an anticipated transfer from fund balance of $3.88 million.
Council directed staff to bring clarifying detail and to continue public hearings on the FY27 budget. The work session concluded with staff promising a fuller set of departmental breakdowns and performance indicators at subsequent meetings.
