Gaithersburg staff present $99.6M proposed FY2026 budget with no tax increase, prioritize infrastructure and staff pay

Tanisha, the staff presenter, opened the April 14 work session with an overview of the proposed FY2026 budget and the timetable to adoption: "This is the proposed budget," she said, and noted changes can occur between the proposed and adopted budgets when council takes action in May.

The presentation framed the city’s finances across seven funds. Tanisha said the all‑funds total of $156.2 million includes transfers and intrafund movements; removing transfers lowers the figure to about $124.7 million. She told council that the portion of fund balances and reappropriation planned for next year is about $12 million, while staff currently projects using about $2 million of reserve for the current fiscal year as that projection tightened.

On revenue, staff presented a projected $87 million in solid general fund revenue for FY2026 and noted the two largest sources remain property taxes and income tax distributions. "Real estate taxes are expected to generate nearly $36.5 million next year," Tanisha said, and she emphasized the city is not proposing a tax‑rate increase. Income tax distributions were projected at about $18.1 million.

Tanisha and Janice Hartman, the finance director, reviewed other notable revenue streams: parks and recreation fees (about $4 million), the recycling fee (about $2 million, with a proposed $3 increase to cover contract costs), duplication/shared services from Montgomery County (about $5.5 million, in part to reimburse expanded police services) and photo‑radar fines (projected at roughly $1.4 million, down from prior years). They flagged that building‑permit revenue is volatile and tied to development timing, and said some permit receipts from larger projects came in earlier than planned in prior years.

On spending, staff described the FY26 general fund as a people‑centered budget that also advances infrastructure. The proposed $99.6 million general fund (including transfers) funds a proposed 4% wage increase for non‑law‑enforcement positions and a range of about 6.2%–7.7% for law enforcement to maintain competitiveness. The budget also includes four new full‑time equivalents (two police officers, an administrative support position for the clerk’s office and conversion of a part‑time graphics role to full time), and a $3 million transfer to the other post‑employment benefits (OPEB) fund.

Council members pressed staff on sensitivity and timing: one council member asked when Lake Forest Mall work would show up in permit revenue, and staff said demolition and site work are built into FY26 and that inspection contract support was included to meet anticipated demand. Staff also described contingency and five‑year projections for revenues and expenses; the five‑year forecast assumes triennial assessment effects, modest growth after FY27, and continued transfers to capital projects to support a multi‑year CIP.

Public works director Brian Fields summarized the capital improvement program. He reviewed recently completed FY25 projects (LED street‑light conversion, surface improvements, park upgrades), and listed FY26 projects expected to break ground, including Crown Farm Park, Bloom Park Trail and several pedestrian‑safety and traffic signal projects. Fields also introduced 12 new CIP entries (sidewalk replacements on Main Street, safe routes to school work, parking‑garage repairs, activity center roof work, sports‑field lighting upgrades and a ViewWorks 2.0 public‑works software implementation), with estimated schedules and costs.

Stormwater staff said the stormwater fund’s FY26 operating budget increases (driven largely by capital) and highlighted a headwater study that will fund seven flood‑control and water‑quality projects (roughly $1.9 million spread across FY26–30), a dam breach analysis and pond maintenance work.

Janice and Tanisha reiterated that the document before council is the proposed budget and that staff will publish a comprehensive list of changes between the proposed and adopted budgets for council consideration. The public record for written input closes April 23; adoption is scheduled for May 5. The work session adjourned after the presentation and questions.

What’s next: staff will accept public comment through April 23, post any adjustments and bring the adopted budget for council action May 5.