It is budget season and while the General Assembly finalizes things in Annapolis, Baltimore City officials announced their budget plan for fiscal year 2026 on Wednesday morning.
There are no major tax increases or major cuts to service proposed– but there is still a lot of uncertainty as the city tries to navigate potential cuts to federal grants and a possibly reduced income base as the federal government looks at eliminating federal jobs, a move that is already impacting Marylanders.
Emily Hofstaedter spoke with officials from Mayor Brandon Scott’s administration yesterday in a budget preview meeting. She joined Matt Bush to break things down.
Matt: There are some big uncertainties here, especially related to the federal government but let’s just start with the basics. What does the Baltimore City budget look like this year?
Emily: Yes, we have an operating budget of $3.6 billion– that is up from last year. That’s the day to day of running the city; agency budgets, salaries, city programs, etc. We also have a capital plan of about one billion dollars– that’s for projects and physical infrastructure. In total, the budget is up 11% from last year’s and we are looking at a budget shortfall that finance officials are trying to close.
Matt: More on that shortfall later but let’s get into the trickle-down effects here. State lawmakers are finalizing their budget and trying to close their nearly $3 billion deficit this week. Is the city picking up the tab at all there?
Emily: A little bit, mostly for teacher pensions. The city will have to pay almost $9 million for those this year.
Matt: There’s a lot of anxiety over how attempts to cut federal spending and the federal workforce are going to affect municipal budgets. What are we seeing in Baltimore?
Emily: Finance officials say they have not received word yet of any budget formulas being changed or major grant cuts. The city has a number of federal grants peppered throughout that do support hundreds of city jobs but there are five big ones that total about $200 million that as of now are in the budget. That includes programs like the Ryan White program which supports HIV-related services, and the nutrition and education program Head Start.
But officials seem most concerned about impacts to the federal workforce. They estimate about 12,000 federal jobs in Baltimore City, not to mention local businesses and industries that work with the federal government, especially in health and research. If hundreds to thousands of those people are laid off– it could have very immediate impacts to city income tax– which is the second highest revenue source after property tax. That could really hurt the city.
Matt: And you mentioned earlier that we have a budget shortfall?
Emily: Yes, of around $85 million dollars. Finance officials say that’s largely driven by rising personnel costs– increases from union negotiations and healthcare benefits– as well as inflationary aspects hitting certain agencies. To close that, the city is looking to streamline certain things– one example was cutting a bunch of city department landlines that aren’t being used.
But you and I could be contributing too. There are a number of proposals for increased taxes and fees. City officials point out that many of these haven’t been increased in years. For instance, they propose an increase in landfill tipping fees to $135 dollars per ton; those haven’t been raised since 1993. They’re also looking at increasing fines for nuisance behaviors related to quality of life, like, for instance, illegal dumping.
