County government leaders knew that Maryland’s fiscal 2026 budget season would be a tough one.
With a nearly $3 billion deficit looming, Gov. Wes Moore proposed about $2 billion in cuts in his budget earlier this month, along with an overhaul of the state’s personal income taxes.
But according to fiscal analysts with the Department of Legislative Services, Moore’s proposed budget also includes about $144 million in costs shifting from the state onto local governments — which could have been worse, county leaders say, but still isn’t ideal.
The biggest factors in the local shifts, which total more than $97 million across all of Maryland’s jurisdictions, would require local governments to pay a larger share of public school and community college teachers’ retirement costs. The amount that local governments contribute to the cost of educating children with disabilities in nonpublic school programs would collectively increase by $25 million, and the local share of the cost of property valuations would increase by nearly $21 million.
Reactions from county leaders seem to break along party lines. Republicans say Democrats have made some bad financial decisions that are now hurting counties, but some Democrats aren’t as rattled.
‘A lot of shifting’
Anne Arundel County Executive Steuart Pittman said the cost shifted onto his county — about $14 million — is not a “make-or-break number.”
“It’s significant, but it’s not going to kill us,” he said. “But when they do the tax reform the way they planned it, they’re projecting that we come out pretty close to breakeven, so we make back some of that because of the changes that they’ve made.”
The governor’s proposed changes to the tax code would consolidate the four lowest income tax brackets at 4.7% and add two higher brackets: 6.25% for people making at least $500,000 and 6.5% for those making more than $1 million. About 18% of Maryland taxpayers would pay more.
Pittman, a Democrat, said he likes the governor’s tax reform package, adding that he thinks more progressivity has been needed in the state’s income tax rates.
“We know the highest earners are going to benefit from major cuts in what they have to pay the federal government, and I think most people would rather have their tax dollars going locally,” he said. “The small increase in Maryland will be offset by the decrease at the federal level and I think that’s fair.”
However, Harford County Executive Bob Cassilly thinks the proposed income tax rate increases could be detrimental.
“The risk there is that we’re going to drive businesses out of our state, which is something we’ve been working really hard [on] to increase revenue production,” he said. “I’m afraid that this is going to take us back the wrong way.”
Cassilly, a Republican, said his county has been working “feverishly” for the last two years to cut and manage expenses, but he feels the state’s budget has not shown the same effort.
“I don’t see cuts in this budget,” he said. “I see there’s a lot of shifting and some delays, but we’re not actually cutting anything, and that’s a challenge moving forward.”
‘Feeling the pressure’
Under the budget proposal, Harford County would see about $5.6 million in expenses shifted onto its government.
Ken Kiler, president of the Carroll County Commissioners, voiced similar concerns about delays, particularly with the Blueprint. Carroll County would see about $3.8 million shifted to its government.
“It hurts the counties, not helps the counties, just like your household budget — when you delay something, it still costs you just as much or more, it doesn’t save you money,” Kiler said. “Until somebody in Annapolis can wake up and say, ‘We made a mistake with Blueprint,’ we can’t afford it.”
Cassilly said he had also hoped for the state to help fund large expenses from law enforcement and the Blueprint, the state’s multi-billion dollar education reform plan, through adjustments to the plan’s schedule.
Kevin Kinnally, legislative director for the Maryland Association of Counties, has realized that every county, not just the small or rural ones, will feel the impacts of the governor’s budget. Many residents live in counties with the maximum local income tax rate, too, meaning the only way for counties to raise revenue to fund the Blueprint is through increased property taxes, he said.
“They’re feeling that pressure, they need some relief, they need the ability to be more flexible with revenue,” Kinnally said. “Anything that the state shifts on top obviously makes things a lot more difficult.”
Baltimore County Executive Kathy Klausmeier, who was a state senator for more than 20 years before taking the county office in mid-January, said the county’s “increasingly difficult budgetary challenges” will require “leadership, innovation, and sound fiscal decisions.”
“The county must balance its commitment to maintaining and improving aging infrastructure, which continues to impact annual revenues and fund balance resources; sustaining record investments in education in light of proposed reductions to state funding; and supporting capital construction needs, which continue to outpace annual state funding; and maintaining operational budget needs,” she said in a statement.
The budget proposal would shift about $17.9 million in state expenses onto Baltimore County.
Kinnally said it’s key to remember that the spending plan will change when the General Assembly begins to modify the proposals.
“There are a lot of things in here that are eye-popping; there are a lot of massive changes, but it’s really important to remember that this is not what it’s going to look like at the end of the day,” he said. “We’ll have to see what survives and what doesn’t, and [for] things that don’t survive, what the General Assembly is going to do to backfill that money and balance the budget, so a lot of uncertainty.”
Have a news tip? Contact Natalie Jones at najones@baltsun.com.
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