ELLICOTT CITY, MD – Today Howard County’s Spending Affordability Advisory Committee (SAAC) released its report for the Fiscal Year (FY) 2026. A non-partisan body comprised of residents representing different disciplines and areas of expertise, as well as representation from educational entities, council staff, and executive staff, the SAAC was charged with providing policy advice to the County Executive on fiscal planning.
I’d like to thank the members of the Spending Affordability Advisory Committee for the time, effort, and insight they provide to our budget process. As we begin the process of developing our FY 2026 budget, it is pertinent that we take into consideration the SAAC’s recommendations, especially as external and internal risks threaten Howard County’s financial well-being.
During the last two months, the SAAC has been briefed by economists, financial experts, business representatives, multiple County agencies, and local educational institutions on economic outlook, revenue projects, capital needs, and operating budget requests for not only FY 2026, but also for fiscal years 2027 through 2031. In its report, the SAAC advises the County that it must adopt a level of budgetary caution, especially with 45 percent of the County’s General Fund operating revenues coming from income taxes. The SAAC warns that with mass reductions in employment and spending at the federal level will continue and may have an oversized impact on Howard County.
If the fog is so dense you can’t see land, it’s time to trim the sails. The County faces extraordinary mid-term and long-term risks to its primary revenue streams at every level of government – federal, state and local – at the same time growth has stalled, school enrollment is down, our population is rapidly aging and spending demands are ratcheting up. It is time to curb long-term commitments and take a highly cautious approach on obligating the County past the current year’s revenue cycle.
Additionally, severe budget pressures in Annapolis are resulting in proposals to pass down state government expenses to the local jurisdictions, which could cause both significant funding loss and significant new costs to County Government. These may include unfunded state mandates and rising needs to assist impacted County residents, organizations and businesses.
Additionally, the report highlights the estimated six percent annual spending increase on average to the Howard County Public School System (HCPSS) in the past five years. The report points out that given the decline in school enrollment and the potential loosening of the State’s Blueprint spending targets given statewide revenue shortfalls, the opportunity to “right-size” HCPSS’s operating budget exists. With only 92 percent of eligible county students enrolled in HCPSS schools, the school system now has more seats available than students enrolled. To reduce pressure on the County for major capital spending and long-term debt commitment on new school construction, SAAC recommends HCPSS consider strategies to more effectively utilize its underenrolled schools, along with a highly targeted expansion of seats where crowding is most acute and redistricting is unable to properly remedy the situation. The SAAC advises doing so would free up funding for deferred school maintenance and aging public infrastructure.
“This year’s report recommends taking the long view in these uncertain times. We are in the middle of a transition in local growth demographics, faced with State out-migration and revenue challenges, and in a maelstrom of federal employment, procurement, and funding reductions. Careful consideration of ‘what we have, what we need, and how long do we need it’ before making commitments to new projects, programs, and their multi-year operational impact is only prudent,” said Ellen Flynn Giles, former Board of Education Chair, longtime SAAC member, and current Chair of the HB1450 Task Force that brings together state and local elected officials to produce recommendations on long-term capital needs.
The report brings to light that while the county’s housing stock (and by extension, population) has stalled at a growth rate of less than one percent per year for the past five years, the County’s recently adopted HoCo By Design general plan could sustain needed growth in population and revenues in the future, if successfully implemented. The Committee supports fully implementing HoCo By Design, which has the potential to power the County forward for another generation.
Based on the information gathered, the SAAC recommends the County:
- Develop a General Fund budget of no more than $1.519 billion (reflecting four percent growth, excluding use of one-time Fund Balance) for FY 2026.This represents a slowdown from the strong performance in the early COVID-period that was driven by temporary factors, but largely comparable with prior year budget growth and slightly higher than pre-COVID average budget growth of 3.6 to 3.7 percent per year;
- Exercise extra caution in budgeting amid elevated financial uncertainties and limit the addition of any new recurring expenditures;
- New authorized GO bonds in FY 2026 total no more than $25 million until the uncertainties of federal and State actions and their potential sizable impact on the County’s affordability is determined;
- Tighten its debt controls and prioritize maintenance of its AAA ratings as a higher debt burden increases the County’s long-term liabilities and impacts future budgets;
- Keep its Capital Budget in line with fiscal reality and debt capacity;
- Pause any new projects which are not mission-critical, prioritize infrastructure maintenance, and use Pay-As-You-Go (PAYGO) to reduce new debt rather than expanding its Capital Improvement Program scope;
- Adopt a revenue projection of 3.6 percent growth, on average, during FY 2027-2031; and
- Collaborate with all stakeholders to close a sizable funding gap projected over the next six years.
“Not only has Maryland and Howard County lagged in the recovery from the Covid-Recession, but the entire region is also entering into a unprecedented time of economic uncertainty as a result of decisions made by the new federal administration. The State and County economies are highly dependent on federal spending and employment. Given the potential impacts of reductions in federal spending, fiscal conservativism is of the utmost importance,” said Dr. Richard Clinch, SAAC Member.
The FY 2026 SAAC Report can be found online on the County’s website.