At its May 20 special session, the Hagerstown City Council introduced ordinances for the city’s fiscal year 2026 budget and accompanying property tax rates. The total proposed budget stands at $222,997,300 and includes funding for general operations, capital improvements, and enterprise funds. The budget and taxes previously failed to be introduced due to resident and councilmember concerns.
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The introduced tax ordinance sets the real property tax rate at $1.057 per $100 of assessed value and the business personal property tax rate at $2.643 per $100. The Council voted 4-1 in favor of introducing the ordinance. A companion ordinance to adopt the full FY26 budget was also introduced with the same 4-1 margin. Councilmember Flaherty was the dissenting vote in both.
A supporting worksheet, to be included in the final budget ordinance, will show a $375,000 reduction to the proposed budget. That reduction is comprised of adjusted real estate revenue estimates, a decrease in general fund transfers to the Economic Redevelopment Fund, and corresponding expenditure reductions in the Invest Hagerstown program.
During the presentation of the updated financial projections for several enterprise funds, the city emphasized that both the parking fund and the electric fund will face operating shortfalls in FY26. The parking fund is expected to operate at a $314,000 cash deficit, with usage of the new HUB parking deck still stabilizing. The electric fund is projected to end the fiscal year with a negative $4 million cash balance, driven by wholesale power costs that account for 78% of total service revenues.
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While the water and wastewater funds are currently operating with positive cash balances, upcoming infrastructure improvements—estimated in the range of $200 million over the next decade—will require future utility rate adjustments. The city has already contracted a consultant to prepare updated rate models, which will guide FY27 and mid-year adjustments if necessary.
Final adoption of the FY26 budget and tax ordinances is scheduled for the May 27, 2025, regular session.
Article by multiple RFHC contributors, based upon information from the City of Hagerstown Council Work and Special Session – May 20, 2025
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