Smithsburg’s FY26 Budget: Lower Tax Rate, Reliable Services, and Beyond

Smithsburg residents will soon notice a slight dip in their tax rate while enjoying uninterrupted town services and preparations for future growth. In June 2025, the Town Council approved a $2.3 million spending plan for Fiscal Year 2026 that lowers the constant-yield property tax rate for the third straight year, from 0.3232 to 0.3100, yet keeps vital programs and maintenance on track. This three-part overview breaks down what you’ll see in your community over the next 12 months: an easy-to-follow look at where the money comes from and goes, how these choices support long-term town goals, and what the proposed Cloverly housing-and-commercial project could mean for Smithsburg’s future.

This article was updated 7/10/2025 to better reflect that Smithsburg’s annexation policy mandates developers wishing to annex land into the Town are responsible for infrastructure upgrades required to service the new development.

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What’s in the FY26 Budget—and How It Affects You

Smithsburg’s $2,333,391 General Fund budget balances “on the nose”—that is, total revenues equal total expenditures—so the town isn’t dipping into reserves. By virtue of rising home values, the tax rate dropped, but the overall revenue pot remains steady, ensuring no cutbacks in essential services. Here’s a breakdown:

• Public Safety Takes Priority. The single largest increase goes to the Police Department, whose budget grows by roughly 25 percent. That funding hires extra officers, covers overtime for busy shifts, and maintains squad cars. Separately, $20,000 supports volunteer fire and EMS companies, and money from speed-camera fines is earmarked for safety gear and station maintenance.
• Town Operations Stay Steady. Running Town Hall and Public Works—clearing snow, fixing potholes, managing stormwater—remains fully funded so that everyday life in Smithsburg feels seamless. All full-time employees will receive a 6 percent pay raise, reinforcing the town’s commitment to retaining experienced staff.
• Keeping Community Events Alive. Approximately $78,500 of hotel‐tax revenue is dedicated to local festivals, holiday light displays, movie nights, and promotional events for downtown businesses. These activities continue without dipping into the core budget.
• Water and Sewer Work. Separate funds—each about $950,000—pay for your drinking-water purchase, pipe repairs, and a major upgrade of the wastewater treatment plant by the county. Those improvements expand capacity so new homes and businesses can connect without overloading the system. These are enterprise funds, meaning that the funds need to be self-sustaining to cover expenses.
• A Cushion for Surprises. A $270,000 contingency reserve sits ready to cover unexpected needs—anything from emergency equipment repairs to unplanned legal costs. The town also maintains special restricted funds, such as sidewalk and curb fees, ensuring that money collected for a specific project goes strictly to that work.

How It Affects You Directly

You’ll benefit directly from a slightly lower tax rate per $100 of your home’s assessed value—even if your total bill remains roughly the same due to higher assessments, your effective rate has fallen. In return, you’ll see smoother streets, reliable trash collection, and a more noticeable police presence, with faster emergency response times. Your favorite local festivals and holiday celebrations will go on as usual, and you can count on safe drinking water and dependable sewer service even as Smithsburg readies its systems for new residents.

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Connecting This Budget to Smithsburg’s Long-Term Vision

Smithsburg’s 2011 Comprehensive Plan paints a roadmap for growth and service quality through 2030. The FY26 budget aligns with that mandate by ensuring infrastructure and staffing keep pace with anticipated development, without sacrificing fiscal health or placing undue burden on current residents.

1. Road and Utility Readiness Before New Homes.
   • The town routes highway-user fees directly into street repairs and capital paving projects.
   • Dedicated sewer and water funds pay for routine inspections and fixes—preventing small leaks from turning into costly emergencies.
   • By shoring up these basics first, the town follows the principle that new neighborhoods should arrive only when roads, pipes, and emergency services are ready.
2. A Focus on Safety as Smithsburg Grows.
   • Additional police funding and speed-camera programs help maintain low crime rates and safe traffic speeds.
   • Volunteer fire and EMS groups receive extra support so they can handle more calls without delay.
   • This mirrors the plan’s warning that higher population density demands stronger public-safety staffing and resources.
3. Investing in the Town Workforce.
   • A 6 percent raise for all employees and a new planning department position reflect the need for skilled staff in zoning, permitting, and community engagement.
   • The Comprehensive Plan emphasizes that town staff are as crucial to quality growth management as roads and sewers.
4. Fairness and Fiscal Stewardship.
   • Lowering the constant-yield tax rate for the third year in a row—even as assessments grow—keeps existing homeowners from subsidizing new development.
   • A healthy surplus from previous years and ongoing audits ensure that the town lives within its means, consistent with the plan’s call for prudent resource management.

What This Means for Smithsburg’s Future
By closely matching budget choices with long-term planning goals, Smithsburg is protecting its small-town charm while preparing for new neighbors. Roads get repaired, pipes get replaced, emergencies get faster responses, and community events continue—all paid for without sudden tax hikes.

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The Cloverly Project—Private Investment Meets Public Planning

One of the biggest stories on the horizon is the proposed Cloverly mixed-use development. Once infrastructure funding has been secured and permitting approvals granted, Cloverly Hill, LLC would build roughly 350 new residences—single-family homes, senior apartments, multi-family units—plus retail and office space. Here’s how that could reshape town services and spending:

• A Special Taxing District for Infrastructure. Cloverly has proposed forming its own special assessment tax district, issuing bonds to pay for more than $14 million in roads, water lines, and stormwater systems. Smithsburg’s main budget won’t front these costs—future residents in the district foot the bill through assessments on their properties. Per the Comprehensive Plan, Smithsburg’s annexation policy mandates developers wishing to annex land into the Town are responsible for infrastructure upgrades required to service the new development.
• Up‐Front Fees and Long-Term Revenue. The developer will pay over $3 million in connection and impact fees when the project ties into town water and sewer lines. Once fully built and assessed, Cloverly properties are estimated to generate an extra $350,000 per year in property taxes—enough to repay district bonds and then boost general funds.
• Service Demands and Mitigations.
  • Hundreds of additional residents mean more emergency calls, but Cloverly has included a location for a new EMS station and discussions are underway for fire department expansion.
  • Schools may become more crowded. State rules and Smithsburg’s Adequate Public Facilities Ordinance will require developer contributions toward school capacity, but residents should anticipate that classrooms will feel tighter in the years ahead. However, with a significant number of the new units dedicated to senior living, the impact won’t be as large as it would be if Cloverly were only single family homes.
• Traffic, Access, and Town Character.
  • Cloverly includes state-required upgrades to highways MD 64 and MD 77, improving safety and traffic flow. The town will still need to manage driveway access points and local streets to prevent congestion.
  • Open-space buffers and scenic-area guidelines in the development plan aim to preserve views of farmland and ridgelines. Careful design reviews will be essential to maintain Smithsburg’s rural charm.

Balancing Risks and Rewards
The Cloverly project is an example of modern municipal growth strategies: private developers financing their infrastructure through creative financing, easing the town’s budget while expanding the tax base. If managed well, Cloverly can provide new housing, shopping, and jobs without raising the tax rate or overtaxing Smithsburg’s core services. Yet it also underscores the need for ongoing oversight—on school capacity, traffic safety, and scenic preservation—to ensure that growth enhances, rather than detracts from, community life.

Article by multiple contributors, based upon Town of Smithsburg’s FY26 Budget, Comprehensive Plan, press releases, and statements from Cloverly Hill, LLC. The Comprehensive Plan and FY26 Budget are available in our Public Information Archive.

This article was updated 7/10/2025 to better reflect that Smithsburg’s annexation policy mandates developers wishing to annex land into the Town are responsible for infrastructure upgrades required to service the new development.

Associated documents for this story are available in our Public Information Archive.

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