Harford County, Maryland FY 24 Proposed Operating Budget

Executive Summary The Spending Affordability Advisory Committee (“Committee”) has concluded that the local economy, while still strong, is slowing. The likelihood of a mild recession in 2023 is increased from this time last year as the economy adjusts to both the contraction of pandemic stimulus and the Federal Reserve's tightening of the money supply and subsequent interest rate hikes in an effort to subdue inflation. Even with these challenging headwinds, revenues are still expected to increase. The Committee projects growth of 2.5% in the Net Adjusted General Fund Budget from FY 2023 to FY 2024. This overall increase is driven by income tax, property tax and interest income, which are partially offset by declining recordation and transfer tax. Income Tax has proven the most difficult for the Committee to project in addition to accounting for the overall economy. Income Tax is significantly affected by the mechanics of how the State Comptroller distributes this revenue to the County as well as the timing of individual filing decisions made by a relatively small number of high-income earners. The Committee projects Income Tax revenue in FY 2023 to increase 3.9% from FY 2022 actual; however, no additional growth is anticipated for FY 2024. While the Committee expects the labor market to continue to be tight resulting in continued strong growth in withholding, a counterbalancing drop is expected from estimated payments and final payments. As property values are continuing to rise in the County, the Committee believes Property Tax revenues, based on the current tax rate should increase 2.2% from FY 2023 budget to FY 2024. This year Group 2, which is the Bel Air and Fallston areas, was reassessed and grew at 16%, which will be phased in over the next three years. This represents the strongest reassessment growth since 2008 and is an indication of the vibrant housing market in the County. The Committee did not factor in any changes in tax or fee structure; however, they were made aware that the County Executive is considering fee increases for 911, solid waste tipping and ambulance

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