FY 25 Harford County Government Proposed Operating Budget

a better path forward. Data going back to 1980 was examined, and after adjusting for some outliers, a

long-term rolling growth of average of 3.5% was established. That growth rate was applied to the

remaining FY 2024 distributions and from that base to the FY 2025 estimate. The Committee projects

income tax revenue in FY 2024 to decrease 2.4% from FY 2023 actuals and then grow by 3.5% FY

2025. On a budget basis, income tax in FY 2024 is expected to miss its mark by $4.4 million and grow

by 2.0% in FY 2025.

As property values are continuing to rise in the County, the Committee believes Property Tax

revenues, based on the current tax rate should increase 4.6% from FY 2024 budget to FY 2025. This

year Group 3, which is primarily the southern portion of the County, was reassessed and grew at

22.0%, 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.

One area of particular concern for the Committee is the structural deficit of the County. In FY

2023 the County used $89.9 million of fund balance to balance its budget, and while that number

decreased to $74.1 million in FY 2024 it was still too high considering that most of those funds were to

finance on-going expenditures. It is the Committee’s understanding that the credit rating agencies have

expressed concern, rightfully so, about this practice as it is not sustainable. If the County expects to

maintain its AAA bond rating, it is imperative that the County Executive and the County Council

correct this imbalance in a prudent and practical manner.

Finally, while the County’s debt affordability ratios are healthy and in -line with other AAA

rated counties, the Capital Budget in recent years has significantly increased the appropriation of

bonds. While the Committee understands the capital needs of the County and the rising cost of

construction projects, there was concern expressed regarding the trajectory of future debt.

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