FY 26 Proposed Operating Budget Book

from these two revenue sources. Due to a lack of historical patterns, the Committee presumed no significant changes in other revenue sources, such as licensing, permits, and miscellaneous fees, or in miscellaneous State funding, such as police or law enforcement aid. The exception to this statement is impact fees, which were increased from the original amounts set in 2004 by legislation effective March 1, 2025. This revenue was increased by approximately $3 million, which the committee deems reasonable. The Committee also reviewed the FY 2025 General Fund Budget as a necessary step in carrying out its charge to recommend a FY2026 spending level. It was necessary to adjust the FY 2025 General Fund Budget to reflect the reduction of the appropriated fund balance and other one-time revenues equal to $58.5 million. Our approach has been to estimate annual recurring revenue; therefore, we are continuing the historical adjustment to exclude non recurring sources of funds. This adjustment yielded an Adjusted FY 2025 General Fund Budget of $721.6 million. Debt Authorization The Committee has reviewed the County's Debt Management Policy dated April 13, 2010. The Debt Management Policy includes adiscussion of strategic capital planning and sets overall objectives for the issuance of debt and debt service loads. The Committee concurs in those objectives and the reasoning set forth in the Debt Management Policy and considers the objectives both reasonable and conservative.The Committee seeks to offer the County some guidance on this topic, and our general impressions as to the level of debt contemplated by the plan. We do not intend to give advice to the County on the highly technical subject of debt issuance and structure. As detailed in the policy, the County will engage qualified financial advisors, bond counsel, and bond underwriters to give them advice on the issuance and structure of the County’s debt. The Committee reviewed the Debt Affordability Ratios provided by the Debt Management Policy and their impact on theexpected debt level in FY 2025 Budgeted and FY 2026 Projected: The County aims to maintain a level of debt not to exceed $2,500 per capita. Projected FY 2025 level is expected to be $1,865 and $1,862 for FY 2026. The County aims to maintain a debt level under 2.3% of the full cash value of assessable property in the County. Projected level for both FY 2025 and FY 2026 is 1.4%. The County aims to have debt service not exceed 10.0% of budgeted general fund expenditures. Projected level for both FY 2025 and FY 2026 is 7.4%. The Committee believes the proposed level of debt for FY 2026 is reasonable. Care should be taken to revisit the guidelines periodically to make sure they are still relevant, prudent, and allow the most reasonable use of debt for proper public purposes. Since most of the County debt is publicly issued, additional consideration needs to be given to the requirements of the public debt rating agencies and bond investors. The Committee finds additional comfort in the recent reaffirmation of the County’s strong public debt ratings as a testament to the sound fiscal policies implemented by the County. Harford County is in a select group ofgovernment issuers with the highest ratings from the three major rating organizations. The Committee recognizes this as a significant achievement and believes it stands as a testament to the strong fiscal policies employed by the County. While the Committee recognizes the County’s obvious strength in the management of the debt service levels regarding the General Fund, the Committee would be remiss in ignoring potential impacts to the General Fund from other sources such as Enterprise Funds. The Water and Sewer Fund was established as a self-sustaining utility to provide water and sewer services for Harford County. Revenue from users covers the costs of providing these services. The County has taken steps to set rates at appropriate levels to ensure the General Fund will not have to bridge any shortfall in the Water and Sewer Operating Fund.

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