FY 27 Proposed Operating Budget

The County aims to maintain a level of debt not to exceed $2,500 per capita. Projected FY

2026 level is expected to be $2,027 and $2,195 for FY 2027.

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 2026 and FY 2027 is 1.5%.

The County aims to have debt service not exceed 10.0% of budgeted general fund

expenditures. Projected level for FY 2026 is expected to be 7.2% and FY 2027 is 7.3%.

The committee believes the proposed level of debt for FY 2027 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 c ounty’s strong public debt ratings as a testament to the sound fiscal policies implemented by the

County. Harford County is in a select group of government 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.

Fund Balance

The committee reviewed the county's practice of maintaining a fiscal stabilization fund,

commonly known as a Rainy-Day Fund, of approximately 5% of the annual General Operating Fund

Budget. This assigned reserve holds funds that could be used by the county to fund revenue shortfalls

or other emergencies. This fund balance is considered critical in maintaining an acceptable level of

financial strength.

Fiscally strong municipalities/counties are expected to maintain reserves in excess of the 5%

reserve to maintain strong investment grade public debt ratings. These additional reserves can be in

the form of restricted, assigned, and/or unassigned. It is important for the county to communicate

with the rating agencies periodically to understand their current thoughts on the level of reserves. The

committee is encouraged that the unassigned fund balance exceeded $20.0 million for the first time in

three years at the close of Fiscal Year 2025. The committee recommends that the target for

unassigned be transitioned to a percentage instead of straight dollar amount due to inflation. To

conclude, the Committee proposes 2.5% for unassigned in addition to the 5.0% assigned under the

fiscal stabilization reserve. With the uncertainty of the Maryland economy, the committee encourages

the county to maintain both of these levels of reserves for a number of reasons:

First, the 5% fiscal stabilization fund and additional reserves help to ensure healthy county

operations and services during recessionary conditions or due to unexpected shortfalls in revenue.

Recent years have proven to be difficult times in which to manage County Government. The wisdom 74