Commissioner Workshop - FY27 Strategy and Goal Setting_111825.pdf

BUDGET WORKSHOP

FY2027 Strategy & Goal Setting November 18, 2025 Commission Members:

Chris Corchiarino, Jim Moran, Phil Dumenil, Jack Wilson & Patrick McLaughlin County Administrator: Todd R. Mohn, P.E.

Budget & Finance Office: Jeff Rank & Karen Rodgers

1. Welcome and Workshop Purpose

2. Economic & Revenue Outlook

AGENDA

3. Strategic Priorities Discussion

4. Fiscal Health & Key Budget Considerations

5. Communications & Public Engagement

6. Closing & Next Steps

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• Align on Fiscal Outlook

Fiscal Year 2027 Welcome &

• Strategic Priorities

Workshop Purpose

• Potential Constraints

• Outreach Planning

3 Fiscal Year 2027 Revenue & Expenditure Outlook Revenue Chart (Income & Property Tax Revenue,

FY2025–FY2027)

•Strong Growth Forecasted: Income and property tax revenues are projected to rise steadily, reaching a combined ~$195.6M by FY2027.

•Core Revenue Drivers: These two sources make up over 85% of General Fund revenues, supported by continued employment and property valuation growth.

•Stable Tax Rates: Growth is achieved without increases to the income tax rate (3.2%) or property tax rate ($0.83 per $100 AV).

•Broad-Based Stability: Forecast reflects a balanced reliance on wage growth and real estate value appreciation.

4 Fiscal Year 2027 Revenue & Expenditure Outlook Expenditure Chart (Major Categories + Total Trend,

FY2025–FY2027)

•Education-Focused Investment: Board of Education spending continues to be the largest category, exceeding $89M by FY2027.

•Rising Compensation Costs: Salary and fringe benefits projected to increase by over $6M across the three-year period.

•Capital & Debt Obligations Growing: Transfers and debt service costs increase notably, reflecting ongoing infrastructure investments.

•Total Spending Trend: Overall General Fund expenditures increase from $200.7M in FY2025 to $226.5M in FY2027—about a 12.8% growth.

5 Fiscal Year 2027 Economic Outlook

• Labor market remains relatively tight, but growth is modest —meaning

wage pressures may persist even in a slow-growth environment.

• Low unemployment (~3.6%) suggests limited slack in the workforce, which

increases risk of cost escalation (benefits, salaries) for local governments.

• Housing market is moderately strong (price +6%, permitting +8%) but may be

nearing a plateau—this affects property tax revenue growth potential, especially in commuter/exurban counties like ours.

• Eastern Shore’s slower growth and structural constraints (industry

concentration, out-migration) mean the County should adopt conservative revenue forecasts and remain cautious about relying solely on high growth assumptions.

• Because the region is exposed to federal/state funding shifts (contractors,

grants, defense installations), a slowdown in federal hiring or increased tariffs/trade pressures could ripple locally.

• Given inflation and tight labor markets, the cost side remains under

pressure—even if revenue growth is moderate. Budgeting should assume moderate growth on the revenue side but elevated cost pressures on the expenditure side.

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GENERAL FUND REVENUE FORECAST

FY2026

$0.01 of property tax rate = $1.1 million 0.1% of income tax rate = $2.9 million 7

GENERAL FUND EXPENDITURE FORECAST

FY2026

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FUNDING PRESSURE POINTS

 Board of Education  Additional $6.5m operating over FY26  New/Renovated Centreville Middle School  Unfunded mandates and legislative impacts

• HUR & Roads

• Does the County supplement state road capital projects?

• Beginning in FY28, allocations revert to fiscal 2024 distribution

• SDAT

• $215k in FY26 for office support (90% of cost)

• We may be expected to pay 100%

• Health Department

• Current funding is 54% State/45% County, MACO advocating for a fair and functional funding model

that reflects local realities and supports long-term public health success

• We may be expected to pay higher share

• Court System

• Second Courthouse judge (~$250k-400k)

 RecentStateProjectionsshowa$1.5billiondeficit 9 Fiscal Year 2027 Strategic Priorities Discussion

BOE

Capital Funding 10

BUDGET HIGHLIGHTS – MAJOR CAPITAL

Projects in Current 6-Year Plan Projects NOT in Current 6-Year Plan Detention Center $70.0-80.0 Million Jemal Property (Outlets) $6 Million -$10 Million BOE –Career Tech Ed Facility $28.2 Million Old Grasonville Amb. Bldg TBD BOE –CMS Replacement $20.5 Million Additional EMS Unit $1.0 Million Pedestrian Bridge $19.9 Million Charter School TBD Sheriff’s Office $16.0 Million Board of Elections Facilities TBD

Rec Center $15.0 Million Library Admin Office Space TBD Historic Courthouse $10.0 Million Historic High School/Old BOE TBD Admin Bldg Animal Services Building $6.3 Million Health Department Building TBD These may be adjusted for timing, These may need to be added to inflation, priority, etc. the plan and moved up in timeline 11

BUDGET HIGHLIGHTS – MAJOR OPERATING

Items NOT in Current Operating Budget Additional Funds for BOE (ongoing) $6.5 Million Additional EMS Unit – operating costs ~$1.1 Million/annum Second Courthouse Judge Expenses ~$250,000-$400,000 Additional Sheriff staffing for protection ~$70,000-$120,000/each and enforcement State Road Hwy Safety Improvements and TBD Enforcement 12

DEBT SERVICE PROJECTIONS

FY2026

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OUTSTANDING DEBT PROJECTIONS

FY2026

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DEBT MEASURES PURSUANT TO POLICY

FY2026

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DEBT MEASURES PURSUANT TO POLICY

FY2026

16 Fiscal Year 2027 Communications & Public Engagement Strategy

• Budget Workshops

• November18“FY2027Goals & Strategy Setting”

• March 26 “Board of Education, Library & Sheriff”

• March31“ParksandPublicWorks”

• April 9 “Other Depts as needed and Outside Agency

Grants”

• Public Information Sessions

• May18–KentIslandLibrary

• May 19 –Liberty Building

• May20–SudlersvilleMiddleSchool

• Online Resources

• All Public Budget Documents https://qacbudget.com

• Online Budget Transparency Portal

• Schedule

• Work SessionHandouts

• Presentations

• CountyAdministrator’sSubmitted Budget

• BudgetinBriefDocument

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• CountyCommissioners’FinalBudget

• Budget Resolution

Fiscal Year 2027 Next Steps

• Operating Budget Guidance to Departments

• Although revenues are growing, expenses are growing quicker due to inflation, tariffs, etc.

• Will be recommending non-payroll operating costs be held within 3%

• Be Realistic, Not Optimistic: Use conservative revenue and cost estimates. Assume costs for wages, benefits, fuel, utilities,and contracted services

will continue rising at 3% to 6%.

• Prioritize Core Services: Focus on sustaining essential services. Avoid launching new programs unless there’s a compelling need or offsetting

reduction elsewhere.

• Scrutinize Base Budgets: Identify and eliminate outdated, underutilized, or duplicative costs. Emphasize service-based reviews over incremental

increases.

• Flag Personnel Requests Carefully: New positions or reclassifications should be tightly justified—especially with rising benefitand pension costs.

• Expect Higher Benefit Costs: Anticipate continued increases in health insurance and retirement contributions, andreflect that in their projections.

• Capital Budget Projects

• Prioritize “Ready-to-Go” Projects: Favor projects that are shovel-ready and fully scoped, especially those eligible for state orfederal matching

funds.

• Phase Multi-Year Projects Thoughtfully: Break large capital initiatives into manageable phases to maintain flexibility in funding and timing.

• Watch Construction Cost Escalation: Building material inflation has moderated but remains elevated. Include escalation contingencies in all

estimates.

• Defer Non-Essential Assets: Delay capital items (vehicles, equipment, buildings) that don’t directly affect health, safety, or mandated operations.

• Consider Operational Impact: Quantify how new capital assets will affect future operating costs (staff, maintenance, utilities, technology).

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