2027 Spending Affordability Advisory Committee Report

Recommendation:

Accordingly, the Committee urges the County to use the temporary strength in FY 2027 revenues strategically—to reinforce fiscal resilience, address structural risks, and enhance long-
term growth capacity. Specifically, the Committee recommends:

● Operating Budget Discipline
For FY 2027, limit recurring General Fund spending growth to no more than 4% and
allocate the remaining projected revenue growth (approximately 2.3%) to reserves.
Given that this year’s revenue strength is temporary, ongoing expenditures should not be
built on a one-year spike.
This approach will rebuild reserves that have declined in recent years and strengthen the
County’s fiscal position relative to AAA credit rating benchmarks. It will also avoid
creating new recurring obligations that may become unsustainable when revenue growth
returns to more moderate levels.
● Capital and Debt Management
For FY 2027, limit General Obligation (GO) bond issuance to no more than $75 million
and prioritize the existing backlog of deferred maintenance projects across HCPSS and
County agency facilities. While debt indicators have improved, long-term obligations
remain significant and warrant continued monitoring.

This recommendation reflects three realities:
o The County has incurred additional liabilities, including low-interest loans for the
Ellicott City Safe and Sound project, which increases annual principal and interest
payments from the General Fund.

o New bond issuances commit the County to fixed debt service payments for up to
20 years, reducing future operating flexibility and crowding out funding for core
services such as education and public safety.
o New capital projects typically generate ongoing costs—including follow-on
capital needs and annual staffing, operating, and maintenance expenses—that
extend well beyond initial construction.

● Grow the Economic Pie
A stronger County economy creates a cycle of increased revenue, increased investments,
and greater desirability for businesses and residents to locate in Howard County. There
are limited places where the County can find new revenues, which means when there are
fiscal challenges, there are only two options: raise taxes or cut programs. Encouraging
economic growth helps meet the County’s long-term fiscal needs and provides resilience
to meet future challenges with less austerity. The Committee is encouraged by the
adoption of HoCo by Design, but notes that much of the implementation of its
suggestions has yet to occur. Additionally, the Committee encourages the Council to
review regulatory and permitting mandates that add time, uncertainty, and unnecessary
costs, all of which could be inhibiting investment in our community.

• Develop a Balanced Multi-Year Fiscal Plan in Collaboration with All Stakeholders
  Engage all stakeholders, including election candidates, to promote dialogue and mutual
  understanding of the tradeoffs of different options. Identify solutions to close the
  projected structural gaps between forecasted revenues and requested expenditures by
  different entities.

Funding Gap: