HAGERSTOWN, Md. – City Administrator Scott Nicewarner, along with CFO Michelle Hapburn and Budget Manager Brooke Garver, presented a budget plan that keeps property taxes steady but highlights significant financial challenges, including escalating operational costs and a $10 million recurring shortfall.
Despite no increase in the tax rate, residents may face higher bills due to increased property assessments during the state’s reevaluation cycle. The budget projects a 9.3% rise in assessed property values and an 8-9% increase in property tax revenue.
About 70% of city revenue comes from property taxes, with half of expenditures dedicated to public safety.
Leaders stressed that, despite balancing the budget annually, underlying fiscal issues remain, chiefly a mismatch between service costs and revenue.
This persistent structural deficit is driven by rising expenses for utilities, wages, benefits, pensions, healthcare and infrastructure, many of which are fixed costs that are hard to cut in the short term.
Federal pandemic relief funds have been exhausted, compounding financial strain. The city faces challenges such as heavy reliance on property taxes, numerous tax-exempt properties and serving as a regional hub without proportional funding.
Although services benefit residents beyond city borders, revenue from users outside the city remains insufficient. Additional issues include aging infrastructure, growing demand for public safety and economic growth favoring development outside city limits.
If unaddressed, the deficit could result in service cuts, postponed infrastructure projects, higher borrowing costs, workforce issues and future tax hikes.
To counter these challenges, officials propose reevaluating core services, expanding revenue through economic development, modernizing fees, improving efficiency with technology and revisiting cost-sharing with Washington County.
They also plan targeted efforts to attract higher-paying jobs and revitalize local housing and commercial properties, strengthening the tax base.
Discussions on long-term solutions will continue alongside the FY2027 budget process, with final decisions expected soon.
