HAGERSTOWN, Md. – City officials continued their review of the proposed fiscal year 2027 budget Tuesday, shifting focus to capital spending plans that emphasize public safety, infrastructure and facility upgrades while avoiding new debt.
During the meeting, Chief Financial Officer Michelle Hepburn walked the mayor and City Council through the Capital Improvement Program portion of the general fund, outlining how the city plans to fund major projects in the coming fiscal year.
Capital spending trends decline in FY27
The proposed general fund capital budget totals $13.3 million for FY27, a decrease from prior years. Officials noted the city originally budgeted $17.1 million for FY26 but now expects actual spending to be lower, around $14.5 million.
The reduction reflects a more conservative approach as staff works to balance long-term financial stability with ongoing infrastructure needs.
Unlike past years, no new projects will be funded through bond borrowing in FY27. Instead, the city is relying on existing resources and internal funding mechanisms to support capital investments.
Funding strategy shifts away from debt
City officials detailed a funding strategy centered on two primary sources:
- Capital Improvement Program fund balance: $2.9 million
- Includes approximately $1.4 million for new projects
- Remaining funds support projects carried over or restricted to specific uses
- General fund balance reserves: $3.8 million
- About $2.2 million had been previously committed
- Roughly $1.6 million represents new allocations for FY27
This approach allows the city to move forward with key projects without increasing debt obligations, aligning with what officials described as a disciplined financial policy.
Earlier in the budget process, departments had requested roughly $9.5 million in general fund transfers for capital projects. That figure was reduced significantly to maintain a balanced budget, with some projects deferred or shifted to alternative funding sources.
Public safety and facilities drive major investments
Several high-cost projects dominate the FY27 capital plan, with a strong emphasis on public safety and city infrastructure.
Among the most significant investments:
- Fire department vehicle replacements, including reserve engines and specialized equipment
- City Hall renovations, particularly improvements planned for the fourth floor
- Public safety radio systems and station alerting upgrades
- Consolidation of public safety assets, including planning for future facilities
Officials said the public safety consolidation project will initially focus on land acquisition and design, laying the groundwork for potential future construction depending on grant funding or financing options.
Balancing priorities amid long-term pressures
While the capital plan reflects targeted investments, officials acknowledged ongoing financial constraints. Staff members emphasized that project selection required careful prioritization, with many proposals either scaled back or delayed.
The decision to avoid new borrowing also reflects broader concerns about long-term fiscal sustainability, particularly as the city prepares for future budget pressures.
Even with reduced capital spending, officials stressed that maintaining infrastructure from emergency services to municipal facilities remains a critical responsibility.
Next steps
The FY27 budget, including capital and operating components, will continue to be refined in the coming weeks. A public hearing and formal adoption are scheduled for May.
City council members reiterated that while the current proposal is balanced, future budgets will require continued focus on managing costs, identifying new revenue sources and prioritizing essential investments.
