News Summary
Baltimore City concluded the 2025 budget year with a $3.3 million deficit, significantly smaller than expected, attributed to a surprising increase in income tax revenue. City budget director Laura Larsen noted the city collected $42 million more in income taxes than anticipated, contributing to a $66 million overall surplus. Despite this positive outcome, officials caution that fiscal challenges could arise in future years, especially if job market declines occur. Mayor Scott has proposed a new budget of $4.6 billion to address an $85 million deficit, focusing on public safety and youth services while avoiding tax increases.
Baltimore City has wrapped up the 2025 budget year with a $3.3 million deficit, which is notably smaller than initially anticipated. This outcome was made public during a budget hearing at City Hall, where it was revealed that an unexpected increase in income tax revenue helped to mitigate the deficit.
City budget director Laura Larsen reported that Baltimore collected $42 million more in income tax revenue than originally expected. Ultimately, the city ended the year with $66 million more in revenue streams than had been planned. Income tax revenue, collected at the state level, is distributed to localities based on a specific allocation formula. This unexpected boost in revenue paints a brighter picture than earlier forecasts, which had predicted challenges due to potential job cuts during the Trump Administration.
Despite the better-than-expected income, Larsen cautioned that the city could still face fiscal challenges in the next two budget years, especially if income tax revenues experience declines linked to shifts in the job market. Earlier in the fiscal year, Baltimore City implemented various financial controls, including spending freezes, tighter overtime regulations, and restrictions on credit card access for most agencies.
However, some departments nonetheless exceeded their budgets, primarily due to high overtime costs. The Baltimore Police Department went over budget by $47.5 million, while the Fire Department’s overspending amounted to $38.5 million. Other departments, including Recreation and Parks and the Sheriff’s Office, overshot their budgets as well, with excesses of $5.6 million and $3.4 million, respectively.
Economist and CEO of Sage Policy Group highlighted the need for careful financial management considering potential federal downsizing and continued high overtime costs. A spokesperson for Mayor Scott noted that the surplus from income tax would factor into plans to address agency deficits and ongoing multi-year financial commitments.
Baltimore is also preparing for the eventual depletion of federal American Rescue Plan Act (ARPA) funds, which previously contributed $641 million to the city’s budget. There are efforts underway to replace ARPA funding through the Opioid Restitution Fund, while the city seeks alternatives to retain skilled staff hired through these funds.
The city aims to take a cautious approach to future revenue projections, emphasizing the importance of maintaining solid fiscal management instead of assuming continuous growth. In light of these circumstances, Mayor Brandon Scott has proposed a new budget totaling $4.6 billion aimed at addressing an $85 million deficit.
The proposed budget includes a $7 million increase to the mayor’s office, increasing its staff count to 118, aligning with the governor’s office. This rise in the budget is partially attributed to escalating costs and a need for enhanced public safety investments. However, taxpayer advocates have criticized the city’s financial decisions, arguing that spending billions without an improvement in services is not a wise strategy. Critics of the proposed budget also raise concerns about potential fee increases, which the mayor intends to implement alongside regulatory updates to help manage the deficit.
Mayor Scott’s budget seeks to allocate substantial funding to vital areas including youth services, public safety, clean neighborhoods, and equitable development, all while claiming a commitment to balance the budget without raising city property or income taxes. The new fiscal plan will be subject to review and voting by the city council before it is finalized.
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Additional Resources
- Baltimore Sun: Baltimore Deficit Eases
- Wikipedia: Baltimore
- Fox Baltimore: Critics Slam Baltimore Plan
- Google Search: Baltimore budget deficit
- WBAL TV: Baltimore City Budget Deficit Plan
- Google Scholar: Baltimore Budget
- CBS News: Maryland Budget and Tax Deficit
- Encyclopedia Britannica: Baltimore budget
- WBAL: Mayor’s Strategy to Close Deficit
- Google News: Baltimore City budget
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BALTIMORE STAFF WRITER The BALTIMORE STAFF WRITER represents the experienced team at HEREBaltimore.com, your go-to source for actionable local news and information in Baltimore, Baltimore County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the Baltimore Book Festival, Preakness Stakes, and Artscape. Our coverage extends to key organizations like the Baltimore Chamber of Commerce and Visit Baltimore, plus leading businesses in shipping and healthcare that power the local economy such as the Port of Baltimore and Johns Hopkins Medicine. As part of the broader HERE network, we provide comprehensive, credible insights into Maryland's dynamic landscape.
