On March 4, Legislative Director Kevin Kinnally testified before the Budget and Taxation Committee in support of HB 392 – Budget Reconciliation and Financing Act of 2026 with amendments.
The BRFA shifts tens of millions of dollars in new, ongoing obligations onto county governments while limiting formula-driven State support. Taken together, these provisions place growing pressure on county budgets amid economic uncertainty, federal funding instability, and limited local revenue flexibility.
Speaking on behalf of county governments, Kinnally connected the plan’s cost shifts and funding reductions to increased pressure on property taxes and local services. Most counties already operate with little remaining flexibility in their local income tax structures. When costs shift to counties or formula funding is reduced, local governments must either cut services or rely more heavily on property taxes — costs that ultimately flow through to homeowners and renters.
MACo’s testimony raised concerns about several provisions that would increase county financial exposure or weaken existing funding commitments.
Pension Cost Shift – The BRFA shifts approximately $39 million in new retirement costs to counties in fiscal 2027, with analysts recommending shifting the full increase, roughly $78 million annually. Combined with nearly $100 million in pension cost shifts enacted last year, counties could assume more than $170 million in new ongoing obligations across two budget cycles.
Disparity Grant Reduction – The BRFA cuts Disparity Grant funding by $27 million in fiscal 2027 and freezes the program for three years. Combined with existing statutory caps, funding would fall $84 million below the formula-driven level designed to support counties with weaker tax bases that demonstrate strong local tax effort.
Community College Funding Cap – The BRFA limits annual growth in the State share of the Senator John R. Cade community college funding formula to 3% through fiscal 2029. The cap would reduce the expected fiscal 2027 increase by roughly $21 million, shifting additional pressure onto county governments and potentially student tuition.
Behavioral Health Program Mandate – The BRFA creates new county obligations tied to implementation of court-ordered behavioral health treatment programs, potentially requiring counties to reimburse the State for escalating costs. MACo urged lawmakers to address this policy through standalone legislation and full fiscal review rather than through budget reconciliation.
Local Health Department Funding – The BRFA technically implements the statutory core public health funding formula, but offsets that investment by reducing discretionary salary support, leaving many county health departments with flat or reduced total funding.
MACo also highlighted concerns about a proposal to expand allowable uses of the 9-1-1 Trust Fund, which supports county and Baltimore City emergency communications systems. Counties appreciated the amendments offered during the House and Senate hearings to remove that provision from the BRFA.
Counties remain committed to working with policymakers on balanced solutions. However, ongoing cost shifts and reductions in formula support are placing a growing strain on county budgets and essential local services.
MACo and county leaders are prepared to work with state policymakers on all these
issues, and other considerations, as part of a responsible balanced budget plan. MACo hopes that state leaders recognize further cost shifts or disproportionate reductions to county programs would compound existing strain and undermine essential local services.
SB 284’s cross-file, SB 284, was heard in the Budget and Taxation Committee on March 4. Kevin Kinnally testified in support of this bill with amendments.
More on MACo’s Advocacy:
