Proposed Baltimore budget plugs $60M hole; mayor’s office says it’s ‘very strong’ to absorb Key Bridge costs

Baltimore Mayor Brandon Scott’s proposed $4 billion budget plan will lean on parking revenues and trims to vacant positions across the city to fill a $60 million deficit, leading administration officials to say they are in a “very strong” position to absorb potential costs presented by last week’s collapse of the Francis Scott Key Bridge.

The fiscal year 2025 plan, unveiled Monday, includes more than $3.4 billion in operating expenses and $654 million in capital costs. The proposed budget, which still faces a lengthy vetting process by the Baltimore City Council, represents a modest decrease in overall spending from fiscal year 2024 when city officials approved a $4.4 billion budget. The budget makes no change to the city’s current property tax rate.

Months before the preliminary budget was finalized, city budget officials warned the City Council that Baltimore was facing a potential $107 million structural deficit, the difference between revenue raised by the city and the cost of delivering services.

On Monday, however, budget officials said the deficit its actually lower — around $61.9 million. Officials said that difference was realized through property tax revenues, estimates for which came in higher than anticipated for the southernmost swath of the city, and the city’s tab for the state-mandated Blueprint for Maryland’s Future, which increased by only $3 million for fiscal year 2025 rather than the $15 million bump that was anticipated.

To cover the $61.9 million hole, Baltimore is relying heavily on cuts to vacant positions across city agencies and a shift in funding for city police positions from Baltimore’s general fund to a state revenue source that helps pay for civilian positions. During a media briefing Monday, Deputy Finance Director Bob Cenname said $13.3 million would be saved by eliminating 89 vacant positions, 55 of which are in the city’s police department. City officials said there would be no cut to the total number of positions in the department because state funding would pay for civilian jobs.

Scott’s administration has pushed for more civilian hires in the police department to address vacancies which have been a persistent problem. Cenname said the latest shift will free up sworn officers from doing work that can be done by civilians.

Another $20 million in savings will come from cuts across other agency budgets that administration officials said would not affect city services. Cuts will come from areas like the Health Department where Cenname said the budget did not reflect that the city school system has picked up the cost of providing some in-school health services.

Scott’s budget also calls for $6.2 million of the deficit to be filled with additional revenue from parking. About $2.6 million would come from increased parking enforcement in residential zones using license plate readers, while $3.2 million is expected to be raised with the restoration of parking penalties. Those penalties, due after parking tickets go unpaid, have been suspended since the coronavirus pandemic.

Administration officials said it is too early to know the financial impact on the budget from the collapse of the Key Bridge, which plunged into the Patapsco River on Tuesday after it was hit by a massive container ship. The Port of Baltimore has been blocked to cargo vessel traffic since, and a salvage operation to clear the channel only recently began. Six people were killed in the collapse, only two of whom have been recovered from the site.

Laura Larsen, the city’s budget director, said city finance officials are “actively tracking costs” associated with the collapse to see what may need to be absorbed into the fiscal 2024 budget, which expires at the end of June, and what may be recurring costs for the fiscal year 2025 budget. Budget officials are treating the collapse as they would any expense reimbursable by the Federal Emergency Management Agency, she said. FEMA has not yet authorized such reimbursements.

Bryan Doherty, Scott’s spokesman, said it is still too early to estimate the financial impact of the collapse on the city.

“[Fiscal year 2024’s] preliminary budget puts us in a very strong fiscal position to tackle any future costs over the next couple months,” he said.

Scott’s proposed budget must be considered by the City Council which has until June 26 to adopt a final plan. Before then, the budget proposal will first be considered by the mayor-controlled Board of Estimates. Residents will be invited to weigh in at two taxpayers’ nights, the first of which will be held on April 17. The City Council will receive the budget on May 6. Budget hearings are expected to start in late May.

Last year, the City Council exercised new budgeting power for the first time in a century, making $12 million in amendments to Scott’s budget plan. The new power, which allowed the council to make cuts and additions to the budget, was approved by voters via a charter amendment in 2020. Previously, the council had bene unable to reallocate any money that was cut, and instead had to rely on the mayor.

Amendments to the 2024 budget included the reallocation of funding to buy new firetrucks, purchase new city surveillance cameras and fund a vocational training program. The council also made a $1.7 million temporary cut to the Baltimore Office of Promotion and the Arts amid concerns about its ability to manage city festivals and other arts programming.

Baltimore’s fiscal year 2024 budget was heavily impacted by the cost of the state Blueprint for Maryland’s Future, a state program approved in 2020 that is slated to fund a variety of programs including increasing teacher salaries, putting more counselors and health professionals in schools and giving extra support to schools with many poor students.

The state funding formula for Blueprint required a significant jump in fiscal year 2024 compared to 2023 for Baltimore’s local share — an extra $79.4 million. That was $67 million more than budget officials had initially projected.

During a news conference to unveil the city’s budget last year, Scott called the news a “gut punch,” and said the city could not sustain that level of funding without a change to the funding formula.

A change has not come, however Baltimore’s Blueprint obligation will actually drop next year, officials said Monday. The city will owe $389 million, $3.2 million less than the previous year.

Larsen said the city’s share of the funding stabilized because Baltimore remained in the same category for what’s known as the Education Effort Index. That index offers a credit based on the relative wealth of a jurisdiction. Asked whether the Blueprint payments will be sustainable for Baltimore moving forward, Larsen said the city is “comfortable” that it can pay for the coming fiscal year.

“What I think would be a challenge is if the city dropped into that next tier,” she said of the index. “If the credit we were receiving through that program declined again, then we would be in another situation where we’d have a large year-over-year increase for schools.”