County reports FY25 second‑quarter finances as state tax restructuring could cut Caroline revenue by about $1.1 million

Deputy County Administrator Daniel Fox and Stacy Stewart, grant coordinator, told commissioners Tuesday that Caroline County’s fiscal year 2025 second‑quarter (through December) revenue and spending are broadly in line with expectations, but they cautioned that proposed state tax changes and shifting state budget obligations create uncertainty for next year’s county budget.

Fox said the county’s core revenue lines are tracking as expected in mid‑year. “Right now, overall, we're at a 90% collection rate” for property taxes as of the December close, he said. He also reported recordation tax receipts are “about 76% collected” and noted income tax receipts are at roughly 35% of the annual total at year‑to‑date (a timing pattern he called typical because larger payments arrive later in the fiscal year). On charges and reimbursements, Fox highlighted an unusually large balance in an agency reimbursement account that reflects insurance settlements and reimbursements that will be spent down as claims and repairs are processed.

On spending, Stacy Stewart said most departments are near or below the 50% midpoint expected at year‑to‑date after six months; she identified seven departments slightly above that benchmark, often because of annual upfront insurance or audit payments (for example, general services and central shop liability insurance) or coding issues that staff are correcting. The county reported a largely positive net position at midyear: “we're still about 12.9 to the good,” Fox said; he and Stewart added that the number is roughly consistent with the same point in last year’s fiscal cycle.

Commissioners and staff spent considerable time on the interaction between county finances and pending state actions. Fox summarized a Bureau of Revenue Estimates analysis the governor released of a proposed state income tax restructuring: the proposal would remove itemized deductions at the state level and broaden the standard deduction, shrink taxes for many lower‑income filers while raising liabilities for higher‑income filers. Fox said the county’s estimate based on the bureau’s model shows Caroline County could lose about $1.1 million in income tax receipts under the governor’s proposal, while some wealthier counties would see large increases (the staff presentation cited a Montgomery County projection of approximately $75 million additional income tax receipts in the same model). Fox summarized the statewide net effect in the bureau’s table as a roughly $139 million net increase in state revenue but with an uneven county distribution.

Commissioners also reviewed other state budget pressures staff described: the governor’s proposed budget included what staff called net reductions and cost shifts to counties (Fox cited $283 million in state reductions and roughly $143 million in additional county liabilities across programs in the governor’s package), and the board discussed prior increases in the county’s mandatory education contribution ($2.2 million last year and a projected additional $1.8 million this year, according to staff). Fox and Stewart said those shifts — combined with uncertain final outcomes in the legislature — make the FY26 local budget a moving target.

What happened next: county finance staff said they will finalize property tax figures and deliver a preliminary FY26 estimate to the commission next week; Fox and Stewart said they are continuing to adjust internal coding errors, reconcile late grant reimbursements and monitor state budget and tax actions that could require adjustments to the county’s revenue projections.

Ending: Commissioners directed staff to continue the FY26 schedule, correct coding issues, and return with updated revenue projections once the county has the latest state guidance and final property tax numbers.