Frederick City Council members seek budget cuts for potential decrease in tax rate

Yahoo

13-05-2025

Some Frederick City Council members are looking to cut parts of the proposed fiscal year 2026 budget for a possible property-tax-rate cut.
The cuts could reduce the budget proposed by Mayor Michael O'Connor by $8.3 million or more, according to City Council President Katie Nash.
O'Connor's current budget proposal asks for $238 million in expenditures.
The council is slated to consider the budget on Thursday. Nash said the vote on the budget and tax rate would likely be delayed, however.
Nash and Council Member Ben MacShane both said they would support cuts with the possibility of a tax-rate decrease, though discussions over what could be cut are ongoing.
'We need to be aware of the fact that its hard for many of our residents to cover their expenses here in Frederick,' MacShane said in an interview on Monday.
Nash, MacShane and Council Member Donna Kuzemchak are looking at possible cuts to a proposed $8.5 million reserve fund the mayor proposed to combat cuts to federal grants, as well as a $1.8 million proposal to increase the pay of some city employees based on tenure.
Nash said she was looking to cut $6.5 million of the $8.5 million reserve, and put that $6.5 million toward decreasing taxes.
Nash and MacShane said they were interested in making the cuts to allow a decrease in the tax rate, but Kuzemchak had reservations.
Nash in an interview on Monday said the cuts could amount to a tax cut of 5 cents per $100 of assessed property value or more.
The city's tax rate is currently 73.05 cents per $100 of assessed property value, and the mayor's proposed budget maintains this tax rate.
For a property worth $100,000 under the current property tax rate, a property owner would pay $730.50 in city taxes.
With a 5 cent cut, the same property owner would pay $680.50 in property taxes to the city, a $50 decrease.
This would be the first time the tax rate decreased since the city dropped the tax rate from 73.2 to 73.05 cents per $100 of assessed value in fiscal year 2014, according to the Frederick County website.
Kuzemchak said in an interview on Monday that she is also looking at cuts, though she is unsure of whether the saved money should contribute toward a tax cut or a reserve.
She said the cost of cutting the tax rate does not just affect this year. If the rate does not go back up in the future, it amounts to millions in lost revenue for the city.
Everything from roads to parks to libraries is affected, Kuzemchak said.
While Kuzemchak described the amount saved by city taxpayers in the event of a potential tax cut as small, Nash said it is important to consider that property values have been going up.
Council Member Kelly Russell wrote in an email to the News-Post on Monday that she supports the mayor's current proposed version of the budget.
Council Member Derek Shackelford did not respond to a request for comment on Monday.
Allen Etzler, a spokesman for the city, said O'Connor has heard council members' concerns and, in response, is drafting a budget amendment that he expected to share this week.
THE CUTS
The mayor proposed an $8.5 million unallocated reserve as part of the budget.
Frederick Director of Budget and Administration Katie Barkdoll said the fund would automatically be put forward in the event the city loses funding for a project or service.
With potential cuts in federal grant funding under the budget-slashing administration of President Donald Trump, the city could lose millions in funds typically directed toward large-scale projects, like an effort to redesign downtown sidewalks, or toward programs that assist the unhoused and provide meals to children.
Nash said she wanted to look at other cuts across the budget, such as the inclusion of funds to hire six new city employees, with the idea of storing some money away in a separate reserve fund with certain limitations on it.
This could be a fund that requires council discussion approval to be spent, she said.
This is in contrast to the mayor's reserve fund that Kuzemchak, Nash and MacShane have described as spendable at the mayor's discretion.
O'Connor has previously said he would be willing to go to the council to discuss priorities for the reserve fund in the event of federal grant cuts.
Kuzemchak, MacShane and Nash previously voiced their opposition to a tenure-based pay increase proposal for city employees.
The $1.8 million measure aims to increase the pay of around 269 city employees, with a focus on alleviating what Barkdoll described as 'compression' in the city's pay scale.
City Director of Human Resources Karen Paulson said in a March meeting that the city has about 640 full-time and about 100 part-time employees.
This 'compression' in this instance refers to some employees being paid less than or close to the rate of an employee tenured for a shorter period of time.
The pay proposal would see longer tenured employees paid more, and is meant to bring tenure into employee pay, Barkdoll said.
Nash previously said it was a bad year to budget for proposals like this. MacShane previously said he did not support a pay increase based only on tenure.
Kuzemchak said employees are already paid well and are set to receive other pay increases.
The budget separately proposes increases of up to approximately 5.5% for all city employees, accounting for merit and inflation-based adjustments.
'I adamantly support the restructured pay scale that begins to restore equitable pay across [a] wide and varied spectrum of our employees,' Russell wrote in an email on Monday.