There has been much anticipation for the fiscal year 2026 state budget release — and for good reason. Headlines over the last several months have continued to remind us of the looming deficit and questions have intensified about what comes next.

With the governor’s budget officially introduced, state legislators, analysts and the like will now all descend and deep dive line by line. The governor’s budget is a thoughtful approach as it relates to local government and understanding of the everyday challenges we face — and we also urge all of our partners in governance to continue to consider the long-term challenges ahead.

As the voice for the 160 municipal local governments, let us be clear: Maryland’s municipal revenue system is long overdue for a major overhaul.

For more than five decades, the framework for municipal revenue raising has largely remained unchanged yet the challenges, demands and services continue to compound on local leaders. In fact, the last substantial revision to Maryland’s municipal revenue structure occurred in 1967 .

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Since then, local governments have relied on a narrow set of revenue sources — chiefly property taxes; a small portion of income taxes in which municipal leaders do not have the authority to set rates for their own residents; and limited state funding, mostly in the form of highway user revenue funds. Local governments maintain upwards of 80% of road miles — on average, 6-9% of municipal budgets are state funded.

The current reality is an existing revenue structure that is outdated, inefficient and increasingly inequitable for some of our most vulnerable populations we all aim to protect. While property taxes remain the cornerstone of municipal revenue, they are increasingly insufficient in meeting the costs of modern governance, especially as we face challenges such as aging infrastructure, climate goals and increased expectations of municipal services.

Property taxes disproportionately affect homeowners in areas with high property values, which often include historically marginalized communities. Maryland municipal property values are 13% higher than its unincorporated counterparts and it results in higher taxes, creating financial strain for individuals, particularly those on fixed incomes or in gentrifying neighborhoods. This dynamic can lead to displacement, rising inequality and community instability. It’s a formula no leaders want to contribute to.

Despite our revenue challenges, the solution lies in our strength — Maryland’s municipalities are mighty economic hubs — and in fact, contribute far beyond what one might expect to the state’s revenue structure.

The data speaks for itself — and our ask is different than what you may expect after seeing such significant numbers. Municipalities are unique, diverse and each with its own vision of how, when it comes to revenue. We recognize the challenge our state faces, and we will not add to the battle ahead. It is long past time for municipalities to have enabling authority.

It is clear that a diverse set of revenue sources is crucial for long-term stability and outcomes — for both our cities and the state’s long-term financial health. Municipalities remain the pulse points of Maryland where her most diverse, vibrant communities gather, celebrate and thrive. We are the economic hubs where Maryland must invest, grow and support to meet its own goals for our collective future.

It is Maryland’s decade and we must commit to lifting all Marylanders, together.

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