How Do I?
What is Baltimore's budget?
The City’s budget has two major components—operating funds, which cover the everyday activities and services of the government, and capital funds, which cover the large and long-term infrastructure projects of the City. The Bureau of Budget and Management Research (BBMR) oversees the City’s operating budget, managing the budget process—providing analysis and recommendations to the Mayor—and operating expenditures–overseeing each agencies spending to help maintain a balanced budget. The Department of Planning oversees the City’s capital budget, preparing an annual six-year plan of capital projects based on agency requests that is reviewed by the Planning Commission. You can learn more about the capital budget here.
The Fiscal 2021 budget is $3.87 billion, with $3.05 billion in operating and $823 million in capital funds.
How is the operating budget funded?
The operating budget has three fund sources: General Fund, Enterprise Funds, and Grant Funds.
The General Fund is where most funding comes from and is what BBMR works most closely on. These are the funds that the City has most flexibility is maneuvering to meet needs or requests. The majority of the General Fund comes from property taxes (50.2% in Fiscal 2020) and income taxes (18.6% in Fiscal 2020).
Enterprise Funds come from utility fees, such as water, wastewater, and stormwater, which have specific user fee rates that are established by the Director of Public Works. These funds are self-supporting in that the fees received from users go right back into the service and General Fund dollars are not used.
Grant Funds come from federal, State, or private grants. These funds can only be used for specific programs and services and are often time limited.
What are “fixed costs” and how do they impact the City’s ability to fund services?
In general, “fixed costs” are expenses that the City is required to pay by law or contract and cannot be easily reduced in the short-term. The City’s fixed costs include contributions to employee pension systems, health care for retirees, the State-mandated Maintenance of Effort (MOE) contribution to Baltimore City Public Schools (BCPS), payment of debt service on loans and bonds, workers compensation claims, insurance and liability costs, utilities, and fees for solid waste disposal. Fixed costs make up approximately 44% of the General Fund costs, which limits the amount of funds that the City can shift across services to meet funding needs or requests.
However, the City is regularly working to reduce the proportion of funds that are allocated for fixed costs in order to open up more funds. For example, in Fiscal 2019, the City rebid the health care and prescription drug coverage contracts and saved nearly $35 million. These savings could go back into the General Fund to be used for other purposes.
What are utilities and how do they relate to the City’s budget?
The City has Water, Wastewater, and Stormwater Utility Funds, also known as enterprise funds. The Water and Wastewater Funds were established in Fiscal 1979 and the Stormwater Fund in Fiscal 2014. The Director of Public Works is required to establish water and wastewater (sewer) rates charged to users that are enough to keep the systems self-supporting.
Almost all utility fund revenue comes from user fees, such as monthly water bills; the City sells water to the surrounding counties, including Baltimore, Anne Arundel, Harford, Howard, and Carroll Counties. Baltimore and Ann Arundel counties utilize and pay into the City’s Wastewater Fund. The Stormwater Fund allows for the City to budget and plan for the capital and operating costs associated with the City’s stormwater management system; it also funds the City’s mechanical street sweeping operations. These funds are self-supporting, which means that the services provided under these funds do not use City General Fund dollars.
Learn more about the utilities from the Department of Public Works.