Five Things to Watch During Budget Season
Deficits, capital, and consultants; transparency and questions
Even though it’s only February 2025, Hyattsville’s fiscal year 2026 budget season is about to kick off. Currently, the city is in FY 2025, which began July 1, 2024 and ends June 30, 2025. FY 2025 will begin July 1, 2025, with the city council currently scheduled to adopt the FY 2026 budget in June.
Deficit
The number one thing to watch in budget presentations: will staff present a deficit budget? The city council has approved an operating budget with a general fund deficit every year since fiscal year 2021, relying on savings to make up the difference. The budgeted deficit grew from $1.8 million in FY 2021 to a peak of $5.7 million in FY 2024, before shrinking slightly to $4.9 million in FY 2025.
After the record-breaking budget deficit in FY 2024, city administrator Tracey Douglas committed to proposing a balanced budget for the current budget year, only to come back and propose another multi-million dollar deficit. Councilmember Ed Haba (Ward 4) said last year that he wanted to start with a balanced budget proposal in FY 2026, and Councilmember Emily Strab (Ward 2) recently wrote on social media that she plans “to push for a budget that has our expenditures and revenues align without taking on further debt.”
Over the last five years, budgeted expenditures have grown faster than revenues — 44% growth in general expenditures, including debt service, versus 33% for general revenues.
Capital projects
Hyattsville has undertaken multiple ambitious capital projects in recent years, including the budget-busting police headquarters, the yet-to-be-finished teen center, and the renovation of King Park, which was closed for two years. Despite these projects, Hyattsville’s budget process has historically contained no comprehensive reporting on capital spending or projects, unlike neighboring municipalities like College Park. Whereas College Park gave project-by-project breakdowns of capital spending to date as well as identified revenue sources in FY 2025, Hyattsville opted to give a broad overview of capital spending by department and said it would be paid for mostly with unspecified “other sources.”
At a recent city council meeting, city treasurer Ronald Brooks said staff would be making some changes to the capital project portion of the budget book. Route One Finance will be watching for whether that includes transparency on spending-to-date and income sources for future projects.
FY 2024 spending
While a budget is primarily a forward-looking document, Hyattsville’s budget will also be the first time residents see general fund spending and revenue for FY 2024 because the city is still behind on its audits and doesn’t release regular financial data to the public the way College Park does.
Under the usual timeline, mandated by state law, Hyattsville should have completed its FY 2024 audit by October 31, 2024, plenty of time for it to be included as an audited comparison point in the upcoming budget cycle, but the city has yet to even release its FY 2023 audit, due over a year ago. Route One Finance will be looking for the final (unaudited) number on that $5.7 million operating deficit the council approved in FY 2024. Did the city end up spending all that it planned to? And if not, why ask (or approve) such large deficits in the first place?
Consultants
“We continue to invest in consultants.” — Tracey Douglas, city administrator, March 29, 2023
Consultants aren’t made out of concrete, and they don’t have engines. They aren’t capital costs that can be financed and depreciated over time. But that hasn’t stopped the city from compiling a long list of consultant-written reports. According to last year’s budget memo, the city had “over 20 action-ready strategic plans,” even if the actual city “strategic plan” (initially intended for 2022-2026, now for 2025-2030) is still unfinished.
$52,900 for a property tax consultant that apparently can’t find the (publicly available) homestead tax credit data. $80,000 for a financial consultant to produce a financial forecasting spreadsheet without a “specific scenario” and a…unique…way of calculating expenditure increases. $400,000 for a park design with no cost estimate and no funding plan.
Bitcoin, hedge funds, consultants — if it’s an alternative investment with your tax dollars, Route One Finance is watching for it.
Questions
Mayor Robert Croslin has an affection for short meetings. City treasurer Ronald Brooks has asked city councilmembers to put “detailed questions” into emails, rather than answer them in public view. And in my own experience with the city and financial errors, city staff will deny fairly obvious mathematical errors for quite a while and then quietly correct fund balances at the last minute — even when it results in a $7 million decrease in the projected fund balance, which is a pretty big deal when you’re proposing large operating deficits.
Route One Finance will be watching for questions — who asks them, whether they’re allowed to ask them, and whether the answers make sense. It’s not just budget season: city elections are coming up in May.
Other news
Speaking of elections, it’s going to be a busy spring here at Route One Finance, and I invite you to become a paying subscriber. I’d also love to hear what you’d like to see in municipal election coverage — I’ll be focusing on the money, but what do you want to know about your candidates and city finances? Feel free to leave it in the comments or send me an email.
Meanwhile:
State legislators may end up ending Medicaid coverage for some Marylanders if congressional Republicans push more costs onto the states
At least one state legislator wants to postpone Maryland’s paid family leave law — again
Maryland’s Office of Legislative Audits issued an audit of the beleaguered Maryland 529 program and said that while Maryland 529 submitted information about “potential irregularities relating to accounts held by a former senior management employee” to prosecutors in 2015, the agency — which was taken over by the state in 2023 — “had no information regarding the status of the referral”