About
The capital budget is a detailed plan covering the construction, renovation, or acquisition of physical assets like schools, libraries, recreation centers, and bridges. The County funds its capital program in line with the General Plan and master plans for sectors such as parks, human services, education, water and sewer systems, waste management, libraries, and public safety facilities.
The total capital budget for Fiscal 2026 is $368.1 million.
How does the Capital Budget work?
Capital Revenues
General Obligation (GO) Bonds are a primary funding source for the County's capital projects. The ability to issue new GO bonds is limited by existing authorized debt, which requires both current and future revenues for debt service payments. GO debt capacity has also been constrained by other loans and financing sources in recent years, including various low-interest loans for the Ellicott City Safe and Sound projects.
Over the past five years (Fiscal 2022 to Fiscal 2026), the average authorized General Obligation (GO) debt has averaged around $78 million. One of the critical debt affordability indicators, debt service payments as a percentage of annual revenues exceeded the 10% policy ceiling in recent years before gradually coming down to below. Incurring more than adequate level of debt could have several implications:
- Increase the County’s debt burden or long-term liabilities
- Jeopardize the County’s AAA credit rating
- Reduce the availability of funds for other services in the operating budget if debt service payments continue to grow as a share of the annual budget
Capital Expenditures
The County funds capital projects mainly through 20-year General Obligation (GO) bonds backed by its full faith and credit. Any new debt becomes a long-term liability, requiring annual principal and interest payments in the operating budget for 20 years. When available, cash PAYGO is used as a cost-saving alternative to debt for infrastructure needs, but it is unpredictable. Other funding sources for infrastructure projects are generally restricted by law to specific project types. In Fiscal 2026, the County fully funded the Board of Education's $100.6 million capital budget request with county funds (GO bonds, transfer tax, school surcharge, PAYGO) and State aid. The County also faces other significant infrastructure needs, including maintaining, renovating, or replacing its aging public infrastructures.
Capital Long-Term Outlook
General Obligation (GO) bonds infrastructure funding requests by all entities in Fiscal 2026 continue to exceed affordable levels, as noted in the Fiscal 2026 Spending Affordability Advisory Committee (SAAC) report. With limited capacity to fund capital projects, the County has to balance the needs for maintaining, renovating and repairing existing infrastructure with those for new capital projects.