City Council passes $235M budget, cuts new positions and tenure-based pay increase; mayor ponders veto

Yahoo

07-06-2025

Frederick's City Council on Thursday passed a Fiscal Year 2026 budget after two months of budget meetings, cutting just over $3 million from the mayor's $238 million budget proposal.
The council removed several new positions totaling around $900,000; $700,000 for a tenure-based pay increase for 269 city employees; $700,000 for a nonprofit emergency fund and more from the budget, totaling around $3.2 million.
The council made the modifications to the amended budget Mayor Michael O'Connor put forward on May 14.
The approvecd budget includes transferring more city funds to the city's Department of Housing and Human Services to account for projected losses in federal grants, more funds for new city equipment and vehicles, and a $20,000 immigrant legal fund for grants for local nonprofits serving the immigrant community.
It also includes another $2.5 million for a West Side Regional Park community center.
O'Connor objected to the council's cuts and said he would decide by early next week if he would veto the budget. He has two weeks to do so.
The council approved the budget with the cuts 3-2.
Council Members Donna Kuzemchak, Ben MacShane and Katie Nash were in favor.
Council Members Kelly Russell and Derek Shackelford voted against the budget plan with cuts.
Kuzemchak cited the tax-rate cut the council passed May 15 as the main reason for cutting items from the budget.
The cut reduced the city's property tax rate by about 2.5 cents, from 73.05 cents to 70.55 cents per $100 of assessed property value — about a 3% decrease.
MacShane previously proposed a larger cut of 5 cents per $100 of assessed property value, but Kuzemchak proposed splitting the difference, which she said was a compromise to the mayor.
Kuzemchak said the city has left millions of dollars unspent at the end of each fiscal year, despite budgeting to spend most of it.
Unused funds
Unused funds the city of Frederick has had left over at the end of every fiscal year between fiscal year 2016 and 2024. The calculation to find this number was taken from subtracting the rainy day fund allocation for each year from the unassigned figure for that year in the city's annual comprehensive financial report. Council Member Donna Kuzemchak explained how to calculate these figures and has described these funds as unused. She said this money should be given back to taxpayers.
'There's literally a 20- to 30-some-million-dollar ending balance at the end of the year,' she said. 'When I see money that's not being spent, in my mind, that money needs to go back to the people who are paying it.'
Director of Budget and Administration Katie Barkdoll said the ending balance at the end of every year was accumulated 'since the beginning of time' and often accrued because of things like unfilled positions accounted for in the budget.
Russell has previously said she supported the mayor's budget.
Shackelford encouraged his fellow council members to take the mayor's offer to meet with them to talk about the budget.
O'Connor argued there was no need to cut items from the budget, as his budget proposal — even with a tax-rate cut — would still be balanced by revising their estimates for revenue.
Kuzemchak sent The Frederick News-Post a list of the cuts. They included:
* A $700,000 nonprofit emergency fund meant to help nonprofits in the event they lose federal grant funding
* Around $700,000 for the tenure-based pay increase for 269 city employees from the general fund
* Around $240,000 from the city's water and sewer fund, golf course fund, airport fund, parking fund, storm water fund, and rental operations fund that would also have gone to the tenure-based pay increase
* A new superintendent of facilities maintenance position at around $175,000 and the new vehicle for the position at almost $90,000
* A new community and urban design planner position in the Planning Department at around $130,000
* A new deputy chief of staff position in the mayor's office at around $175,000
* A new economic development specialist position at around $120,000
* The current vacant senior assistant director position in the Department of Housing and Human Services at just over $175,000
* $225,000 from the police department's expenditures
* Almost $50,000 from removing City Council staff positions and upgrading the current legislative assistant to legislative manager
* Reducing a Rainy Day Fund requirement by $380,685
* $249,561 for an increased use of fund balance to offset property tax reduction
Nash said it's time to pause all new hires, with the federal government cutting back on grants.
O'Connor argued that he proposed adding fewer positions than in previous years.
The city has gone from 683 full-time equivalent positions in the Fiscal Year 2022 budget — a metric that includes full-time positions and part-time positions that add up to full-time positions — to having 768 in the Fiscal Year 2025 budget.
O'Connor's most recent amended budget proposal would have called for the addition of six positions, two of which were meant to assist the City Council. All of those were cut from the budget.
He said the council has asked for ways to improve the speed of the Planning Department, and adding a new position is a way to help things move forward.
The new superintendent of facilities management position was necessary, O'Connor said, especially as the city plans shortly to start using its new 60,000-square-foot police headquarters.
The economic development position would help support small and emerging businesses, he said.
In an interview on Friday, O'Connor said that not moving forward with the tenure-based pay proposal could get the city sued.
The proposal was aimed at giving pay increases to longer-tenured employees in the city, as currently many are paid at similar or lower rates to those in the same position with less tenure, O'Connor has said.
'I do feel strongly that addressing a payroll system that could result in the city being sued is something that I'm going to take seriously,' he said. ... 'It is within the realm of possibility that an employee who doesn't see the city addressing that with the tools that we have available could seek a judicial remedy, most likely through the Equal Employment Opportunity Commission.'
The commission is a federal agency aimed at making sure employees are not discriminated against based on race, color, religion, sex, transgender status, national origin, age, disability, genetic information or other factors, according to its website.
Kuzemchak, MacShane and Nash have repeatedly voiced their opposition to the compensation measure.
Kuzemchak has said that city employees already get merit and inflation-based yearly pay increases.
O'Connor said he was most surprised by the cuts from the police department budget.
Kuzemchak previously said the police department could not explain the need for the entirety of the budget in O'Connor's proposal at $50.8 million.
If O'Connor did veto the budget, the council could overturn his veto. However, as the charter is written, it would require all five council members to vote to overturn the veto.
Nash said the requirement was a 'mistake' the council made when changing the city charter in September 2024.
The council intended to have the five-member overturn requirement for when it grows to seven members after elections in November, but not before then.
In the same council meeting on Thursday, the council unanimously voted to change the requirement to overturn a veto to two-thirds of the council — which would be four out of five in the current council and five out of seven in the next council.
However, state statute dictates that this change cannot take effect until 50 days after the council passes it.
If O'Connor did veto the council-amended budget and the council failed to overturn his veto, his most recently amended budget, at $238 million, would become the city's budget.
'I appreciate that, for the most part, as a body — as a city — there's so much that we agree on,' Nash said during the meeting. 'Sometimes, that does get lost in the process when we're going back and forth.'