Draft FY 2025–2026 plan avoids tax hikes, trims spending, and prioritizes equity across all wards. This summation is based on Town Manager Larry DiRe’s report to the town council, Monday, April 7, 2025.
With the federal infusion of American Rescue Plan Act (ARPA) funds now in the rearview, Chestertown’s draft budget for fiscal year 2025–2026 reflects a shift from pandemic-era stimulus toward steadier, leaner governance.
Passed in 2021, ARPA enabled Chestertown to fund a wide range of community programs and local infrastructure. With those resources now fully expended, the Town is focusing on a balanced budget that preserves essential services without increasing property taxes.
The draft budget includes no new staff positions or layoffs and proposes a 3% cost-of-living increase (COLA) for employees earning under $100,000. Staff making above that threshold will not receive a COLA this year, a decision that yields approximately $7,000 in savings. Several leadership roles—including town manager and town planner—are currently filled at lower salaries than their predecessors.
Town officials are also bracing for a potential spike in health insurance costs. Preliminary estimates suggest increases between 18% and 32%, or up to $97,000 over current levels. While state-mandated FAMLI Act contributions were deferred until 2027, these costs loom on the horizon.
Although no property tax rate increase is proposed, the town expects a modest $99,952 bump in property tax revenue due to rising assessments, according to the State Department of Assessment and Taxation. Still, the budget reflects flat growth overall. Key development sites, including 98 Cannon, the Armory, and Radcliffe Meadow, are unlikely to generate new taxable improvements in the coming fiscal year.
To help close the budget gap, the town is proposing a 3% increase in water and sewer rates and revising development fees to match those of its contracted plan review and inspection services.
The town’s marina debt continues to be a long-term financial obligation. Originally financed with a $2 million loan in 2012, the general fund covers principal payments while marina revenue pays the interest. The FY 2025–2026 general fund cost is $127,595, with the original bond maturing in 2032 and a USDA renovation loan extending to 2058.
This proposed draft budget does not include any tax increase but does propose development fees be brought into line with those of our contract plan review and inspections service, as well as a three-percent (3%) increase in water and wastewater services.
Even with constrained revenues, the town has carved out $45,000 in new investments, including:
- $14,000 for tree maintenance
- $12,000 for a trail survey connecting Coventry Farms to Carpenter Park
- $8,000 for park signage
- $8,000 for bleachers at Gateway Park
- $3,000 for a residential composting program
To balance this new spending, the draft budget proposes $88,500 in cuts that do not affect service levels. These include reductions to retiree benefit payments, holiday bonuses, out-of-state travel, and visitors center staffing. The net savings of $43,000 help maintain equilibrium.
Notably, community groups that previously benefited from ARPA grants will not receive direct financial support this year. Instead, the town is offering free grant writing and capacity-building assistance through the Upper Shore Community Development Partners—an effort to help these organizations remain sustainable beyond federal aid.
Final decisions rest with the Mayor and Town Council, who are expected to take up the draft in the coming weeks.
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