Dorchester County and eight Maryland cities and towns could lose 20% of some of their state aid if they do not file overdue audit reports by Saturday, Oct. 31, according to the state’s Office of Legislative Audits. Two of the towns are now so far behind that the auditors have flagged them to the legislature’s staff for possible repeal of their charters.
The nine are Dorchester County, the City of Hyattsville and the towns of Eagle Harbor, Fairmount Heights, Federalsburg, Greensboro, Indian Head, Lonaconing and Westernport. Each “may lose this funding if the fiscal year 2024 reports are not filed by October 31, 2026,” the office wrote in its annual review of local government audits, dated Sept. 17 (page 8). The list reflects filings as of that report; a government that has filed since would no longer face the cut.
The penalty is new. Under a 2024 law, a local government that goes two calendar years past its audit deadline has 20% of its state highway user revenues and disparity grants withheld, and the cut stays in place until the audit is filed, according to the Department of Legislative Services’ fiscal note on Senate Bill 747. Highway user revenues pay for local roads. Withheld money goes back to the state, and payments can resume if the audit is filed in the same year, the note says. This fall is the first deadline the penalty applies to.
How much is at stake depends on each government’s aid. When the bill passed in 2024, legislative analysts estimated 20% of Dorchester County’s highway and disparity aid at $1,188,886 a year, at fiscal 2025 aid levels, and 20% of Hyattsville’s highway aid at $153,537 (fiscal note, Exhibit 1). Current amounts were not in either document.
Two towns flagged for charter repeal
Eagle Harbor has not filed audits for fiscal years 2023 through 2025, and Lonaconing has not filed for 2022 through 2025, the report says. Missing three years in a row gives the Department of Legislative Services’ executive director “reasonable cause to suppose that the municipality is no longer actively operating under its charter, which could cause the municipality to have its charter repealed,” the auditors wrote. The office has reported both towns to the executive director.
Who else is behind
Statewide, 22 local governments had not filed their fiscal 2025 audits by the office’s April 30, 2026 cutoff, 13 of them also behind for earlier years, and 16 more filed late, the report says. Of 221 audit reports due, the office found 55 local governments out of compliance with its audit guidelines, accounting or auditing standards, or state law.
Indian Head’s place on the list was first reported by TheBayNet.