The trickle down effects of the Trump administration’s cuts to the federal workforce have arrived on Baltimore’s doorstep.

After weeks of warnings that the city may come up short on income tax revenue as a result of layoffs to federal employees, city budget officials announced Wednesday that Baltimore now expects to receive $5.9 million less in income tax for the coming fiscal year. Further reductions, officials said, could be coming.

Mayor Brandon Scott’s proposed $4.6 billion budget relies heavily on property and income tax revenue, and until now, the city had anticipated receiving almost $494 million in income taxes. The $5.9 million reduction, made upon recommendation from state finance officials based on federal layoffs, is on the top end of $3 million to $5 million city finance officials previously estimated was at stake.

Baltimore, like other Maryland jurisdictions that are a hub for federal employees, is grappling with lost revenue as a result of cuts enacted by Trump’s Department of Government Efficiency, officially the U.S. DOGE Service. City officials know of at least 12,000 federal employees who work in Baltimore, but there are untold more who commute to other locations or work from home in the city.

The impact of cuts so far has been difficult to measure because employees who have been put on administrative leave are not yet eligible to collect unemployment, city finance officials told the City Council last month. City officials will rely on estimates as they pass the city’s budget for the fiscal year that begins on July 1.

Scott has proposed covering the $5.9 million shortfall, which is part of more than $18.4 million worth of changes made to the budget since its introduction last month, by dipping into the city’s fund balance. That $383 million pot includes the city’s $167 million rainy day fund, which can only be used on a restricted basis, and other money set aside as a cushion. The rainy day fund would not be touched as part of Scott’s current plan, but officials have also said that cannot be ruled out if federal grant funding is cut.

Changes to the mayor’s spending plan were outlined Wednesday as the city’s mayor-controlled spending board voted to advance the budget proposal, the first step in the approval process. The plan next heads to the Baltimore City Council, which will begin holding hearings in late May. The council must vote on the budget, with or without amendments, before the end of June.

The spending board approved the plan by a vote of 3-0, with Council President Zeke Cohen and Comptroller Bill Henry abstaining. Cohen said he was deferring a decision on the plan until after it can be considered by the council, but made clear that he strongly objects to the mayor’s plan to increase fees and fines to help close an $85 million structural deficit.

Scott’s proposal would increase landfill tipping fees, the cost of ambulance rides and a fee on taxis and other ride-sharing services. A yet-to-be-specified set of other fines and fees would generate an estimated $6.5 million in revenue.

“It’s a really concerning time to be raising fines and fees,” Cohen said, noting his disappointment that the plan had not been adjusted in response to his previous statements.

“Hear you loud and clear with regards to the pressure that our residents are feeling,” said city Budget Director Laura Larsen.

Larsen and Scott have argued that a property tax increase, which is not included in the spending plan, would be worse for residents.

Separate from the proposed budget, Scott has pledged property tax relief, announcing plans in his annual State of the City address to reduce the levy to less than $2 for every $100 of assessed value by 2028. Residents currently pay $2.248.

Henry abstained from the vote, arguing Scott’s proposal doesn’t do enough to invest in libraries, cultural institutions or zero-waste initiatives. Henry said removing himself from the vote would allow him to “more objectively” lobby the City Council for changes to the spending plan.

During a news conference after the vote, Scott defended his proposal, listing dozens of cultural institutions and initiatives set to get money under his plan.

The City Council will next hold a Taxpayers Night May 15 at 5 p.m. for residents to weigh in on the budget.