Howard County operates on a July 1 - June 30 fiscal year.  By Charter, the County is required to have a balanced budget.

The County budget is the plan that identifies the sources of County revenue and establishes the ways those County funds may be expended. The budget consists of legislation to enact the operating budget and the capital budget, which are described below, as well as several related bills and resolutions. The County's budget includes all taxes, fees, and other revenue sources for the County and some affiliated agencies.  Expenditures may be made only as the budget allows.

The County budget has two parts:  capital and operating.

The capital budget deals mainly with structures that have long useful lifespans like buildings, bridges, roads, and parks. The capital budget may also include the furniture, equipment, and supplies that are needed to start up operations at a new facility. The projects in the capital budget are sometimes paid for with current revenues called PAYGO (Pay As You Go). Sometimes projects have special funding sources, for example the fire tax or state open space money, and sometimes projects are paid for with borrowed money, generally bonds including general obligation bonds (GO Bonds).  Often a project will have a mix of funding sources.

The county operating budget covers the day to day activities of the county (and related agencies). It includes, for example, salaries, the cost of supplies and services, rent, bond and loan repayments, grants to the County's partners, and employee benefits.  It is mostly paid for with tax money, derived mainly from the property tax and the local income tax.  Most of the money covered by the operating budget is in the General Fund, but the budget also contains a variety of special funds, for example the Shared Septic Systems Fund and the Water and Sewer Operating Fund, all of which have special sources of revenue and are used for restricted purposes.