11.13.24 – WCBM
Maryland lawmakers were warned on Tuesday of an impending $2.7 billion budget deficit for the next fiscal year, a significant shortfall that will force difficult decisions on spending cuts or tax increases.
According to new estimates, the state’s budget picture is deteriorating faster than previously expected. David Romans, an independent state fiscal analyst, described the gap as “an enormous” one, driven by growing expenses and years of temporary fixes to cover slow revenue growth.
The projected deficit is even worse than the one the state faced during the Great Recession in 2008-2009. Without any changes, Maryland will only be able to cover 84% of its planned spending through the 2030 fiscal year – “the worst situation we’ve seen in the last 20 years,” Romans said.
The bleak forecast doesn’t even account for potential federal funding cuts or job losses under the incoming Trump administration, which analysts and lawmakers warned could further erode Maryland’s fiscal position.
The state’s job growth has also lagged, with payroll data showing a gain of only around 5,800 jobs in the 2024 calendar year. Private sector employment has even slightly decreased in some figures, an unusual occurrence outside of a recession.
This dire budget outlook threatens the priorities of Maryland’s new Democratic governor, Wes Moore, who has emphasized fiscal responsibility while pursuing major new initiatives. Moore has set a “very, very high bar” for new taxes, instead balancing budgets through spending cuts, reserve drawdowns, and borrowing.
However, analysts recommend drawing down about half of the state’s $2.5 billion rainy day fund and shifting some capital projects to bonds to save money in the short term. Even with these steps, lawmakers will still need to find an additional $1.2 billion to balance the next budget.
Advocates are pushing for a “Fair Share for Maryland Act” that would raise taxes on high-earners and corporations while providing tax relief to lower-income residents. But this plan, which could generate $1.6 billion annually, faces an uphill battle in the state legislature.
Another major driver of Maryland’s long-term budget woes is the Blueprint for Maryland’s Future education reform plan, which is projected to have $2 billion in unfunded costs starting in 2028, growing to $3.2 billion by 2030.
As Maryland confronts this daunting fiscal challenge, policymakers must weigh painful spending cuts against raising new revenues – decisions that will shape the state’s future for years to come.