Maryland’s legislative Spending and Affordability Committee adopted recommendations Thursday to cut state spending next fiscal year and pad its reserve accounts to protect the state from Trump administration policies.
The recommendations come as fiscal leaders project Maryland will face an estimated structural deficit of $1.2 billion next fiscal year and an overall cash shortfall of just over $1.5 billion.
While a new Board of Revenues estimate presented last week kept projections relatively the same, the General Assembly’s Fiscal and Policy Coordinator David Romans says new student enrollment data may provide some financial relief.
Maryland public school enrollment dropped 7,411 students compared to a year ago – a roughly 1 percent decrease – while English Language Learners dropped 4 percent.
“That is a category that has grown I think every year, except for maybe the Covid year, for about 15 years. And it was very surprising to see the magnitude of that drop,” he told lawmakers.
Additionally, there was a 9 percent decrease in very low-income students, known as compensatory education.
Because of these enrollment drops, Romans is anticipating the state will spend $265 million less in aid in fiscal year 27 – starting July 2026 – than they were previously forecasting.
This also means the state will have more funding for its ambitious public education transformation plan known as the Blueprint for fiscal year 28, but it will still need to use just over $1.5 million in General Fund revenues for the first time to cover the program.
As far as recommendations, Romans suggested lawmakers commit to cutting the $1.2 billion structural deficit in half, meaning the General Assembly will need to find $600 million of ongoing savings during the budget process come January.
The nonpartisan Department of Legislative services reports the state’s budget challenges largely reflect the negative impact of Trump administration policies and Blueprint costs surpassing planned estimates.
Federal job cuts have weakened Maryland’s economy, contributing to a March 2025 revenue write-down of more than $1 billion over the fiscal 2025 through 2030 period.
President Trump’s “One, Big Beautiful Bill Act” alone will increase state spending by about $100 million annually and reduce taxes paid by businesses by more than $350 million over the next two years.
Romans recommended lawmakers pad its reserves to combat unpredictable policies on trade, federal employment, and government services, including maintaining the state’s Rainy Day Fund at a balance of at least 8% of the General Fund.
Since the federal government also appears less likely to provide disaster assistance in the future, Romans says the state should maintain a combined balance of at least $15 million in its Catastrophic Event Account and State Disaster Recovery Fund.
The recommendations encourage keeping annual general obligation bond authorization the same next year, maintaining the current level of state jobs – only filling critical positions – and increasing transportation funding by $50 million to anticipate lack of federal support.
Committee Chair and Democrat State Sen. Jim Rosapepe (D-Prince George’s and Anne Arundel Counties) believes modest spending cuts, as well as stockpiling in anticipation of more federal funding slashes, is the way to go.
“I think the theme of these recommendations is we got to be prudent, we got to be conservative. And that's why I'm supporting it. The reality is that we got problems because we got a big problem in Washington,” he said.
However, Republican Delegate Jiff Ghrist (R-Eastern Maryland) worries the recommendations do not go far enough.
“If we don't make the appropriate cuts to the structure of government that matches the deficit, by making these one-time cuts, the only thing we're really doing is kicking the can down the road,” Ghrist said.
Ghrist and two of his Republican colleagues voted against the recommendations, but they were ultimately adopted and will be considered by the full General Assembly come January.
