Gov. Wes Moore announced his state budget plan Wednesday, which balances a $1.5 billion projected shortfall through some major cuts, as well as drawing on state reserves.
The governor’s proposed budget for Maryland in fiscal year 2027 tops out at $70.8 billion, a 0.8 percent increase over the current fiscal year, or what Acting Budget and Management Secretary Jake Weissmann calls a “low-growth budget” — the smallest increase in modern history.
The budget proposal does not include any tax or fee increases.
Moore says the state’s projected deficit is attributable to policy decisions under the Trump administration, calling out Maryland’s loss of 25,000 federal jobs in the past year, as well as the financial implications of the president’s “One, Big Beautiful Bill Act.”
“We know the numbers, and Maryland is going to be forced to do more with less,” Moore said. “Being fiscally responsible and being fiscally disciplined does not mean we stop investing in what matters most to the people of the state of Maryland, but it does mean that we're going to be more targeted. We're going to be more data driven about how we invest.”
While his budget includes some record investments in law enforcement, public education and energy programs, it also includes about $1.8 billion in spending cuts, cost shifts and transfers.
Without any balancing, financial leaders anticipate Maryland’s current budget habits would lead to a $1.5 billion cash shortfall next fiscal year — $1.2 billion of that is what’s known as a structural deficit, meaning without permanent cuts or increased revenue, state finances would continue operating at that magnitude of a loss.
In December, lawmakers adopted recommendations to cut that structural deficit in half, putting state leaders on alert to find at least $600 million in targeted cuts.
Weissman says the governor’s budget exceeds expectations in that regard, bringing the structural deficit down from $1.2 billion to $526 million.
Some of the most significant cost reductions are proposed within the Developmental Disabilities Administration (DDA), resulting in $150 million in savings for the state.
“We believe the approach we are taking is a balanced approach. We are not wedded to it as the only solution, and we look forward to continuing to engage and work with the community on preserving the DDA program,” Weissman said.
Moore’s proposal also increased state salaries by an average of 2 percent, but this raise is less than initial projections, resulting in about $120 million in state savings.
While the Moore administration reached collective bargaining agreements with six of the state’s public sector employee unions, state government’s largest union, AFSCME, rejected the deal and hopes lawmakers will propose higher raises when reviewing the budget.
Other budget saving tactics include no provider rate increases for employees within the Department of Health, Department of Human Services and Department of Education, increasing the local government portion for some cost-sharing categories and decoupling from certain federal tax code provisions.
In addition to structural cuts, Moore is also proposing drawing down on state reserve accounts and moving some money around to make ends meet.
His budget would take $145 million out of the Rainy Day Fund — designed as a state savings account in the event of a recession, abiding by the Department of Legislative Service’s (DLS) recommendation to maintain the account balance at 8 percent of the General Fund.
Moore is also proposing pulling $322 million from the state’s capital budget, $292 million from the Strategic Energy Investment Fund (SEIF) — a fund designated to promote clean energy projects — and $187 million from the state’s Fiscal Responsibility Fund.
The governor says his spending priorities are centered around three fundamental pillars: “protecting our people, making Maryland more affordable and increasing Maryland’s economic competitiveness.”
“This is the time to show that despite the chaos, and frankly the erratic policies that are coming from Washington DC, that in Maryland, we can focus on predictability and stability and growth,” Moore said.
Republican lawmakers are not as enthusiastic about the budget, criticizing the administration for not making more structural cuts.
“I’m disappointed that instead of confronting the long-term structural issues that are driving future deficits, the Administration has chosen to shift money between funds. Marylanders expect a responsible, sustainable budget that addresses the real challenges facing our state—not one that postpones difficult but necessary decisions,” said ranking Republican member of the Senate Budget and Taxation Committee Sen. Paul Corderman (R-Frederick and Washington Counties) in a statement.
“Marylanders are still waiting for tax relief, and this budget doesn’t deliver,” said Senate Minority Whip Justin Ready Justin Ready (R-Carroll and Frederick Counties) in a statement. “After passing the largest tax increase in state history, working families and small businesses were hoping for a different approach. Instead, they’re being asked to absorb higher costs with no relief in sight.”
The budget goes to the Senate first this year for consideration.
Lawmakers in both chambers will have the ultimate say in any changes before the budget heads back to the governor for signature.
