Maryland budget leaders were given a reprieve on Wednesday with the release of new financial projections that put the state at $355 million in the green.

The Maryland Board of Revenue Estimates (BRE) — responsible for projecting state income — met for the final time this fiscal year, which ends on June 30.

The $355 million surplus — compared to a $70 billion state budget — contributes to an overall General Fund revenue growth of 5.5 percent over last fiscal year.

General Fund revenue sources mainly include major tax categories like personal income tax, corporate tax, sales tax, etc. — those sources of income represent roughly 40 percent of Maryland’s revenue.

An unexpected boom in estate and inheritance taxes make up almost three-fourths of the $355 million figure, which are paid on the estate and assets of a deceased person.

“We believe this is a one-time benefit,” Director of the Bureau of Revenue Estimates Robert Rehrmann said, calling it a volatile revenue source. “We're not really carrying that through in the forecast. So if you take out that one-time windfall, if you will, the estate tax forecast is roughly level.”

While the extra cash comes as a small sigh of relief for state officials, it's now up to lawmakers to decide what to do with the funds.

The small excess comes as Maryland is expecting a $1.5 billion cash shortfall next fiscal year.

The governor and the General Assembly are constitutionally required to present a balanced budget, meaning state leaders are required to close that estimated gap by either raising revenues or cutting spending.

For FY27, Gov. Wes Moore is proposing making up the difference with some “cost contaminants” measures and pulling from other funding sources like the Rainy Day Fund — the state’s savings account — and the Strategic Energy Investment Fund (SEIF) — designated to promote clean energy projects.

The cost contaminants include a $150 million cut to the Developmental Disabilities Administration (DDA) through various administrative policy changes.

Moore’s proposed budget does not include any tax or fee increases.

The governor announced his proposal in January, and the Senate Budget and Taxation Committee has been fine-tuning it ever since.

The committee is expected to release its version of the budget on Friday.

At a media availability on Tuesday, Senate Budget and Taxation Committee Chair Guy Guzzone (D-Howard County) said negotiations around DDA cuts and SEIF transfers will come down to the wire.

“I'm sure people aren't going to be completely happy because that's just the nature of it. But everyone is involved — the governor's office, House and Senate and all the advocacy folks have been involved in discussions in this,” Guzzone said.

State leaders don’t appear keen on using the one-time $355 surplus to offset any of these proposed cuts.

“I think in an effort to prepare for the future, having a little higher fund balance, surplus, would be better,” Guzzone said, noting he feels having some change socked away would be helpful to combat any federal funding volatility and agency deficiencies.

At a media availability Wednesday morning — prior to the official release of the Board of Revenue Estimate numbers — Moore also did not reference using the extra change to circumvent cuts.

He instead spoke on generally bolstering the Rainy Day Fund, investing in economic growth measures and providing energy and housing relief.

“If it comes in better than expected, that's great, and I think it shows the resiliency of Maryland's economy, particularly with the kind of headwinds we've gotten from Washington. But my fundamental principles are not going to change,” he said.

Last fiscal year, Moore’s major budget proposal to close a $3.3 billion structural deficit included a new tax on information technology (IT) and data services.

That tax was expected to bring in just over $482 million dollars for the current fiscal year, but it is grossly underperforming.

The IT tax has reportedly brought in just around $35 million for the first half of fiscal year 26.

The BRE is now projecting the tax to bring in $112 million for the state by the end of June – less than one-fourth of what it was hoping for.

“All of the large companies that you would expect to report this tax are reporting this tax. Their numbers are in, and so based on their amounts being in, we are very confident in this new estimate that has been adopted,” Maryland Comptroller Brooke Lierman said during the BRE meeting.

The weak earnings from the tax this year led the BRE to drop its overall sales tax revenue estimates for next fiscal year by $239.5 million.

That change, combined with a couple of pick ups in other tax categories, resulted in a net $108 million decrease in the revenue forecast for next fiscal year compared to the BRE’s December 2025 estimates.

“That comes as no surprise to me, or to our Caucus members, as we warned of this very thing last year. The tech tax has succeeded only in depressing the tech economy and stunting business growth in Maryland, but it has failed in raising revenue. Before we leave Annapolis this year, we should seriously consider repealing it,” said House Republican Leader Jason Buckel (R-Allegany County) in a statement.

In December, the board projected fiscal year 27 revenues would grow over the current year by 1.4 percent — now, the $108 million dip puts the state at negative 0.3 percent growth.

Those numbers are subject to change — and reducing revenues by $89 million is only a drop in the bucket compared to over $27 billion in total income — but it’s the first time the board has projected that the state will actually bring in less revenue next fiscal year compared to the current year.

Regardless, fiscal leaders presented a strong front on the overall fiscal health of the state.

“Maryland's fiscal strength has always come from a combination of discipline and forward looking investment by maintaining strong reserves while continuing to support economic growth,” said Acting Budget and Management Secretary Jake Weissmann. “The state remains well positioned to navigate uncertainty and preserve the strong fiscal reputation it has built over many years.”

As lawmakers solidify plans on how to close next year’s $1.5 billion shortfall, a fiscal year 28 deficit of around $3 billion is already looming.

Close to $1.7 billion of that figure alone is from costs needed to cover the implementation of the Blueprint, the state’s ambitious public education transformation plan.

“It is a challenge. I mean, there's no question about it,” Guzzone said when asked about plans to balance the budget in the outyears. “It costs a lot to do important, big things, and that's just the nature of it.”

He says legislative leadership is already planning meetings to discuss the fiscal turbulence ahead.