Maryland’s budget season has come to a close after Gov. Wes Moore signed off on the three-bill spending package Wednesday morning.
The finalized budget authorizes the state to spend just under $71 billion in operating costs next fiscal year, a growth of 0.8 percent over the current fiscal year.
The governor and lawmakers successfully closed a projected $1.5 billion structural deficit, largely through fund swaps and modest cuts — the budget does not include any tax or fee increases.
“Taxes pay for the services and programs that make our great state a great place to live. However, in this current economic climate, we did not do that, in good conscience,” House Speaker Joseline Peña-Melnyk (D-Anne Arundel and Prince George’s Counties) said during the signing ceremony.
In lieu of tax increases, elected officials utilized “cost containment measures,” to close the gap, including cutting the Department of Developmental Disabilities (DDA) budget by $127 million.
Including federal funding, DDA’s budget has ballooned to $3.3 billion in the current fiscal year, doubling its spending in the past five years due to changes in their reimbursement model and an increase in service utilization.
In order for states to receive federal funding for Medicaid waivers, which support individuals with disabilities who are not in a nursing home or institutional care, they must demonstrate that average participant cost does not exceed the cost of care if those individuals were in an institution.
Peña-Melnyk says DDA’s budget growth is at risk of federal noncompliance, which could ultimately lead to the revocation of Medicaid waivers.
“To protect our ability to offer these services and to keep the program healthy and to protect this waiver, we had to take and make those decisions, and it was not easy,” she said. “So this is an example of how we dealt with accountability, and it was difficult, but we did it.”
The budget also provides state employees with a 1.5 percent cost of living adjustment (COLA) instead of 2 percent, saving the state around $120 million.
The budget does include changes to make state employee pay scales more equitable by a small percentage, but the increases fall miles short of what AFSCME Maryland — the largest union in state government — has been asking for.
The governor and legislative leadership tout next fiscal year’s budget as one that will lower costs for working families, pointing to a not-yet-finalized energy bill that is expected to save ratepayers at least $150 a year.
Gov. Moore also mentioned hopefulness around the Protection From Predatory Pricing Act, which has not yet received final approval in either chamber with only days left in the legislative session.
The bill would ban “dynamic” or “surveillance” pricing in Maryland grocery stores, prohibiting them from using personalized data to tailor pricing and requiring that food retailers keep their prices set for at least one business day.
However, questions over how many Maryland stores are actively engaging in dynamic pricing continue to circulate.
“We have seen how this is happening, not just within the state of Maryland, but particularly for a lot of our ‘big box’ retailers, that this is something that has been moved on in other jurisdictions,” Moore said during the bill’s Senate hearing in February, offering to share some data on the matter with lawmakers but not providing any specific store locations.
Moore also pointed to investments in affordable housing and transportation growth within the budget as an additional strategy to improve affordability.
“We are saying loud and clear that choosing between fiscal responsibility and investing in our state is a false choice — that Maryland can and will do both. And because our budget is a lot more than just a lot of numbers on a paper, because it shows who we're willing to fight for with this budget,” Moore said.
While the budget passed with some bipartisan support in both chambers, Republicans are pushing back on the spending plan’s cost-saving measures for Marylanders.
“The majority party has done nothing, pretty much nothing, on affordability,” House Republican Whip Jesse Pippy (R-Frederick County) said during a press conference following the budget signing. “Marylanders demand affordability, and they demand relief. If we cannot deliver that, what are we doing? Why even be here?”
While Pippy voted against the budget, House Republican Leader Jason Buckel (R-Allegany County) voted in favor of it.
“Any budget that's $71 billion has some things in it that you like and some things in it that are really important, and probably has some things in it that you don't like,” Buckel said, adding that it is “not a budget that any Republican ever would have crafted.”
In a statement following the signing ceremony, Senate Republican Leader Stephen Hershey (R-Caroline, Cecil, Kent and Queen Anne’s Counties) called the fiscal plan “an election-year budget that does nothing more than meet the Constitution's requirement to balance it.”
Both House and Senate Republicans sounded the alarm on a looming projected structural deficit of $3 billion in fiscal year 28, the majority of which is due to the lack of a set funding source for Maryland’s recently implemented ambitious education overhaul known as the Blueprint.
“You're going to have to reform the Blueprint. We can't afford the Blueprint — I've said it 5,000 times. I don't understand why my Democratic friends and colleagues can't just admit it,” Buckle said. “We can't afford the Blueprint without massive middle class tax hikes, period.”
Moore did not directly answer if the FY28 budget could be balanced without tax or fee increases, but he said he is focused on ensuring that he does not pass off a structural deficit to his successor.
Budget and Management Secretary Jake Weissmann said making a decision as to what the FY28 budget looks like is “months and months away,” but that conversations between state officials have already begun.
