ANNAPOLIS, Md. (September 16, 2025) — The Maryland Office of the Comptroller released its fiscal year 2025 closeout report on September 12, revealing an unassigned General Fund balance of $459.8 million as of June 30, the end of the state fiscal year. This figure, representing available funds not earmarked for specific uses, stems from a combination of $270.5 million carried over from prior balances and an estimated $189.25 million in surpluses tied to fiscal year 2026 projections.
Bureau of Revenue Estimates analysts attributed the positive outcome to steady revenue growth despite federal policy shifts. Sales tax and withholding income tax collections rose faster than in fiscal year 2024, with overall revenues surpassing March estimates by $520.7 million, or 2.1 percent. Key drivers included robust tax year 2024 filings, particularly higher-than-anticipated payments from high-income earners, alongside record unclaimed property remittances to the state.
“Despite the economic headwinds we are facing with federal policy and spending changes, this Closeout Report demonstrates the strength of our revenue projections, revenue collection, and fiscal management,” Maryland Comptroller Brooke E. Lierman said. “This thorough accounting of the state’s finances provides an additional layer of transparency and can aid the General Assembly and Governor with budget planning for FY27.”
The report underscores Maryland’s ongoing commitment to fiscal stability, bolstered by its AAA bond ratings reaffirmed earlier in 2025 by Fitch Ratings and S&P Global Ratings. These top-tier assessments, held by the state for decades—Fitch since 1993 and S&P since 1961—signal investor confidence in Maryland’s ability to meet debt obligations amid economic variability. Moody’s Investors Service, however, downgraded Maryland’s rating from Aaa to Aa1 in May 2025, citing structural budget pressures from education mandates under the Blueprint for Maryland’s Future and potential federal spending cuts. Despite the Moody’s action, the state maintained its prized triple-AAA status from the other two agencies, which helped secure favorable terms for a $1.7 billion bond sale in June 2025.
To buffer against revenue swings, particularly from non-wage sources like capital gains, the report highlights the Revenue Volatility Cap’s role. Enacted in 2018 as part of broader tax reforms, this statutory mechanism limits reliance on volatile income streams that fluctuate with stock market performance or economic cycles. It requires depositing excess non-wage revenues—those exceeding benchmarks set by the Board of Revenue Estimates—into dedicated reserves rather than immediate spending. For fiscal year 2025, the Comptroller’s Office transferred $382.3 million under the cap, split evenly at $191.2 million each into the Rainy Day Fund and the Fiscal Responsibility Fund. These reserves, totaling about $2.9 billion statewide as of mid-2025, provide a cushion for downturns, such as recessions or policy disruptions.
The cap’s formula calculates a baseline for non-wage income based on historical averages adjusted for wage growth, ensuring budgets do not overdepend on one-off windfalls. In practice, it has shielded Maryland from boom-bust cycles; for instance, during fiscal year 2024, a smaller $18.3 million deposit helped stabilize projections amid slower growth. Analysts note the tool’s effectiveness in promoting long-term planning, especially as federal changes—like the One Big Beautiful Bill Act, or OBBB, projected to reduce state revenues by $189.3 million over fiscal years 2026 and 2027—loom larger. Maryland plans automatic decoupling from certain OBBB provisions for tax year 2025, preserving an estimated $5 million or more in fiscal year 2026 inflows.
For Southern Maryland communities in Calvert, Charles and St. Mary’s counties, the surplus translates to tangible support through shared state revenues and targeted programs. These jurisdictions, home to about 450,000 residents reliant on a mix of federal jobs at sites like Naval Air Station Patuxent River and local agriculture, benefit from formula-based distributions. In fiscal year 2025, local governments received roughly 15 percent of state sales tax collections, aiding road maintenance and school funding in areas like Prince Frederick and La Plata. The Rainy Day Fund’s bolstering could fund emergency responses to coastal erosion along the Chesapeake Bay or workforce training at the College of Southern Maryland, which serves over 20,000 students annually.
Historical context reveals the surplus as a return to pre-pandemic norms after years of federal aid-fueled booms. Fiscal year 2021 and 2022 closed with $2.5 billion and $2 billion unassigned balances, respectively, driven by stimulus checks that boosted consumer spending and tax receipts. Fiscal year 2023 dipped to $555 million, and fiscal year 2024 settled at $479 million unassigned after assigning $581 million for operations. The 2025 figure reflects resilience: personal income tax hit $12.3 billion, up 4.5 percent from estimates, while corporate taxes added $1.1 billion amid steady business activity.
Challenges persist, however. Federal policies, including potential cuts to defense spending affecting Patuxent River’s 23,000 jobs, could trim fiscal year 2026 revenues by up to 1 percent. The Board of Revenue Estimates will convene September 25 at 2 p.m. to refine forecasts, incorporating the closeout data and OBBB impacts. Comptroller Lierman emphasized collaboration among state financial leaders—herself, Treasurer Dereck Davis and Budget Secretary David Brinkley—in navigating these uncertainties.
“It is always good news to finish the year with a positive fund balance and strong reserves,” Lierman added. “There was a lot of collaboration across our key Maryland financial institutions that went into the successful planning and execution of fiscal year 2025’s financial strategy. That collaboration will be key to ensuring our continued financial strength and navigating the myriad of uncertainties ahead.”
The full report, available on the Comptroller’s website, details breakdowns by revenue source and fund allocations. It serves as a baseline for Governor Wes Moore’s fiscal year 2027 proposals, due in January 2026, amid debates over education funding and tax reforms.