Maryland required an additional $25.6 billion to cover its bills at the end of fiscal year 2024, resulting in a taxpayer burden of $11,100 per taxpayer, according to a report from the nonprofit Truth in Accounting. The Chicago-based organization ranked Maryland 41st out of 50 states in its annual Financial State of the States analysis, assigning the state a D grade for its finances.
The report, which examined audited financial statements from all states, found that Maryland had $37.2 billion in assets available against $62.8 billion in obligations. This shortfall stemmed largely from unfunded retirement liabilities, including $25.3 billion in pension benefits and $12.1 billion in retiree health care benefits. Bonds accounted for $26.1 billion of the total bills, offset partially by $13.8 billion in debt related to capital assets. The state’s pension liability increased by $3.3 billion in 2024, the largest jump in a decade, due to revised estimates reflecting potential higher future payments from factors such as longer life expectancy, faster payroll growth, earlier retirements.
Truth in Accounting calculates the taxpayer burden by dividing the net shortfall by the estimated number of state taxpayers. For Maryland, this equated to $11,100 each, placing it among 25 states labeled as sinkhole states, where obligations exceed available resources. States with burdens between $5,000 and $20,000 receive a D grade under the organization’s scale. In contrast, sunshine states like North Dakota reported surpluses exceeding $60,000 per taxpayer.
The analysis highlighted risks from fading federal aid, projecting Maryland could lose $5.3 billion—about 8 percent of its primary government expenses—if funding reverts to 2019 levels adjusted for inflation. Federal grants surged during the pandemic but have since declined, adding pressure to state budgets already strained by rising costs and inflation. “More and more states are dragging their feet on financial reports – and taxpayers are paying the price,” Sheila A. Weinberg, founder and CEO of Truth in Accounting, said in a statement. “Whether it’s due to a shortage of trained accountants or confusing government accounting rules, the public deserves better.”
Maryland’s State Retirement and Pension System, which administers benefits for over 420,000 current and former state workers, reported a net pension liability increase tied to updated assumptions on salary growth, which roughly doubled in some cases. The system’s actuarial valuation as of June 30, 2024, detailed these adjustments, emphasizing the need for accurate long-term projections. Statewide, public pensions held a funded ratio of about 80 percent in 2024, up from prior years but still contributing to overall debt.
This fiscal picture aligns with ongoing budget challenges in Maryland, where lawmakers faced a widening structural gap projected to reach levels not seen in two decades. In November 2024, analysts forecasted an enormous deficit, prompting discussions of cuts and adjustments across programs. By January 2025, Gov. Wes Moore and the General Assembly confronted one of the toughest challenges in recent history, with Senate President Bill Ferguson warning of potential reductions to maintain priorities.
The state’s $67 billion fiscal 2026 budget, signed into law in May 2025, included over $1.6 billion in new taxes and fees to address shortfalls, amid warnings of a possible Maryland recession if federal cuts materialized. Ferguson highlighted risks from federal actions, noting Maryland’s high exposure. Senate leaders prepared for up to $500 million in additional cuts by February 2025.
These pressures extend to local economies in Southern Maryland, where state funding supports infrastructure and services in counties like Calvert, Charles and St. Mary’s. Efforts to bolster the state’s economy have linked transportation improvements to deficit relief, with investments in roads and transit seen as key to growth. A May 2025 downgrade of Maryland’s bond rating by Moody’s drew criticism from Treasurer Dereck Davis, underscoring concerns over long-term liabilities.
Truth in Accounting’s methodology uses full accrual accounting to capture long-term obligations, differing from cash-based budgets that often exclude future costs. The organization argues that all states except Vermont require balanced budgets, but officials shift expenses to future generations by underfunding pensions and other benefits. Nationally, states reported $2.2 trillion in assets against $2.9 trillion in debt, with $832 billion in pension shortfalls and $514 billion in other post-employment benefits.
Maryland’s pension system returned 9.8 percent in fiscal 2024, exceeding benchmarks, but volatility remains a concern. The system’s quarterly report for December 2024 showed a -1.2 percent return, net of fees. Fitch Ratings noted Maryland’s debt and pension liabilities at 9.7 percent of personal income in 2024, above the states’ median.
The report urges reforms to align public pensions with private-sector standards under the 1974 Employee Retirement Income Security Act, which exempted governments. Truth in Accounting, founded in 2002 by Weinberg, a certified public accountant, promotes transparent reporting to empower citizens. The organization analyzed 2024 data for most states, using 2023 figures for seven where reports were delayed.
In Southern Maryland, where communities rely on state allocations for education, health and public safety, these fiscal strains could influence local planning. Lawmakers staked positions ahead of the 2025 session, with Moore emphasizing balance amid debates. As federal support wanes, Maryland’s ranking underscores the need for sustainable budgeting to avoid deeper burdens on residents.
