Maryland could be in for some belt-tightening in an effort to contain a series of projected budget shortfalls, including a $1.2 billion gap forecast for the fiscal 2027 budget.
The joint Spending Affordability Committee Thursday adopted a recommendation to cut the projected deficit in half by cutting ongoing spending by $600 million.
“I think the theme of these recommendations is that we’ve got to be prudent,” said Sen. Jim Rosapepe (D-Prince George’s and Anne Arundel), the joint committee’s Senate co-chair and the vice chair of the Senate Budget and Taxation Committee. “We’ve got to be conservative, and that’s why I’m supporting it.”
The committee also adopted a recommendation to leave the state’s rainy day fund untouched. Using the fund — even a portion of the fund — would be a one-time move.
The current balance of 8% of general fund revenues is about $800 million more than the 5% required by law. But analysts and lawmakers note that bond rating agencies are already skittish about the state dipping into the account, and worry the state’s higher-than-required reserves are not enough compared to peer states.
Another recommendation called on the governor to fill only “mission critical” vacancies and increase others to meet turnover goals. The recommendation stopped short of asking Moore to implement a hiring freeze.
Thursday’s vote fell along party lines, with the committee’s three Republicans rejecting the recommendation. Del. Jefferson L. Ghrist (R-Upper Shore) suggested the recommendations did not go far enough.
“Obviously we’re very concerned about our structural deficit,” said Ghrist. “If we don’t make the appropriate cuts to the structure of government that matches the deficit by making these one-time cuts, the only thing we’re really doing is kicking the can down the road to a time and place where, looking at the graph — it’s going to be much worse than it is now.”
House Minority Whip Del. Jesse T Pippy (R-Frederick) and Sen. Johnny Ray Salling (R-Baltimore County) also voted against the recommendations.
The governor is not required to follow the recommendations of the committee but typically does.
Lawmakers and Gov. Wes Moore (D) start the 2026 legislative session next month facing a nearly $1.6 billion structural budget deficit. Three quarters of that — about $1.2 billion — is a cash shortfall.
The forecast released by the committee last month was a gut punch following a fiscally trying 2025 legislative session.
The news since that November meeting has not improved the state’s fiscal situation in a significant way.
A week ago, the Board of Revenue Estimates projected general fund revenues for fiscal 2027 would inch up from $27.102 billion in September’s estimates to $27.111 billion in December — an increase of just $9.1 million.
Legislative budget analysts pointed to “weakness in the sales tax” collections as well as uncertainty related to federal fiscal policies.
“The reality is that we’ve got problems because we got a big problem in Washington,” Rosapepe said Thursday. “We had … the longest government shutdown in history just a month ago. We may have another government shutdown in January. We’re never sure when the Trump administration is going to come through with money that it is supposed to provide us from the federal government.
“We saw what they tried to do with SNAP benefits during the shutdown,” he said. “So the risks caused by the Trump administration to the people of Maryland and to the budget of Maryland are huge.”
To start the year, legislators and the governor faced a $3.3 billion deficit for fiscal 2026, which started July 1. A final spending plan used one-time cuts, fund transfers and $1.6 billion in tax increases to plug that hole.
When it was all said and done, the compromise budget agreed to by the House and Senate closed the deficit and was supposed to leave the state in a good place for fiscal 2027, with what was expected to be about a $300 million surplus.
The solution was meant to get the state through the final year of the term. But lawmakers and Moore knew then — as now — that tougher challenges awaited starting in fiscal 2028 through fiscal 2030.
In those years, the state would see the structural deficit explode, driven by increased spending required by the Blueprint for Maryland’s Future education program.
And while the out-year gaps projected a year ago are smaller, they increase from $1.5 billion in fiscal 2028 to $3.4 billion in fiscal 2030.