LA PLATA — Maryland’s budget problem is likely to land on county budgets in 2027, the head of the Maryland Association of Counties told Charles County officials on Oct. 27, and counties may not learn how hard until the governor’s budget is released in January.
“It always does,” MACo Executive Director Michael Sanderson said when asked whether a state fix would squeeze county governments.
Sanderson and MACo President MC Keegan-Ayer, a Frederick County Council member, made their annual stop in La Plata. Only two commissioners, Thomasina O. Coates and Amanda M. Stewart, were in the room, so the board lacked a quorum and took no action. Commissioner President Reuben B. Collins II joined online near the end.
How the state got here
Sanderson said the state balanced its current budget in April but knew it faced a $2.5 billion problem in fiscal 2028, the budget the governor must submit in January and lawmakers must pass by April. State budget officials have since told agencies to plan around a deficit closer to $3 billion.
He listed several causes:
- Education costs come due. The state has paid its share of the Blueprint for Maryland’s Future from the Education Trust Fund, which built up a cushion before it was needed. That cushion is nearly gone, so the state must pay cash, about $1.5 billion of the gap, he said.
- Weak revenue. Overall revenue is growing only about 1% to 1.5%, with income tax forecast at about 2%, far below the 4% to 5% growth the budget once relied on.
- Federal job losses. MACo’s working estimate is 25,000 to 30,000 direct federal job losses among Marylanders, plus contractors and businesses that served them.
- Federal cost shifts. Changes in last year’s federal budget law moving Medicaid and food assistance costs to states will likely cost Maryland a few hundred million dollars.
On a general fund of about $29 billion, Sanderson said, that adds up to a problem big enough to require a bit of everything: trimming or stretching out parts of the Blueprint, leaner agency budgets, flat or declining aid formulas, possibly some school construction to win votes, and new revenue.
He floated the sales tax as a likely yardstick. Maryland’s rate is 6%, and each penny raises roughly $1 billion, he said. He was careful to say that was not a prediction, only the benchmark other ideas may be measured against.
Bills sent to the counties
Counties’ real worry is cost shifting. Sanderson said the state has found it easier to send counties a bill than to cut a popular program. When teacher pension costs ran higher than expected, the state began invoicing counties for half, roughly $90 million the first year, $50 million the next and about $55 million expected this year. Counties also pay about 90% of the cost of the state’s property assessment office without having any say in how it runs, he said.
Local road money is also at risk. Sanderson said highway user revenue for local roads and bridges is heading toward a cliff unless lawmakers act this year, and the state is turning down hundreds of millions of dollars in ready school construction projects for lack of cash.
Charles officials pushed back. Stewart said transportation is the county’s top issue and that Southern Maryland has not seen a significant state transportation investment in 20 to 25 years, arguing the state can shift priorities even when money is tight. That morning the board had sent a letter urging the state not to stall the Southern Maryland Rapid Transit project.
A senior county staff member said Charles keeps paying the state’s invoices while the quality of state services falls, citing problems with income tax distributions, a pre-K invoice and the state’s handling of a senior tax credit that the county was blamed for. Another official asked whether the state, by spending local tax dollars on state programs, risks running afoul of its constitutional duty to balance its own budget.
Waiting on January
Asked whether counties would know what is coming by January, when Charles budget staff start building the next county budget, Sanderson said that if the past is any guide, the answer is no. State budget officials have no reason to reveal cuts weeks early, he said, so counties likely won’t see specifics until the budget bill is introduced.
Sanderson said popular local aid streams, about $100 million each for police aid, community colleges and local health departments, are unlikely to be eliminated. But he predicted formulas that were supposed to grow 5% will be flat or slightly down, a hardship for counties and community colleges.
On housing, the commissioners said they are wary of state bills that take zoning authority from local officials and treat every county the same, pointing to a recent local fix the board made for residents of common ownership communities as proof counties can solve their own problems. Sanderson said he expects a renewed fight over housing density and local approvals in 2027. Keegan-Ayer, whose MACo term is ending, urged commissioners to bring residents’ stories to Annapolis, saying lawmakers respond to real people more than to association staff.
The General Assembly convenes in January. Commissioners Gilbert O. Bowling III and Ralph E. Patterson II were absent.
