In December 2024 the Department of Legislative Services reported a historic $2.95 billion General Fund projected shortfall for the State’s Fiscal Year 2026 (beginning July 1, 2025)—greater than any shortfall in at least 20 years including during the Great Recession.
The $2.95 billion projected shortfall (before any budget actions) represents a projected 11 percent operating loss–62 percent of projected State expense for Medicaid or 27 percent of all State aid to local governments including funding for public schools.
Former Maryland Governor Larry Hogan posted the following statement to Facebook on Tuesday, January 14, 2025.
“When we left office two years ago, Maryland was in the strongest fiscal position in its history, with $5.5 billion in financial reserves. As Governor Moore himself said at the time, he inherited a “fortunate financial position.”
Despite our warnings to protect the surplus, this progress has been squandered, and we are being told that tax hikes are on the way again. This is the wrong path for Maryland. We know where it leads–to more people and more jobs being driven out of the state.
Maryland doesn’t need tax hikes to balance its budget. We proved that. In our first budget, we closed a record $5.1 billion structural deficit and put our state back on strong financial footing, helping us to weather the unprecedented challenges of the pandemic. We cut taxes every year by $4.7 billion.
Marylanders deserve leaders who will prioritize fiscal responsibility and economic growth—not a return to the failed tax-and-spend policies of the past.”
1/15/2025: Full budget report can be read by clicking here “Dear Madam Speaker, Mister President, Members of the General Assembly, and fellow Marylanders:
Today, the Moore-Miller Administration introduces our proposal to balance the state budget. Maryland is caught in the middle of two storms.
First, we know that a stark new policy direction from the federal government will have big implications for Maryland’s economy. Second, we are staring down the worst fiscal crisis in two decades. Maryland faces a $3 billion budget gap, the result of both increased state spending and slow economic growth over the course of eight years before I took office.
Our administration did not create the budget hole. But as good stewards of the public trust, we share a responsibility to close it. We have moved in partnership with the people of Maryland and the Maryland General Assembly to pass two consecutive state budgets smaller than that of the previous year – something that hasn’t happened in nearly a decade. Together, our budgets have spent less, cut more, and bent the cost curve. Still, a budget gap years in the making cannot be solved in a matter of months.
Now, we must continue to execute common-sense policies that help get us through these twin challenges and promote pathways to prosperity for all Marylanders, so their hard work is rewarded. Too many families continue to struggle under the weight of rising costs nationwide. Too many young people are moving away because rent and home prices are too high. And while good-paying jobs are growing in our state, I still hear from Marylanders who say opportunity remains out of reach. We must do better – and build a Maryland that honors the great source of our power: the people.
Budgets are strategy documents. And in this year’s budget, we have made our strategy clear. First, we need to prioritize economic growth, because you cannot build a thriving state if we aren’t growing our economy. Second, we need to modernize government to keep pace with the changing dynamics we see across every aspect of our society and deliver services more effectively and efficiently. Third, we need to fix what’s broken in our state’s tax system to make it fairer and simpler.
This proposal realizes each of these three foundational goals. We have identified key areas to strengthen our economy by building out emerging industries of the future, protecting our communities from violent crime, and educating our children. We are making difficult cuts where necessary, reining in spending, tightening our belts, and delaying the implementation of certain mandated priorities to ensure all state programs are sustainable. We have put forward a responsible plan for tax reform that will bring Maryland’s system for collecting state revenue out of the dark ages and ensure that taxes are simpler, fairer, and, for the majority of Marylanders, lower.
Among some of the critical elements in our budget proposal:
- This budget demonstrates what investing in economic growth truly looks like by prioritizing safety, affordability, and competitiveness. We propose major investments for commercial hubs like Baltimore City and Tradepoint Atlantic and industries of the future like quantum computing, cyber, and biotech to help create new, good-paying jobs. We have also maintained record funding for public safety, historic state support for K-12 schools, and protected critical services like health care and child care. When jobs are available, communities are safe, and opportunity abounds, Marylanders want to stay here and out-of-staters want to move here. This is the formula where everyone thrives.
- We have made responsible reductions to spending for programs that are underutilized, underperforming, or growing at unsustainable rates. During COVID-19, the federal government provided Maryland, and every other state in the nation, with historic amounts of one-time stimulus money to get us through the pandemic and the economic crisis resulting from it. But that extra money wasn’t a structural surplus – it was a sugar-high. Our budget ensures that state funding returns to levels that match our balance sheets.
- Whether I’m in Frederick, Baltimore, St. Mary’s City or Ocean City, and whether I am sitting with business leaders or municipal workers, I hear stories of middle class families being squeezed by a tax system that is both complex and unfair. Going into this year, we knew working with the same broken machinery would not deliver different results. We need to take a close look under the hood of our tax system to determine what needs repair and replacement – and that’s exactly what we’ve done. Under our plan, the majority of Marylanders will receive a tax cut, and we’ve targeted tax relief to those with low- and middle-incomes. For the third year in a row, we haven’t raised the sales tax or the property tax in the State of Maryland. We will cut the corporate tax rate to entice more businesses and drive growth. And at the same time, Marylanders who can afford it will contribute more to our collective strength by paying their fair share.
Now is not the time for small thinking, it is the time for bold action. Those who believe we can just cut our way to prosperity aren’t being honest. Those who believe we can just tax our way to prosperity aren’t being honest either. We must use every tool in our toolbox to deliver on Maryland’s promise, and that is what this budget delivers. And while we may not always agree, you will always know where I stand and why we’ve made these decisions.
We have already demonstrated what responsible and effective leadership looks like, creating more than 50,000 jobs, breaking the back of violent crime, achieving one of the lowest unemployment rates in the country for fourteen months in a row, reducing costs for middle class families, and launching nation-leading programs to end child poverty, support our entrepreneurs, and connect young people with careers that uplift our communities. This year’s budget builds on that foundation.
Over the next several months, the budget process will move forward in a collaborative, deliberative manner. In the coming weeks, the House and Senate will formally respond to our administration’s proposal with input, guidance, and amendment. And Marylanders will come to the State Capitol to make their voices heard. Together, we will deliver a final, balanced budget that meets the moment.
The work ahead will be complicated. But we will make it through these two storms as we always have: Together. Now is the time for us to rise above politics and partisanship and unite, as one Maryland and one people. We must be motivated not by scoring points for our respective teams, but rather, by delivering results for the people we represent. If we focus on advancing shared principles in an honest, disciplined, and courageous manner, I have no doubt that we will emerge from this fiscal crisis stronger than ever.
Thank you for your consideration, and I look forward to working with the General Assembly and the people of Maryland to advance the values set forth in this proposal.”
