Gov. Wes Moore, in his third annual State of the State address today, will expand on what he’s recently described as dueling crises facing Maryland — a massive financial shortfall that’s spurred him to make deep cuts and reform the state’s tax code, and a chaotic new presidential administration that he believes threatens “the basic way of life that we have in our state.”

“This second storm,” Moore said, continuing a metaphor he started last month to describe President Donald Trump’s return, “people are realizing now that it has made landfall, this is real.”

In an interview with The Baltimore Sun ahead of his speech to a joint session of the Maryland General Assembly, the Democratic governor said he will both celebrate what he sees as accomplishments in his term’s first half and chart his path for the second.

Addressing a nearly $3 billion cash deficit in the next year will depend on, he said, the tax overhaul he pitched last month as a “simpler, fairer, pro-growth” way to raise taxes on wealthy individuals while giving a tax cut to most Marylanders.

And it will require a renewed focus on turning around the state’s sluggish economy by investing in emerging sectors while changing the corporate tax code, though some business groups say his plan will not have its desired effect.

But the frenzied start to Trump’s administration portends an entirely new challenge — one that Moore said has been difficult to plan for, despite his efforts.

“It’s almost impossible to prepare for what we’ve seen the past two weeks,” he said.

Trump’s move this week to shutter the U.S. Agency for International Development puts at risk major financial support for Maryland-based institutions like Johns Hopkins University in addition to potentially thousands of jobs in the state, Moore said. Last week’s fleeting order to halt all federal grants meant chaos and uncertainty for popular government-funded efforts like police officers coordination, assistance for military families to bury fallen servicemembers and assisting victims of domestic violence looking for shelter, Moore said.

“The danger of it is not just that it’s arbitrary. It’s that it’s cruel,” the governor said.

Until the backlash against the funding freeze memo, Moore had spent most of the time since Trump’s election in November saying he would try to work with the new administration and that he didn’t wish to be the face of the “resistance.”

Now, it’s a “scary time for a lot of Marylanders,” institutions are “shaken to their core” and states like Maryland, he said, are about to step up.

“In the face of this chaos … I think that calm, steady, compassionate and competent leadership is actually the antidote to what we’re seeing in Washington, D.C., right now,” Moore said.

On his agenda for Maryland’s fiscal challenges, Moore said he will make the case for his tax plan, which aims to raise roughly $1 billion more each year by raising taxes on individuals making at least $500,000, consolidating the lower brackets, doubling the standard deduction and eliminating the ability for itemized deductions. The average tax cut for two-thirds of Marylanders would be about $173, while 22% of filers would likely see no changes, according to his administration and outside analysts.

Tax hikes on recreational cannabis, sports betting, table games, and some vehicle-related fees would be added to fill the gaps in the roughly $67 billion spending plan and a separate $21 billion six-year transportation plan. Another $2 billion in budget cuts would also address the immediate shortfall.

Still, Moore’s focus on economic growth has dominated his 2025 agenda.

His budget calls for reducing the 8.25% corporate tax rate starting in two years and making $128 million in new “targeted, strategic investments” to boost businesses. That money includes $27.5 million to expand the local quantum computing industry, $25 million for a “sunny day” fund that supports projects aimed at significant job creation, $15 million for expanding operations at Tradepoint Atlantic and more.

Mary Kane, the president and CEO of the Maryland Chamber of Commerce, said she appreciates the governor’s recent emphasis on Maryland’s poor economic performance and the need to grow economically. The lowering of the corporate tax rate alone has been a “desperately needed” goal of businesses for years.

But the strategic investments are likely not sufficient, she said. And Moore’s simultaneous effort to expand corporate taxes — through a method known as combined reporting — and add new personal income tax brackets on higher earners don’t get the state to where it needs to be, she said.

“It’s not enough, especially when he has also put in combined reporting. It’s more of a wash,” Kane said. “It’s not really going to encourage any growth.”

Implemented in 28 other states and the subject of decades-long debates in Maryland, combined reporting aims to end what some describe as a “loophole” that allows multi-state corporations that do business in Maryland to avoid paying the state’s corporate taxes.

Proponents said it fixes that loophole and forces corporations to pay their fair share. Business and other anti-tax groups argue it’s a more unpredictable and volatile method that could sometimes result in a net loss under certain economic conditions.

The Chamber is currently surveying its 7,000 members to understand the full impacts of the governor’s tax plan.

A new Chamber-sponsored economic study that is in the works from economists at Towson University will provide more information — including scenarios indicating that a 1% reduction in the corporate tax could lead to a 3% or 4% increase in business establishments over the next decade.

Kane pointed to Pennsylvania, where Democratic Gov. Josh Shapiro entered office at the same time as Moore and has tried to expedite a plan to slash his state’s corporate tax rate from about 10% to about 5% by 2031. Shapiro’s latest budget proposal, released this week, aims to reach that final rate in 2029.

“That gives businesses great hope when they look at something like that,” Kane said. “We haven’t done anything like that.”

Moore said Tuesday he wants to go further to lower the corporate tax rate and believes, like the Chamber and others, that Maryland can grow its way out of its long-term deficit. The capital gains tax, for instance, is intended to sunset in four years because he said he believes the business growth that will come from the resulting investments will mean it’s not needed eventually.

Asked specifically about a neighboring state like Pennsylvania working to lower its corporate rate faster, Moore said he wants to remain competitive but that he’s making his decisions based on what’s best specifically for Maryland.

“I want to be more aggressive, but not because I’m competing with another state,” Moore said. “I know my state better than anybody. I know what it’s going to take from Maryland to be able to grow, compete and win. And so the competitiveness for me isn’t about how are we following policies. It’s about how are we beating them in terms of results.”

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