Months of handwringing over Maryland’s dim financial outlook turned into muted celebrations and then quickly back to handwringing as state lawmakers and Gov. Wes Moore tied up their 2025 lawmaking session last week. The largest state budget deficit in years was resolved, but the potential pitfalls ahead, some said, are significant.

President Donald Trump’s barrage of funding cuts and other executive actions has Maryland officials considering a return to Annapolis for a rare special session prior to their scheduled return in January.

“It is very difficult to count on anything,” Senate President Bill Ferguson told reporters in the final week of the 90-day session in Annapolis. “I feel confident that our budget does the best we can to balance that level of uncertainty, but I am very cognizant that there’s more to come.”

Maryland Republicans who support Trump’s reduced spending agenda have acknowledged the impacts while describing the concerns as overblown. A $3 billion budget deficit existed in Maryland even before Trump took office in January, and Democrats should take credit for years of controlling the process that led to that shortfall, they’ve said.

“It’s a little misplaced that we want to be angry at the federal government because of our budgetary woes,” Senate Minority Leader Steve Hershey, a Queen Anne’s County Republican, said during a floor debate.

Full scope of the impact unclear

Hundreds of millions of dollars in federal funding scheduled to reach the state has been flagged as either at risk or cut as the Trump administration chisels away at what they describe as wasteful government spending.

In the opening months of Trump’s return to power, Maryland has lost:

$280 million in anticipated vanishing tax revenue because of federal workforce cuts.

$400 million in canceled reimbursements for schools.

$200 million slashed from local health departments.

$330 million in grants frozen for projects through the Maryland Department of Transportation.

$15 million in grants frozen for projects through the Maryland Department of the Environment.

The full scope of the impact on Maryland is unclear. Announcements about canceled grants or widespread layoffs of federal employees have been followed quickly by legal action, including from Maryland Attorney General Anthony Brown, that has reversed Trump’s actions or kept them in limbo.

Moore pegged the total impact on the just-finished state budget at $1.3 billion. During an interview with The Baltimore Sun editorial board Monday, he said that figure exemplified the “crisis” and “rupture [of] the relationship between the federal government and our state.”

“Many of the things that are happening have been direct attacks on Marylanders,” Moore said while warning that Trump’s threat to revoke the plans for the FBI headquarters relocation to Prince George’s County would mean further harm.

Maryland most at risk, Moody’s said

Ferguson, a Baltimore Democrat, said he was at his daughter’s softball practice on a recent Saturday morning when he received urgent calls from the Maryland State Board of Education about a notice that the U.S. Department of Education was cancelling $400 million in scheduled reimbursements within the pandemic relief program. Just over $300 million of those funds have already been spent, and the lack of reimbursement could have an outsized impact on the state’s high-poverty schools, experts said.

“This is the perfect example of just how bad things have felt with the uncertainty, with this budget and with this federal administration,” Ferguson said.

Maryland has the most at risk with the federal cuts compared to every other state, the credit rating agency Moody’s reported in March.

About 29,000 federal workers in Maryland are expected to be out of their jobs through the next fiscal year because of Trump’s actions, state fiscal officers announced in late February.

The anticipated $280 million financial hit to the state budget as a result of those layoffs was the largest and most direct way the federal actions made their mark on the state budget for the fiscal year beginning July 1.

Other announcements that have already impacted or could impact the state moving forward include the canceled reimbursements for schools and frozen grants.

In a sign that some of those actions may not be permanent, MDOT said in a statement that it has seen “some movement in the processing” of the roughly 30 frozen grants just in recent weeks. Two that were approved recently will advance design plans for ADA-compliant accessibility improvements at MARC rail stations in College Park and at Martin State Airport.

“We look forward to continuing to work with USDOT to advance all competitively awarded projects,” MDOT said in a statement.

Of the environmental grants that were frozen in early February, all but one has been unfrozen, Department of the Environment spokesman Jay Apperson said. The $1 million environmental justice grant that was terminated was designated for the Chesapeake Bay Trust to work with communities in South Baltimore and on the Lower Eastern Shore to complete projects like tree planting, he said.

“The objectives of the award are no longer consistent with EPA funding priorities,” the Environmental Protection Agency wrote in a March 12 letter to the state.

The indirect impacts on Maryland’s economy are even more widespread. The shuttering of the U.S. Agency for International Development, for example, led to Johns Hopkins University cutting 2,000 positions — both globally and in the U.S. — when it lost $800 million in federal support.

“This onslaught that we are seeing is staggering,” Moore said during a public forum last week with the Rev. Al Sharpton in New York City.

Moore’s warnings included “proposed cuts in the hundreds of billions of dollars to Medicaid” — the largest looming threat that he and other Democrats have braced for.

Trump has said he is “not going to touch Social Security, Medicare and Medicaid,” and that he is solely focused on eliminating fraud in the entitlement programs, which Musk has said without evidence is as much as $700 billion annually. Democrats have said Republicans can’t hit their cost-cutting goals without dismantling those programs.

At one point during the session, Ferguson said he was anticipating Medicaid changes from Washington, D.C. that would have added $900 million to $1.2 billion to the state budget deficit. That was avoided when the federal budget agreement was reached in mid-March. But because state lawmakers are typically out of session after the first week of April, lawmakers debated whether to add “triggers” in the state budget that would automatically adjust state Medicaid spending if those federal changes are enacted.

Those triggers were abandoned in the final days of negotiations because of opposition among House Democrats. The ultimate agreement contained broader language that requires Moore’s administration to create a report if federal cuts collectively reach at least $1 billion.

And with just over nine hours left in the session on Monday, the Democratic leaders announced a bipartisan and bicameral Joint Federal Action Oversight Committee. The group of lawmakers will track and report “timely updates” about federal actions that impact the state during the nine “interim” months before the next regular session.

Del. Ben Barnes, a Prince George’s County Democrat who led the budget negotiations for the House, said it was still too early to say if a special session would be necessary, though he said lawmakers will respond when changes occur.

“The biggest fear is what they’ll do on Medicaid cuts,” Barnes said. “We’re going to adjust and react to whatever the federal government does and we’re going to try to protect services to the greatest extent that we can afford.”

Others were less unsure that the impending cuts will mean lawmakers have to return to work early.

“It’s very much on the table,” Ferguson said.

Have a news tip? Contact Sam Janesch at sjanesch@baltsun.com, 443-790-1734 and on X as @samjanesch.