Much of the legislating the Maryland General Assembly does in 2025 will likely be influenced by the state’s growing budget deficit as well as policies set by President-elect Donald Trump’s next administration, according to state leaders.
“The budget is going to drive every conversation, and it’s going to be an important moment to focus on what matters most, and that’s delivering for Marylanders,” state Senate President Bill Ferguson, a Baltimore Democrat, said at a news conference Tuesday.
The crux of session priorities for 2025 will center around balancing the state budget for fiscal year 2026 while minding the projected nearly $3 billion deficit — the largest in recent history.The 2025 legislative session begins Jan. 8.
During a meeting of the Maryland Spending Affordability Committee Tuesday, Department of Legislative Services fiscal analyst David Romans said that Maryland’s total deficit for fiscal year 2025 is growing from $2.7 billion to approximately $3 billion because of a lack of funding for the Developmental Disabilities Administration.
During the 2024 legislative session, the Maryland Department of Health said they did not believe there were fiscal issues, Romans said.
“What’s happened since shows that they were incorrect.”
Republican lawmakers voted against recommendations brought before the committee, including measures to erase the projected structural budgetary gap for the 2026 fiscal year; maintain a Rainy Day Fund balance of, at minimum, 7.5% of General Fund revenues; restrain spending to ensure a $100 million balance in the General Fund and prioritize filling vacancies in state government jobs before creating new positions.
During a press conference after the committee hearing, House Minority Leader Jason Buckel of Allegany County said the recommendations are simply more of the same — “just maintain the same fiscal course, despite the fact that we have all come to the recognition that Maryland’s fiscal ship is, much like the Titanic, headed for the iceberg.”
“We’re a couple weeks away from the start of the session, and no one seems to know what the solution is — from Governor Moore’s office, what the Democratic proposals really are — and that’s not a good way to run a railroad,” said Buckel.
Ferguson said that 2025 will be a year of tough financial decisions, during which “everything is on the table.”
“We have to make sure we’re living within our means” while investing in areas that keep the state economically competitive, he said.
Ferguson also said that revenues will be an important piece of the state’s fiscal puzzle, because closing the gap “cannot be accomplished with cuts alone.”
A major concern among Republicans is the potential for tax hikes to address the growing deficit.
Gov. Wes Moore, a Democrat, has publicly said that he has a high bar for raising taxes, preferring instead to cut from existing programs and use temporary revenue measures. His budget proposal is due to the legislature by Jan.15.
The Joint Republican Caucus said that “responsible cuts, responsible budgeting and fueling private sector growth is the solution” to the budget deficit.
“We’re coming up on New Year’s and most of us try to make some kind of New Year’s resolution, and I think, for us as the Republican Caucus, we think that Maryland state government needs a resolution to cut back and lose some weight because our budget has really exploded in the last couple of years,” said Senate Minority Whip Justin Ready of Carroll County. “Some of that’s federal dollars, some of its long-term spending commitments … that outstrip the money we’re bringing in.”
Regarding cuts, Republican lawmakers said Tuesday they would like to see the removal of the universal pre-k mandate. Buckel said that a bill to do so has already been drafted.
Ferguson said that the Blueprint for Maryland’s Future education program, including universal access to pre-k, is fully funded through fiscal year 2027.
According to Ferguson, the “vast majority” of the deficit lies in entitlement spending, which totals above projected costs for programs like Medicaid and the childcare subsidy program.
“It’s not because of inappropriate spending in any way. Just as inflation has hit families, it has hit governments, as well,” he said. “We are not going to throw 50,000 people off of Medicaid. We are not going to throw 20,000 families out on the street to not have childcare subsidy credits. We have to find a way to cut from other programs, to prioritize.”
Addressing constituent concerns regarding large surpluses in previous years now being overshadowed by a massive budget deficit, Sen. James Rosapepe, the vice chair of the Senate Budget and Taxation Committee and a Democrat representing Prince George’s and Anne Arundel counties, pointed to COVID-19 and the fluctuation of inflation as a result of the pandemic.
“Inflation affects state government the way it affects family grocery bills, and so costs have gone up,” Rosapepe said. “It’s not surprising that, with the disruption in the supply chains and the disruption of the economy, that the fiscal situation of the state now has changed.”
He said there is no one solution to the problem, but it must be a coordinated effort of restrained spending, increased revenue and a healthy Rainy Day Fund “because we’re facing now with this new administration in Washington some potential very, very big economic shocks.”
Last week, the Board of Revenue Estimates forecast that Maryland will collect a little more than $25 billion in taxes and other revenues for the 2025 fiscal year. The board predicted a similar outlook for fiscal year 2026, which begins July 1.
However, Comptroller Brooke Lierman, a Democrat, cautioned at last week’s meeting that President-elect Donald Trump’s incoming administration could exacerbate the state’s financial pressures if he follows through on certain promises made on the campaign trail, including reducing large swaths of the federal workforce.
Employment through the federal government makes up nearly 6% of Maryland jobs and about 10% of wages. Any major cuts could majorly disrupt the state’s tax base.
While he recognized the impact that cuts to the federal government could have on the state’s bottom line, Ferguson said it’s unlikely that elected officials will know what the exact impact of the incoming Trump administration will be until his first 60 days in office.
“March is probably going to look very different than January, and so we will have better information to really know what the fuller picture looks like at that point,” he said.
Buckel said that government “is not designed to be an industry.”
“Government is designed to provide services that are needed and necessary in the most efficient way possible for the benefit of its citizens,” he said. “Folks of both parties have lost sight of that in Washington, D.C., and we’ve certainly lost sight of it in Annapolis, Maryland.”
Have a news tip? Contact Hannah Gaskill at hgaskill @baltsun.com.