Maryland House of Delegates and Senate Agree on $67 Billion Budget
In the closing days of Maryland’s legislative session, the House of Delegates and Senate agreed on a balanced $67 billion budget, which will include roughly $1.6 billion in additional revenues and roughly $2 billion in spending cuts.
This budget closes a $3.3 billion budget deficit and Gov. Wes Moore touts that most Marylanders will not see a tax increase under his budget.
Some of the new revenues following the April 4 budget agreement will come from increasing the tax on sports betting 15% to 20%, the sales tax on recreational cannabis from 9% to 12%, and higher taxes for Marylanders making over $500,000 annually.
There will also be a 6% sales tax levied on vending machine purchases and a $5 tax on tires will go to the state’s Transportation Trust Fund.
“We made sure our core programs are solid and funded. In the process, we’ve been grownups. A big difference, I think from what you see at the federal level,” said Del. Ben Barnes (D- District 21), who serves as the House Appropriations chair. “We know we had to take cuts, and we took about $2 billion in cuts, but we also raised revenues to make sure our core values are protected and funded.”
Moore’s budget also cut nearly $30 million from services to disabled Marylanders, which has been met with criticism by advocates and families of those affected.
During late negotiations, Senate President Bill Ferguson (D- District 46) cautioned that some severe cuts were potentially on the table, including cutting dental coverage for Marylanders on Medicaid and a significant reduction to food assistance.
“We are constitutionally required to balance our budget. We will, and we are going to make additional cuts. We are at the place now where we are talking about core service provision of the social safety net that’s impacted if we just had a cuts only approach,” said Ferguson. “And so yes, it is scary, and we know that. This is what we should be counting on government to be able to provide. And I believe most Marylanders agree.”
The state also passed a 3% tax on IT services, expected to bring in $500 million in annual revenue. Some of the quantum computing businesses that operate in College Park, including Ion Q, have been given exemptions to this new tax.
During budget discussions, more than 400 business representatives spoke before a committee to argue that the proposed business-to-business (B2B) service tax would harm their businesses and lead to rising costs on consumers. Moore stated he was not in favor of the B2B tax or a proposed soda tax.
The governor initially supported expanding alcohol sales to grocery stores, but the bill did not pass through the General Assembly and Moore did not support the legislation.
Following the opening months of the Trump Administration’s efforts to cut federal spending and reduce the federal workforce, Maryland’s future budget picture is only worsening. A Board of Revenues estimate in early March predicted a $280 million reduction in annual revenues and the projected $3 billion budget deficit that was patched this year will grow in coming years.
Moody’s, a credit rating agency, recently reported that Maryland is the state that is the most at-risk of economic repercussions as a result of Trump Administration actions.
The rainy day fund will retain $2.1 billion following the budget agreement. Last year, the General Assembly passed a $63 billion budget.
Trump Administration’s Cuts Remove Hundreds of Millions from Maryland Schools
Following the Trump Administration’s massive cuts to education funding through the American Rescue Plan (ARP), Maryland schools have lost hundreds of millions in funding.
Much of this funding has already been allocated and several school districts have reported that they are suspending services immediately.
Prince George’s County Public Schools (PGCPS) is pausing some mental health and immunization services, specialized tutoring, and ongoing construction projects such as roofing and air-conditioning repairs as a result of these cuts.
“We have been advised to freeze any remaining spending tied to these funds. Impacts could potentially include halting programs already in progress, canceling or scaling back mental health services and teacher training and resources, and pausing construction projects indefinitely,” read a statement from PGCPS. “However, we are financially obligated to pay vendors for goods and services already rendered. We urge the U.S. Department of Education to honor its commitment and ensure school districts can continue providing the services our students need to succeed.”
Linda McMahon, secretary of the Department of Education, stated that extending deadlines for COVID-related grants years after the COVID pandemic ended “is not consistent.”
She told Maryland’s government on March 28 that the department, which placed 4,133 workers on administrative leave the week before, is withholding up to $418 million in pandemic recovery funds, causing a $305 million deficit in the current year’s education budget.
University of Maryland assistant professor Keisha Allen told the Diamondback, the college’s newspaper, that federal cuts will weaken public education and limit access to higher education, particularly for historically marginalized communities.
Congressman Glenn Ivey (D- District 4) explained the cuts reduced $95 million from PGCPS almost immediately.
“The fact they could come back and try to claw back the money or not reimburse for commitments that are already made, I think, frankly, is illegal,” said Ivey. “It looks like the stuff he used to do as a private citizen. He’d hire people to do millions of dollars worth of work and then just stiff them. But here, you’re not just stiffing vendors, you’re stiffing school kids.”
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