It was, for some, an outcome by design. For others, it was almost completely avoidable. Either way the reality is the same: Maryland lawmakers finished their historic 446th session Monday in Annapolis in a way that will set them up to face the same looming question that greeted them when they arrived this year.
How, exactly, is the state going to pay for all of this?
Lawmakers convened in the State House in January in a precarious financial situation, with budget deficits that risked the futures of core government services and the success of ambitious education, climate and transportation plans.
Debates on whether to raise taxes grew louder over the next three months, with Senate Democratic leaders trying to hold the line and House Democrats pushing a robust revenue package.
The final compromise made some inroads: through a series of tobacco taxes and vehicle-related fees, there will be an estimated $246 million over three years to fully fund the education-focused Blueprint for Maryland’s Future through the 2027 fiscal year, and up to $328 million annually to begin resolving a roughly $3.3 billion, six-year transportation funding shortfall.
But much was left unresolved. A $483 million structural shortfall built into the next budget is expected to grow to nearly $3.3 billion in four years as spending outpaces revenue and Blueprint costs increase, independent legislative analysts reported Friday. And that doesn’t even include big wish-list items of some Democrats, like reviving the Red Line transit project in Baltimore or a $1 billion annual climate plan that the Maryland Department of the Environment released late last year.
Leaders on all sides acknowledged the looming issue, with Senate President Bill Ferguson, a Baltimore Democrat, maintaining that a thorough public debate on taxes still needs to happen and House Speaker Adrienne A. Jones, a Baltimore County Democrat, saying her caucus is ready to act.
Democratic Gov. Wes Moore, for his part, said his stance is going to be the same as long as he’s in office.
“I don’t look at any conversation around taxes as an ideology. I look at them as a tactic,” Moore said in an interview with The Baltimore Sun on the session’s final day. “It’s something that every single year we’ll go through a process and we’ll determine what makes sense for the people of the state, what makes sense for working families in the state. The thing that is going to always stay consistent for me, though, is my bar is going to be very high about any conversations when it comes to revenue and revenue increases.”
The budget cooked up this year — with higher taxes on cigarettes, increased vehicle registration fees and new fees on electric vehicles and ride-sharing services — met that bar, he said, even though his original budget proposal didn’t include any new revenue. It instead called for pulling from reserves, increasing state debt and cutting some programs.
Legislators shrunk the amount of some of Moore’s proposed cuts, and in other places decided to spend where the governor wanted to save. But the lawmakers adopted Moore’s proposed one-time fixes to fill an immediate $1.1 billion cash shortfall, as well as a $255 million revenue downgrade in the middle of the session and a potentially $200 million shortfall for Medicaid costs. Meanwhile, the final budget includes new spending for education, child care, expanding affordable housing and public safety, as both Moore and many legislators hoped it would.
Moore said the result proves the state can make “bold investments” and “not raise sales taxes and income taxes and corporate income taxes.”
Many of the governor’s own allies disagree.
“They were creative in their approach this year, but they merely delayed the inevitable,” said Ben Orr, CEO of the Maryland Center on Economic Policy.
Essential and popular government programs remain at risk, Orr said, noting the governor’s initial proposal included cutting some community college funding and higher co-pays for parents using a state-funded child care program.
“Those are some things that will become unavoidable if we continue on this current path,” he said.
Orr’s nonprofit joined union leaders, school advocates and some Democratic lawmakers this year in backing a plan that they said would have raised $1.6 billion, mostly from expanded taxes on households earning more than $250,000 and on corporations, while giving most Marylanders a tax break of up to a few hundred dollars.
The Fair Share for Maryland Act was never brought for a vote, though House Democrats used one corporate tax piece for their revenue proposal. Sen. Shelly Hettleman, who introduced the bill in the Senate, said she viewed it as a conversation starter. She wasn’t yet sure if she would introduce it in the same form again next year, but emphasized conversations about increasing revenues will continue in 2025 — and potentially beyond.
“Our transportation needs are not going away. They’re only increasing,” said Hettleman, a Baltimore County Democrat. “We either have to temper our expectations or do something different.”
Del. Stephanie Smith, a Baltimore Democrat, began the session on a mission to restore cuts to a portion of highway user revenues expected to be shared with local governments. The cuts were something the Moore administration proposed as part of its plan to slash the transportation budget. Baltimore relies on those funds more than other local governments to repair its vast network of roads, bridges and sidewalks. Smith said she was thankful the budget compromise prevented a “devastating” loss of funding for the city.
But it will be critical to keep up the revenue conversation, she said. And with the potential for cutbacks on everything from commuter services to pre-K for 3- and 4-year-olds, Smith said she would seek to focus on what could be lost versus what could be gained.
“There should be a high bar for exacting policy pain through budget cuts,” Smith said.
Hundreds more bills await Maryland Gov. Wes Moore’s signature
Environmental advocates who had mixed results this session after years of successfully pushing aggressive climate change goals are also concerned about bills coming due.
The RENEW Act, the priority for groups like the Chesapeake Climate Action Network this year, failed to get a vote. The legislation would have fined the largest-polluting companies from the last two decades to raise $9 billion over 10 years for climate mitigation and a transition to renewable energy.
Del. Lorig Charkoudian, an environmental policy-focused Montgomery County Democrat, said the state may not be able to pay for its $1 billion-per-year climate plan without holding fossil fuel companies accountable. That could happen via a future version of the RENEW Act, she said, or by Maryland Attorney General Anthony Brown suing fossil fuel companies.
“In the end, there’s so much money that’s needed I don’t see how we’re going to get there without fossil fuel companies paying,” Charkoudian said. “The sooner we figure that out, the closer we get to when we’re actually holding that money.”
On the final day of the session, environmental advocates lamented the death of the funding bill. They were also disheartened by legislative actions they said rolled back parts of Maryland’s 2022 Climate Solutions Now Act. Those including delaying both a regulation aimed at making buildings’ energy use more efficient and a deadline for state purchases of 100% zero-emission buses. The regulatory change, in particular, raised alarms because it came in the form of a quiet, last-minute addition to the voluminous budget bill.
“We have a bold climate agenda. It will hit some bumps. There will need to be adjustments. Everybody here accepts that. What we can’t accept is that we’re going to get cut out of the process,” Maryland Sierra Club director Josh Tulkin said Monday outside the State House as a New Orleans-style brass band played funeral music.
Moore, who could hear the music from his second-floor office on the other side of the building, said he’s willing to have serious conversations with anyone about the future of the state, revenue packages or otherwise.
In the meantime, the calls for action will keep coming, as they always do.
“Let’s not forget what we’re doing is necessary,” Alvin Thornton, who led the last major statewide education commission prior to the one that produced the Blueprint, said during a rally in March while gesturing to the governor’s mansion and the State House. “No matter who’s in that house, or that house, we must be out here to let them know, as I said 22 years ago, ‘We got your back.’”
