A report from the Department of Legislative Services on the financial condition of the state warns of budget shortfalls “necessitating significant spending reductions and/or increased revenues” by 2028.
Maryland closed out 2022 with a budget fund surplus of $5.4 billion. The report attributes the healthy balance sheet to federal stimulus funding provided in response to the COVID-19 pandemic and increased sales and use tax revenues.
The 2024 state budget is approximately $63 billion. According to budget analysts, over the next several years, funding commitments to health care, transportation and K-12 education will contribute to spending growth of 5.1% per year while state revenues are projected to increase by only 3.3% per year.
By 2028, the accumulated shortfall is expected to be larger than can be offset by redirecting capital dollars or spending the rainy-day reserve fund. This could result in a budget deficit of $1.8 billion.