Maryland Gov. Wes Moore (D) on Wednesday revealed his plan to balance the state budget in the face of a $3 billion deficit, detailing wide-reaching cuts that would affect some vulnerable populations, key initiatives that he campaigned on and the state’s ambitious education goals.
At the same time, the governor floated raising income taxes for the state’s wealthiest earners and increasing taxes on some capital gains, gambling and cannabis to fill the looming budget hole. However, the proposed change to the state’s tax system would lower what nearly two-thirds of Maryland taxpayers pay, saving them an average of $173, and up to $300 per year.
For months, Moore has been foreshadowing that the state will face difficult choices as it seeks to address its worst financial crisis in 20 years, leading to budget shortfalls that are projected to balloon to nearly $6 billion by 2030.
Wednesday’s announcement offered the first glimpse into how the governor is willing to carry out the $2 billion in curtailed state spending he announced last week and signaled that he believes the fiscal crisis has met the “high bar” he set for raising new revenue.
Moore cast his plan as an approach that reins in expenditures while also investing $750 million in economic growth, especially in emerging industries such as cybersecurity, defense contracting, quantum computing and life sciences.
Now, Moore is tasked with making the case to lawmakers and the public to justify his proposed cuts and tax plan, the starting point in negotiations over how to address the budget shortfalls and steer Maryland to financial health.
“Where we can find efficiencies and where we can make things work better, we have to be unafraid to do it as a state,” Moore said in an interview Wednesday morning.
Lawmakers and advocates were still combing through the details of Moore’s plan, but many said the $67 billion proposed budget is a good starting point.
Moore’s proposal, which state lawmakers are likely to debate over the next 2½ months, balances the budget and would leave the state with a $106 million positive cash balance.
Sen. Jim Rosapepe (D-Prince George’s), vice chair of the Budget and Taxation Committee, welcomed the idea of asking the state’s wealthiest residents to contribute more in taxes.
Moore’s proposed overhaul of the tax code would result in lower bills for 60 percent of Maryland taxpayers, no change for 22 percent and a tax hike for 18 percent — the increases largely concentrated among those who make $750,000 or more per year, Moore said Wednesday.
Rosapepe said Maryland’s tax plan has been “too regressive for too long” and applauded the governor’s proposal to shift the tax burden away from working people and onto the state’s highest earners.
“Working people feel they pay too much in taxes, and they do,” Rosapepe said.
The governor’s budget plan is roughly 1.2 percent larger than in fiscal 2025 but would slow spending on some key initiatives that Moore campaigned on and that state leaders have touted as major priorities.
Among other cuts, Moore proposed temporarily freezing enrollment in the state’s child-care scholarship program, trimming the anticipated budget of the state’s Developmental Disabilities Administration and decreasing investment in public universities.
The governor has also floated cost-containment measures that will ask local jurisdictions to shoulder more financial burden across multiple programs and require hospitals and insurers to contribute more to the state’s hospital deficit assessment to cover expanding Medicaid expenses.
Sen. Guy Guzzone (D-Howard), chair of the Budget and Taxation Committee, called the governor’s effort to address the state’s deficit a “first step” in a course-correcting process that could take years, adding that he believed Moore’s proposed solutions were “reasonable” — even if Senate lawmakers may ultimately differ on the details.
Guzzone predicted lawmaker concern over Moore’s proposed cuts to programs that help people with disabilities and victims of crime.
“We will look at both of those very carefully,” Guzzone said. “We know how important those are to a number of constituencies.”
The governor is also recommending that the state adopt a policy known as combined reporting, which requires multistate parent companies and subsidiaries to report profits together for state tax purposes. Under Moore’s plan, the state would simultaneously adopt a cut to the corporate income tax rate.
The proposed tax changes also include ending the state’s inheritance tax, which would be offset by lowering the estate tax exemption from $5 million to $2 million. And some habits for Marylanders would get more pricey under Moore’s plan. The governor has suggested raising the tax on sports betting from 15 to 30 percent, raising the table game tax from 20 to 25 percent and hiking the tax on cannabis from 9 to 15 percent.
Whether lawmakers will support Moore’s recommendations to raise taxes for some and lower them for others remains to be seen. Nor is it clear where Democrats, who control both chambers of the General Assembly, will land on the governor’s proposed cuts.
“This is the moment. We’re going to be asking all Marylanders, is this important to you? Are you willing to pay a little extra to do it?” Guzzone said. “That’s what this moment is about.”
Republican lawmakers said they welcome Moore’s emphasis on growing the state’s economy, his proposal to lower corporate taxes and cut income taxes for many Marylanders, but they did not support other parts of the governor’s plan.
“I was very pleased he talked at length about how we have to grow our private sector economy,” said House Minority Leader Jason C. Buckel (R-Allegany). Buckel said investment in making Maryland a more competitive, business-friendly state was the “long-term solution” to budget woes.
Still, Buckel said he would have liked to see deeper cuts to spending and a plan that did not rely on increasing income taxes for nearly 1 in 5 Maryland taxpayers.
Del. David Moon (D-Montgomery), the House majority leader, called Moore’s plan “thoughtful and thorough.”
“I am applauding the governor at the moment for digging in on the deficit,” Moon said.
Last year, House Democrats proposed their own $1.2 billion tax, toll and fee increase package to generate revenue, though the General Assembly ultimately passed more modest changes to avoid major cuts to the state’s transportation budget.
Moon said Moore’s plan doesn’t exactly match their old one and predicted that his members will need to spend time comparing the proposed cuts and revenue to ensure the underlying values align.
“It’s going to be incumbent on the governor to sell the plan to the public,” Moon said.
Moon said one of the “trickier parts” of Moore’s budget plan will be the proposed cuts and delayed rollouts to key elements of the Blueprint.
The governor’s plan would permanently slash funding for behavioral health services in schools from $130 million to $40 million and delay the rollout of designated planning time for teachers, a move that would also affect the underlying formula used to decide how much money schools receive.
“We in the House have a high bar for changes to the Blueprint and public schools spending,” Moon said, adding that his members will need to see “good justification” for Moore’s modifications.
On Wednesday, Moore made the case that wealthier Marylanders — like himself — should be willing to contribute more in the form of higher taxes to help support better schools, safer streets and a stronger economy, even as the state reduces the tax burden for most taxpayers.
“We refuse to balance the budget on the backs of working class,” Moore said.