A recent report released by the Department of Legislative Services indicates a looming budget deficit largely created by legislation passed during the most recent 90-day legislative session. The deficit projected in the report for fiscal 2028 exceeds $1 billion. From a Maryland Matters article,
It is now projected that the fiscal 2025 budget will start with a $418 million deficit. That represents a $650 million decrease compared to the January estimate. In the next year, the deficit rises to $572 million. This marks a significant difference of $835 million compared to the January projection.
The budget outlook for fiscal 2028, at the start of a new term, “deteriorates substantially,” according to the report. Analysts attribute the sharp decline to the costs of major education reforms.
The projected shortfall that year is more than $1.8 billion “due to the ongoing K-12 education enhancements outpacing the availability of special funds in the Blueprint fund.”
During that time, revenues grow by more than 3%. Projected expenditures outstrip those, growing by 5%.
Legislation that passed this year with a significant impact on reducing revenues includes enhancing tax credits for some military retirees, permanently extending the state’s Earned Income Tax Credit, and creating the Family and Medical Leave Insurance Program. While current funding levels in a dedicated fund will cover costs of the Blueprint for Education, the Blueprint will have a significant impact on the budget beginning in fiscal 2028.
Effect of the 2023 Legislative Program on the Financial Condition of the State
