The Board of Revenue Estimates, which includes Comptroller Brooke Lierman, Treasurer Dereck Davis, and Budget Secretary Helene Grady, met recently to review December revenue projections for the current and upcoming fiscal year. While projections show a slight revenue increase, the budget gap is expected to grow to approximately $6 billion by fiscal 2030. Maryland is facing roughly a $2.7 billion dollar budget deficit in fiscal 2026, and it is no secret that there will be “difficult trade-offs” during this General Assembly session. Creating further uncertainty is Maryland’s reliance on federal employment and contracts as changing federal policies could affect the state’s economy and revenues.
In the Board of Revenue and Estimates’ meeting last week, director Robert Rehrmann noted the uncertainty of the incoming Federal tax policies, federal employment, and federal spending decisions. He then went on to highlight, in the presentation, that there are roughly 550,000 federal civilian jobs in Maryland, the District of Columbia, and Virginia. Of that number, 161,000 are located in Maryland, while D.C. and Virginia each have approximately 190,000 federal civilian jobs. He further went on to disclose that in 2021, 240,000 Maryland households reported a total of $23.9 billion in federal government wages, further cementing the point that Maryland’s reliance on federal government contracts and jobs is notable.
Comptroller Brooke Lierman stated during the meeting “I am optimistic about Maryland’s economy, and the resilience of our economy.” The revenue report presented at the meeting predicts that “the state will bring in $25.3 billion in fiscal 2025, the current fiscal year, and $25.4 billion in fiscal 2026, reflecting marginal growth of 2.2 percent and 1.5 percent, respectively. ” Despite these adjustments, the structural deficit persists, “Today’s modest positive upward adjustment to the revenue forecast is helpful, of course,” said Budget Secretary Helene Grady, another board member. “But it does not change the extraordinary challenge before us as we navigate fiscal year 2025 and prepare the fiscal 2026 budget.”
A topic with an impact that will last for years in the future, the growing concern about fiscal 2026 continues to be the prominent issue facing Maryland. “With regard to the state budget outlook for fiscal ’26, I can’t emphasize enough how significant the challenge is,” Grady said, adding that Thursday’s revenue presentation “doesn’t change it in any significant way.” Driven by strong growth in wages and personal income, the revenue gains in the coming years are important to note. “Robert Rehrmann, the director of the Bureau of Revenue Estimates, said that the growth in the state economy is slowing, but that ‘most importantly, we do not see an imminent sign of a recession that would cause us to significantly decrease our revenue expectations.’” While it may be time for the state of Maryland to increase private sector employment and lessen the state’s reliance on the federal government, Maryland must do what it can with the financial landscape that is before us.
State revenue outlook improves slightly, but ‘significant challenges’ with budget lie ahead
