To Support Thriving Communities, Maryland’s Revenue System Needs an Overhaul
Actions by two key bodies involved in Maryland’s state budget process today emphasized the state’s need to raise significant new revenue to support essential public services like education, child care scholarships, and transportation. The Board of Revenue Estimates slightly reduced revenue forecasts for the next budget year as state agencies working on developing the proposed budget identified significant additional expenses, increasing the gap between expected revenue and expected costs.
“As we have said before, the choice is clear,” Maryland Center on Economic Policy President and CEO Benjamin Orr said. “If Maryland pulls back on our commitment to families and the foundations of our economy, we will all be worse off. Residents and businesses alike depend on good schools, transit and roads that get people where they need to go, affordable child care, and so many other services that the state provides. Cutting funding would be a significant step backwards.”
As MDCEP has outlined in past analysis, Maryland continues to leave significant revenue on the table each year by failing to close major corporate tax loopholes that most other states have closed. The state could also make its tax system more equitable by ensuring the wealthiest Marylanders pay their fair share in income and other taxes.
MDCEP is one of the organizations endorsing the Fair Share Maryland plan, which would raise about $1.7 billion per year and make our state’s tax system more equitable.
“Our tax system today is upside-down, asking much less of the wealthy few than it asks of working families,” Orr said. “An equitable tax system will also ensure that Maryland can fund the public services that families and communities need to thrive.”
Highlights from the Board of Revenue Estimates forecast and Spending Affordability Committee actions:
- The cost of maintaining current service levels is now expected to exceed ongoing revenues by $761 million during the budget year that begins next summer (FY 2025), growing to a $2.66 billion shortfall by FY 2029.
- While there are some one-time actions, such as using money from state reserves, that can help balance the budget, that alone will not be enough to avoid significant budget cuts. The Spending Affordability Committee recommended leaving a Rainy Day Fund balance of at least 8.5%. That would still leave hundreds of millions to be addressed through cutting programs or raising additional revenue.
- These challenges come at a time when we are already underinvesting in essential services. For example, state agencies do not have enough staff to do their jobs effectively, and Gov. Moore recently proposed deep, across-the-board cuts to transportation funding.
Past MDCEP analysis on budget and revenue:
- Maryland’s Fiscal Challenges Are Real, But With Fair Tax Reform We Can Fix Them
- A Roadmap for Tax Justice in Maryland
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Media Contact
Kali Schumitz, Vice President for External Relations
410-412-9105, ext. 701
kschumitz@mdeconomy.org
About Maryland Center on Economic Policy
The Maryland Center on Economic Policy advances innovative policy ideas to foster broad prosperity and help our state be the standard-bearer for responsible public policy. We engage in research, analysis, strategic communications, public education, and grassroots alliances promoting robust debate and greater public awareness of the policy choices Maryland residents face together. mdeconomy.org
