Fair Tax Reform Is Key to Meeting Marylanders’ Needs

New budget forecasts show our state facing growing fiscal challenges, even as we continue to underinvest in essential services that enable Maryland communities to thrive. As the 2024 legislative session nears, Gov. Moore and lawmakers must decide how to address these challenges. Closing corporate tax loopholes and asking wealthy individuals to pay their fair share would generate the resources we need to support great schools, effective government, and modern transportation networks.

Maryland faces considerable fiscal challenges:

• The state faces a projected $761 million general fund structural deficit in the budget year that begins next July (FY 2025). This is the amount by which regular, ongoing expenditures are expected to exceed ongoing revenues. This shortfall is forecast to reach nearly $2.7 billion by FY 2029, driven largely by increasing education costs.
• These deficits are somewhat larger than state analysts forecast last month, for two main reasons:
  • The state Board of Revenue Estimates has lowered revenue expectations. The reduction is a fairly modest $163 million in FY 2025, growing to $404 million by FY 2029. A one-time adjustment slightly boosts expected revenues for the current year.
  • Child care scholarship costs have been revised upward by $225 million per year ($214 million in the current year), mainly due to higher enrollment. This is a positive sign about our child care policies, indicating that we are providing care to more children and increasing opportunity for more parents than expected.
• Gov. Moore has proposed deep cuts to transportation funding to balance the state’s Transportation Trust Fund, which currently faces a projected cumulative shortfall of $3.3 billion over six years ($550 million per year, on average).
• If Congress does not reach a budget deal by mid-January, many federal agencies will shut down. This would push thousands of Maryland families into hardship and cost millions in lost tax revenues. Short of a shutdown, Republican proposals to slash the federal budget would harm our economy and could directly affect the state budget.

Maryland’s state constitution requires a balanced budget. There are only two ways to do this:

• Deep cuts to public services such as schools, transportation, health care, and core state agencies. This approach would do lifelong harm to students, increase wait lists, worsen customer service, and undermine economic opportunity. Black Marylanders and other Marylanders of color would take the greatest hit.
• Build a fairer, more effective tax code. By closing corporate tax loopholes that other states have already addressed and asking a small number of wealthy individuals to pay their fair share, we can raise $1.7 billion per year while supporting families and reducing child poverty. The sooner we act, the sooner new revenues will begin to flow.

To confront our fiscal challenges and build a stronger, fairer Maryland, Gov. Moore and lawmakers should reject harmful budget cuts and act quickly to enact the Fair Share Maryland revenue plan.