Posted on 03/20/25
| News Source: WBAL TV
Annapolis, MD — March 20, 2025 - Maryland Gov. Wes Moore and legislative leaders on Thursday announced an agreed-upon state budget framework based on cuts and tax reform amid a $3.3 billion deficit.
Video above: B2B tax proposal pared down to impact IT, data consulting (Wednesday)
"I am proud to announce that our administration has reached an agreement for a final framework on the budget with the House of Delegates and the state Senate," Moore said.
Lawmakers worked throughout the first half of the legislative session to close the gap by considering drastic cuts to core services and imposing new taxes. The governor said the framework relies on spending cuts over tax increases to close the deficit.
"This is the largest amount cuts from a Maryland state budget in 16 years," Moore said.
House Speaker Adrienne Jones, D-District 10, said lawmakers identified $500 million more cuts that come in addition to what the governor initially proposed.
Senate President Bill Ferguson, D-District 46, said the state budget framework to which legislative leaders and the administration agreed represents the "right balance between fiscal responsibility and protecting (the state's) core social safety net."
While there are cuts, the budget framework also includes tax increases. Under the governor's initial proposal, Marylanders who earn $500,000 or more annually would pay higher income taxes. Jones said low- and middle-income Marylanders can anticipate tax breaks.
"We are raising revenues: We are asking the wealthiest Marylanders to pay their fair share," Jones said. "We're putting aside what we'd like to do, in favor of doing what we have to do. No one up here wants to talk about cuts. No one wants to talk about revenues. But responsible governing means having to make the tough conversations. It means doing what's right, not what's politically convenient."
Republican legislative leaders expressed concern early on in the budget process over proposed changes to Maryland's tax bracket. In January, Senate Minority Leader Stephen Hershey, R-District 36, said the tax increase on wealthy Marylanders could have a different effect.
"The problem with that type of tax is it hurts our job creators and those that have the means have been seen to leave the state of Maryland, which becomes very concerning as well," Hershey told 11 News in January.
House Republican leaders released statements after the Democratic leaders' announcement Thursday afternoon.
House Minority Leader Jason Buckel, R-District 1B, said in a statement: "It is abundantly obvious that the definition of 'Democratic values' is to tax-and-spend-then-tax-again policy. They have provided no solution to the long-term budget issues that have been facing our state since the passage of the (Blueprint for Maryland's Future, the state's education-funding plan that became law in 2021). Even worse, they are pushing through taxes that will only serve to damage our economy."
Legislative leaders said that in order to avoid raising Maryland's sales tax on goods, the budget framework modernizes the state's tax code by imposing a 3% tax on IT and data services.
"We are putting our state in line with others — like Texas, Washington, D.C., and Ohio — by enacting a 3% fee on IT services," Jones said.
When it comes to other taxes, the Senate president said there will be no increase on the broad sales tax rate on goods, property taxes, estate taxes or the gas tax. Ferguson said the budget framework does not increase fees on deliveries or the car trade-in allowance.
Ferguson said there will be increases to gaming and cannabis taxes, but did not provide specifics at the news conference.
The governor first introduced his $67.3 billion budget plan in January. He said the landscape has changed since. Moore and legislative leaders cited federal government cuts and uncertainty over federal funding as making cuts and tax increases necessary in Maryland.
"The budget I introduced on Jan. 15 came five days before the inauguration of President Donald Trump. The world has fundamentally changed in just the past eight weeks," Moore said. "We can no longer count on D.C. for our economic growth ... Maryland no longer has a stable partner in Washington who has our best interest at heart."
The governor said ratings firms indicate federal cuts pose the greatest threat to Maryland than any other state.
The Maryland Board of Revenue Estimates released figures earlier this month, saying it anticipates the state is poised to lose $280 million in revenue over the next two years.
The board cited declining tax revenues and looming federal cutbacks as the reason. Maryland's budget relies heavily on federal funding, as 6% of the state's workforce is employed by the federal government.
House Minority Whip Jesse Pippy, R-District 4, responded to the Democrats' references to Washington, saying in a statement: "We have had weeks of rhetoric from the governor and Democratic leadership about the existential threat Washington, D.C., poses to Maryland's economy. Now, they turn around and deal what will be a horrendous blow to our economy with more than a billion in new taxes including a significant tax on the technology sector we are trying to grow."