Maryland agencies told to prepare for cuts as state faces nearly $3 billion budget gap

Maryland agencies are being told to prepare for a tougher budget year as state officials confront a projected structural deficit approaching $3 billion.

Executive branch agencies and state universities have been instructed to prepare fiscal 2028 budget requests that include reductions of about 3%, while roughly two dozen Cabinet-level agencies were also directed to model scenarios with cuts of up to 10%.

Budget Secretary Yaakov “Jake” Weissmann said the exercise is intended to show policymakers what deeper reductions would actually mean for programs, staffing and services.

Maryland is required to pass a balanced budget each year, but the larger concern is the state’s structural gap — when ongoing spending is projected to exceed ongoing revenues.

The Department of Legislative Services currently projects a fiscal 2028 structural shortfall of about $2.57 billion, with the gap widening in later years if revenues and spending continue on their current paths.

The Department of Budget and Management is using a figure closer to $3 billion for planning purposes.

That distinction is important: agencies are not being told that every department will automatically lose 10% of its budget. Instead, they are being asked to show what those reductions would look like so the administration and General Assembly can evaluate options.

Budget officials said the smaller 3% reduction exercise is similar to previous years. The 10% scenario is new and is intended to provide a broader view of how far reductions could go if needed.

The state’s fiscal pressure is being driven by several factors.

One is the Blueprint for Maryland’s Future, the state’s long-term education funding plan. Beginning in fiscal 2028, Blueprint costs are expected to exceed the dedicated revenues intended to support them, requiring more money from the general fund.

The state is also dealing with broader spending growth, salary costs and weaker-than-expected fiscal conditions compared with earlier projections.

The problem is large enough that Weissmann said cutting everything except health, education, public safety and human services would still not be sufficient to fully close the gap.

There is some positive news.

Maryland ended fiscal 2026 with a larger surplus than expected, and lawmakers are waiting for the Sept. 24 Board of Revenue Estimates meeting for a clearer picture of the state’s revenue outlook.

Even so, the long-term numbers remain difficult.

The Department of Legislative Services projects ongoing spending will grow faster than ongoing revenues through the end of the decade. Its June outlook showed structural gaps of about $2.57 billion in fiscal 2028, $2.86 billion in fiscal 2029, $3.44 billion in fiscal 2030 and $3.37 billion in fiscal 2031.

State budget officials are therefore considering a range of options, including spending reductions, slower program growth and potential revenue changes.

The political debate over how to close the gap is already taking shape.

Republican Senate Minority Leader Stephen Hershey Jr. said the administration should identify specific programs it believes should be reduced rather than simply asking departments to prepare broad 10% scenarios.

Democratic legislative leaders have said all options remain under consideration, including cuts and potential tax changes, but no final fiscal 2028 plan has been adopted.

Gov. Wes Moore’s administration has previously opposed across-the-board reductions and says the current exercise is part of a targeted analysis rather than a commitment to blanket cuts.

The governor’s proposed fiscal 2028 budget will ultimately go to lawmakers when the General Assembly convenes in January.