Policy Brief on Marylands Budget.

This policy brief is written by Jose Del Toro, a campaign volunteer and Masters student in public policy at UMBC

To contextualize Governor Wes Moore proposed budget for fiscal year 2026 (FY) it is imperative to look at the past. The FY2026 budget holds a direct relationship with the approved Blueprint for Maryland Future of 2021 (The Blueprint). This legislation proposed massive investments in education in the state. The cost was a whopping $4 billion dollars, and its implementation had spanned up to 2030. This bill is very costly, therefore changes in Maryland’s revenue are needed to fund this bill. To this end the Maryland Department of Budget and Management recommended increases in the income tax, sales tax and property tax. The government did not find this option viable. Some can argue that there was a pricey political toll and it was not worth risking power. Nonetheless, other sources of revenue for this bill come from the digital tax bill passed in 2021. A measure that increases the cost of life of the lower and middle classes in Maryland. The blueprint is funded up to 2026 but runs on deficit afterwards. This has ties on the FY2026 budget because it is seeking changes to the state’s fiscal policy. These came too late. 

For example in 2019, the Institute on Taxation and Economic Policy and the Maryland Center for Economic Policy reported a regressive fiscal policy. This translates to the rich paying less money compared to the non-rich. Therefore, the majority of Marylanders are worse off (Figure #1). Additionally, they calculated that changing the tax codes and closing corporate loopholes would bring $1.8 billion dollars in revenue to the state accounts. The problem is crystal clear, the democratic and republican parties are all protecting the wealth of those at the top. The government knew this data from six years ago and decided to ignore it. Now it is too late to fix the problem and the proposed FY2026 budget by the Wes Moore administration is not going to live up to its potential. This puts in jeopardy the blueprint funding, as well. A recent article by Wood (2025) at the Baltimore Banner reports that Wes Moore sent legislation to reshape the Blueprint to save money. Thus confirming our predictions. 

What is needed are fundamental and structural transformation of Maryland’s fiscal policy. Wes Moore proposes a cut to corporate taxes and elimination of the inheritage tax. Thus, the tactic is clear, it is seeking to be attractive for companies to move it to the state. Moreover, not taxing large sums of inherited money from Maryland’s top 1% is a mistake. The cap to income tax single filers is too high, this being at earnings $500,000/ year. On the other hand, there are additional policies that affect lower and middle income marylanders. For example, there are going to be cuts to the Developmental Disabilities Administration, a cap on child care scholarships, reductions on local government aid. Other cuts are added to the University of Maryland System’s budget. The net result is mixed, it does benefit the lower and middle classes by expanding child credit and simplifying the code by eliminating itemized deductions, but it is way too timid for Maryland’s top earners.  

Data from Moore’s FY2026 shows a stark reality of Maryland’s economy, it relies too much on federal funds (Figure #2). Therefore, the budget proposes expenditures that do not take into account the volatile nature of Trump’s politics. There are going to be cuts to federal funding, it is the politics of conservative fiscal policy. A taste of what is to come for the next four years can be vividly seen in the amount of Executive Orders signed on Donald Trump’s first day as President. Moreover, the tariff conflict that Trump has created with Canada and Mexico can worsen Maryland’s economy or revenue. According to the Office of the United States Trade Representative, Canada is Maryland's main exporter generating $2.4 billion dollars. In the case of Mexico, la Secretaria de Relaciones Exteriores reported that in 2021, Maryland’s exports to Mexico amounted to $365.4 million dollars and  generated 97,000 jobs in the state. Thus, the proposed tariffs to these key partners will be heavily felt in Maryland. 

On that same note Moore’s strong bet for the development of businesses in quantum computing, cyber and biotech is based on unrealistic expectations. The Maryland Chamber of Commerce has published a report in 2024 outline these are factors influencing lack of competitiveness in Maryland: 1) deteriorating business climate, 2) Lack of investment in infrastructure, 3) stagnant workforce development, 4)regional competition, 5)expensive cost of doing business. Additionally, Trump’s economic plan can be detrimental to the state, international competition is an additional roadblock. Therefore, simple corporate tax cuts and depending on tech will not provide the funding that Moore expects. An additional argument to this idea that attracting companies is not going to deliver revenue comes from the Fiscal Briefing published in 2025 by the Department of Legislative Services. Figure #3 resumes that the state will be in deficit up to 2030. They comment that the FY 2026 budget has positive elements but the complexities of the political nature of budgets and society will leave Maryland in deficit. One of the major reasons is that the Democratic party does not have the political interest to act on true transformative change that will uplift the poor and middle classes. Maryland is held hostage by the powerful and a party that has no incentive to change. 

Data from the 2022 American Community Survey reveals the deficiencies of the Democratic Party policy in the state of Maryland. Poverty in the state reflects the political nature of those policies. For example, poverty rates vary per county; Baltimore city has a 19.6% poverty rate while Carroll county has 5.1%. Marylanders shouldn’t tolerate these rates of poverty. This information contrasts with the state having one of the highest median incomes of the United States. Moreover, West Moore’s proposed budget for FY 2026 goes along those lines. Although it contains positive aspects, it lacks in empowering and lifting lower and middle classes in our state. For example, eliminating inheritance tax and a lower corporate tax will continue to broaden inequality. Without an intersectional framework and the changes that the Trump presidency will bring is going to deteriorate life in Maryland.