The Maryland Senate and House of Delegates have approved their respective versions of the budget, making modest changes to Governor Moore’s proposed spending plan. While legislators were able to restore some funds for priorities like child care and services for people with disabilities, the budget still includes a number of changes that restrict funding for colleges and universities, health care service providers, and people with disabilities, as well as shifting additional costs to local governments.
At the same time, both versions of the budget effectively give significant tax breaks to corporations and wealthy individuals by failing to decouple from all of the new tax breaks that were part of the Republican megabill, H.R. 1, that passed last year. Without legislative action, many of these federal tax cuts that overwhelmingly benefitted corporations and ultra-wealthy individuals will be matched with additional state-level tax cuts. The cost of adopting these federal tax changes is nearly $400 million in the next budget year.
The Senate and House have passed their versions of the budget and are preparing to convene a conference committee to resolve the differences between their budgets and pass the final spending plan, likely within the next week.
Areas Where Legislature Restored and Added Funding
The Senate and House have both proposed some significant additions to the governor’s budget:
- $27 million to restore local government funding for lower-wealth jurisdictions
- $23 million to reduce proposed cuts to services for people with developmental disabilities. While there is increased funding compared to the governor’s proposal, the budget still cuts about $127 million in state funding from these services and foregoes an equivalent federal match.
- $20 million in additional funding for the Child Care Scholarship program, which helps low- and moderate-income families afford child care. The additional funding is intended to reduce but not eliminate the waitlist created after policymakers froze enrollment last year.
- $20 million to restore funding for youth behavioral health services
- 1% rate increase for state payments to nursing homes
- Additional funding for rental assistance for families with children in community schools. The Senate added $5 million to the program, for a total of $10 million. The House added $6 million, for a total of $11 million.
Areas Where the Legislature Retained Gov. Moore’s Proposed Cuts
In addition to retaining the majority of funding reductions for services for people with disabilities, the legislature has signed off on many more of Gov. Moore’s proposed budget actions that limited funding for some state services.
- Capping annual growth in state funding for community colleges to 3% per year, regardless of enrollment growth or inflation. This limit will remain in effect for the next three budget years. ($21 million in FY 2027)
- Limiting growth in funding for four-year colleges and universities to 3% ($32 million)
- Shifting a portion of retirement costs for educators, library staff, and community college staff to local governments. ($39 million)
- Level funding reimbursement rates for most providers who provide health care and health-related services to Medicaid participants. Historically, inadequate reimbursement rates have discouraged providers from accepting Medicaid patients and made it harder to find care. ($79 million)
Legislators also largely went along with the governor’s proposals to reallocate resources from “special funds” – generally a dedicated funding source that is typically restricted to be used for a specific purpose. The largest of these involves funding from the Strategic Energy Investment Fund, which is intended to fund clean energy projects and improve affordability.
Gov. Moore’s proposed budget used more than $600 million from the fund both for its intended use and to fund other parts of the budget. The legislative proposal allocates the same amount of money from the SEIF but uses some of the funds for different purposes to align with energy legislation that is also moving through the legislature.
Budget Doubles Down on Some Trump Tax Breaks for Corporations and Wealthy Individuals
The massive federal budget and tax bill passed in 2025, H.R. 1 or the “One Big Beautiful Bill Act,” affected Maryland families and the state’s budget in a number of ways. The bill provided significant new tax breaks for profitable corporations, wealthy investors, and millionaires and billionaires while making massive cuts to health and food assistance programs.
Portions of Maryland’s tax code are linked to federal tax law, so some of the provisions will be matched at the state level as well if the legislature does not act to decouple from federal tax changes, costing the state more than $550 million in the next budget year. Decoupling essentially keeps Maryland taxes the way they were before the federal changes. Many states facing similar revenue losses have already acted to decouple from some or all of the federal changes, including Virginia, Pennsylvania, Delaware, and the District of Columbia.
Legislators so far have agreed to two decoupling proposals that were in the governor’s proposed budget, saving about $164 million in state revenue in FY 2027 alone.
Decoupling from other costly tax changes could preserve nearly $400 million in additional revenue. That would enable lawmakers to restore some of the proposed funding cuts in the budget, invest in newly identified priorities, have some funding in reserve to address unexpected costs throughout the budget year, or address the much larger expected shortfall for the 2028 budget year.
Differences Between the Senate and House budgets
Legislators and the Moore administration seem to have largely come to agreement on most major budget issues, but there are still some differences between the Senate and House budgets that will be resolved in a conference committee.
In positive cost-saving actions, the House reduced spending on two of the state’s economic development programs, which legislative analysts have often flagged as costly and ineffective.
- The House capped funding for the “More Jobs for Marylanders” business tax credit at $15 million, saving $17 million. The Senate fully funded the credit.
- The House also The House capped funding for another economic development fund, the “Sunny Day Fund,” an $8 million reduction from the proposed budget.
There were also some minor differences between the chambers on state agency funding and programs.
- The Senate cut about $19 million in funds for IT and call center projects in the Department of Human Services after legislative analysts said the funds were not needed. The department disagrees and says it still needs the funds, so the House budget leaves the funds in.
- The House proposed delaying a proposed expansion of the Maryland Corps volunteer service program, reducing funding by about $16 million.
For the most part, the two chambers seem to be in agreement about where to direct additional available funds, as noted above, though the House added a few additional items that were not in the Senate version of the budget:
- $10 million in additional funding for grants to help expand enrollment in local pre-K programs
- $5.7 million for training and professional development for child care providers
- Additional staff for the Comptroller’s Taxpayer Services Division