State lawmakers will return to Annapolis in January facing a widening structural budget gap that analysts said is on track to become one of the worst fiscal situations in two decades. One-time fixes including tapping available cash in the Rainy Day Fund could ease the pain, lawmakers were told Tuesday, but doing so could leave the state at risk for an array of other concerns, including a recession. Maryland faces more than $1 billion in combined structural and cash deficits in the current year. That gap more than doubles to $2.7 billion in fiscal years 2026 and 2027.
Getting to the source: Upcoming state budgets will need to account for billions in additional costs associated with education reforms as outlined in the Blueprint for Maryland’s Future. The state also faces higher-than-expected costs for Medicaid, driven by inflation and increased enrollment, as well as greater demand for the state’s child care subsidy program.
