ANNAPOLIS–Gov. Wes Moore called on lawmakers Wednesday to “confront crisis with courage” in the coming months as they try to close their massive budget gap and navigate an unpredictable new administration in the White House.
The state is being tested by unprecedented fiscal challenges, Moore said, while also by “a new administration in Washington that sows uncertainty, confusion and chaos.”
“While there are many opinions about how we ended up in this crisis,” Moore told lawmakers, “let’s work together to make sure there is never a question about who solved it.”
The remarks came as part of Moore’s third State of the State address, where he recounted the successes of the first half of his administration and laid out the challenges to come. Those remarks were immediately met by critique from Republican colleagues dismayed by Moore’s budget plan – and by his words about President Donald Trump.
“I didn’t like the shots that he was taking at the new federal administration who’s been in office for a mere two weeks blaming, somehow, our financial crisis on potentially what could come out of the federal government,” Republican House Whip Jesse Pippy told reporters.
“I wish I would have heard some accountability from some of the policies coming out of Annapolis and the policies coming out of the second floor, and we didn’t hear any of that,” Pippy said. “And that was disappointing.”
It’s not yet clear how much Trump policies will trickle down into Maryland and affect the state’s budget crisis. Moore is intent on bridging an almost $3 billion budget deficit through program cuts and tax hikes, but the gap could grow much larger if the federal government suddenly decides to drastically cut Medicaid funding to Maryland, for example.
Moore warned of tough decisions ahead, acknowledging the state’s “distinct reliance” on D.C. and the need to break it.
In his address, Moore made a case to the legislature for tax code reforms and changes to state programs like the Blueprint for Maryland’s future, measures that could pull the state out of the current budget crisis.
The Blueprint, passed in 2021, called for costly improvements to public education to be phased in over the coming years. As it turns out, those ambitious standards are set to cost the state more than it is taking in in revenue, and Moore urged to lawmakers adjust for that.
“Working together to make the Blueprint more successful and sustainable doesn’t mean we’re backing down,” Moore said. “It means we’re stepping up.”
To supplement the cuts, Moore would also raise taxes on wealthy Marylanders. Under the current Maryland tax code, someone making $30 million a year is in the same tax bracket as someone making $300,000, Moore said. Moore said the new tax code would require those in the top tax bracket to pay a quarter point more than others.
“As someone who will be affected by this change, I am okay with paying a little more if it means we don’t have to lay off firefighters or police officers,” Moore said.
Senate Budget and Tax Committee Vice Chair and Democrat Jim Rosapepe said these changes would help families in Maryland.
“Governor Moore’s State of the State showed he’s the unTrump,” said Rosapepe, who serves Prince George’s County and Anne Arundel County. “Wes focused on helping our working families.”
But Republicans are skeptical.
Republican Senate Leader Stephen Hershey Jr. said that Moore’s focus on eliminating this year’s $3 billion dollar deficit is leaving larger issues unaddressed.
“I think everybody in Annapolis here is focused on the $3 billion deficit that we have this year,” said Hershey, who represents Caroline, Cecil, Kent and Queen Anne’s Counties. “But it’s important to note, with the full implementation of the Blueprint, we’re looking at $5 and $6 billion deficits in the out years. And that’s something I think all of us Republicans believe we should be trying to address this year as well.”
House Republican Leader Jason Buckel said that there was more style than substance in Moore’s address.
“We’re happy to work with him on areas where we can but a lot of that was sort of smoke and mirrors,” said Buckel, who represents Allegany County. “A lot of puffery.”
The Blueprint was never affordable at the State level, and totally unsustainable at the County level. Using simple math, with a $4Billion per year forcasted expense over the 10 year implementation schedule, and 2.2Million households in Maryland, the $40Billion Blueprint will financially impact the average Maryland household by $18,000. A totally untenable amount of money!
As we know, last year during the 2024 Gen. Assy. session we saw increases in 338 fees and taxes due to the looming structural budget deficit for FY25. While individually incremental, cumulatively it generated a fair amount of revenue. We also know that ultimately these fees and tax increases will find their way down to increases in the cost of doing business, and ultimately impact the prices consumers pay for products and services. There are 18 more proposed for FY26 deficit.
CEO Magazine just recently came out with their latest survey for the 2024 best & worst states for business.
So, going into 2025, not only does Maryland have:
the 5th highest gas tax in the nation, which is automatically increased via CPI, and not very business friendly;
the 5th highest minimum wage in the nation, which is not very business friendly, but justified as Maryland is …
the 5th highest cost-of-living state in the nation, which is also not very business friendly;
but Maryland is CEO Magazine’s 35th worst state for business.
This is not the first time Maryland has ranked poorly in a ‘best & worst states for business’ ranking. Similar rankings have been published by Forbes, CNBC and Wallet-Hub.
Business owners and decision making managers read this. They are knowledgeable and have spread sheets full of other decision making data and metrics; like the cost of land, construction, permits, and the permitting process; the cost of doing business, like corporate taxes, labor, overhead, G&A expenses, which impacts their state viability check-off list and ultimately their decisions on where to move a business, expand a business, start a business. We know the private industry sector has been stagnant in MD for some time. This latest ranking does not, obviously, help Maryland’s situation.
Here is CEO Magazine’s 2024 ranking of the best-to-worst states in our Econ Dev region:
5th – North Carolina*
10th – South Carolina*
12th – Virginia
15th – Delaware
31st – Pennsylvania
34th – West Virginia
35th – Maryland
47th – New Jersey
[*I include NC & SC because of their $7.25 minimum wage, which is justified given their cost of living, and less than half of the min. wage in MD. NC & SC are Econ Dev magnets and not that far away.]
Here is CEO Magazine’s 2024 ranking of the best-to-worst states along the I-95 corridor from Maine to Florida:
2nd – Florida
5th – North Carolina
7th – Georgia
10th – South Carolina
12th – Virginia
15th – Delaware
24th – New Hampshire
31st – Pennsylvania
33rd – Maine
35th – Maryland
36th – Rhode Island
42nd – Connecticut
45th – Massachusetts
47th – New Jersey
49th – New York
If you were thinking about moving your business to, expanding your business to, or starting a new business on the DELMARVA, where I live, where would you put it?
Let’s expand that to thinking about moving your business to, expanding your business to, or starting a new business in the greater Mid-Atlantic region, where would you put it?
Let’s expand that even further to thinking about moving your business, expanding your business, or starting a new business along the I-95 corridor, where would you put it?
Applying common sense and logic to the data, and with an acute sense for the obvious, Maryland would not make it to your short list of states to be considered.
One can only hope the 2025 Gen. Assy., lead by Sen. Pres. Ferguson and Speaker Jones, does not dig the hole Maryland is in any deeper, as neither raising fees and taxes to balance the FY26 budget, regardless of how high the bar, nor creating new ones, is going to entice corporations to move here, expand here, start new here.
Given that income tax is one of the main revenue sources for the state, along with corporate taxes, with 10% of Maryland’s workforce being Fed based, and likely to see that reduced, plus not being considered business friendly, well, there you have it.
We have been a spend and tax state for decades, legislating into being a number of very expensive unfunded mandates [the elephant in the room right now being The Blueprint] well before Moore and Hogan came into office, so Moore shouldn’t blame Hogan, they both inherited this fiscal mess.
Frankly, the Governor’s recent Executive Order to bolster Maryland’s economic competitiveness surprised me; while idealistic, it is not pragmatic with a sense of immediacy and urgency. On the contrary, rather it is more layers of slow moving bureaucratic inefficiency. His State of the State speech was full of promise, but empty on probable achievement; taking dollars from one pocket and putting them in another pocket.
Let’s not forget the FY25 budget was $63Billion. Moore’s FY26 budget proposal is $67Billion. $4Billion more, with $3Billion in cuts and increased fees/taxes, a net increase of $1Billion. So, genuinely, the FY26 budget was originally a $70Billion proposed budget without the cuts and increased fees/taxes!
Maryland needs to reduce spending now, live within our means now, albeit not raise fees and taxes to balance our budget now, and become more business friendly now.
Governor Moore, Sen. Pres. Ferguson and Speaker Jones need to take a leadership role and get our fiscal house in order.