ANNAPOLIS, Md. — Maryland Governor Wes Moore announced a new state budget plan on Thursday in collaboration with the state’s Democratic leaders. The plan aims to address a projected $3.3 billion deficit in the upcoming fiscal year. Governor Moore criticized President Donald Trump’s recent tariffs and reduction of the federal government, suggesting that they have compounded Maryland’s financial issues. To manage the deficit, the budget includes both tax hikes and spending cuts.
The proposed tax increases consist of a new 3% tax on information technology services and the introduction of an income tax bracket targeting the state’s highest earners. “We’ve spoken with Marylanders from various income levels, and there’s a general agreement that individuals earning over $750,000 annually should reasonably contribute about $1,800 more to aid in our state’s advancement,” Governor Moore mentioned. Additionally, the plan includes tax hikes on gambling activities and cannabis sales, along with a 1% capital gains tax for those earning more than $350,000.
In a press conference at the state Capitol, Moore and leading Democrats voiced their concerns over President Trump’s fiscal policies. Moore referred to a Moody’s report that highlighted Maryland as being disproportionately at risk from federal budget cuts. “The reckless trade war initiated by the president with our allies, including our primary trading partners, risks a $2 billion impact on our economy, adversely affecting our state,” Moore remarked. Recently, the state was dealt another blow by the federal government with the announcement that plans to relocate the FBI headquarters to Maryland would be canceled.
Republicans, however, argued that it is unfair to blame the president for Maryland’s financial troubles since the state faced budget problems before Trump took office. “They didn’t offer any accountability,” said Delegate Jesse Pippy, the House minority whip. “Instead, they attributed every problem to Trump while raising taxes by at least a billion dollars.”
Governor Moore emphasized that 94% of Maryland residents would either experience a tax reduction or see no change in their tax obligations. However, details on the average tax cut for those benefiting were not provided due to ongoing calculations. He and other Democrats, who maintain strong legislative control in the state, asserted that the budgetary adjustments are an essential upgrade to Maryland’s revenue system.
“As our economy evolves digitally, this revenue model reflects the increasing significance of IT in our daily operations and business functionality,” stated Senate President Bill Ferguson. “It also reflects the shift towards providing digital services, like software subscriptions and cloud storage, rather than traditional goods.” Ferguson explained that revenue from the capital gains tax would benefit transportation investments and align Trump’s tax policies favoring the wealthy with Maryland’s fiscal strategy.
About $2.3 billion in spending reductions are part of the budget, which is $500 million more than initially planned by Moore in January. Delegate Ben Barnes, Chair of the House Appropriations Committee, highlighted that funds previously cut from the Developmental Disabilities Administration have been reinstated.
Although Moore characterized the reductions as the most significant in over a decade, specific details were sparse during the announcement, drawing criticism from Republicans. Delegate Jason Buckel, House minority leader, expressed his disappointment, stating, “The presentation lacked clarity. All that’s evident is tax hikes and unspecified budget cuts.”
The legislature has yet to pass a balanced budget before the session concludes on April 7. According to Moore, Thursday’s agreement serves as a foundational framework, and further work is needed in the upcoming weeks to finalize the budget. “This framework will guide the final legislation and budget,” Moore explained, “and I am eager to endorse it once it reaches my desk.”