The Maryland legislative session wrapped up late on Monday amid a challenging fiscal environment complicated by the impact of federal government changes under the Trump administration. The state, which heavily relies on federal employment and contracts, faced a significant $3.3 billion deficit. Democratic Governor Wes Moore, along with state lawmakers, addressed the shortfall through a combination of spending reductions and increased taxes and fees.
To keep a close watch on federal activities, legislators announced the formation of a new panel designed to monitor and update them on developments from Washington, D.C., which is crucial given the proximity of just 30 miles away. Maryland House Speaker Adrienne Jones emphasized the potential economic impact of recent federal actions on public services like education, healthcare, and federal workforce stability, noting the persistent threats even after the General Assembly’s 2025 session.
Governor Moore expressed concerns about the ongoing challenges posed by the Trump administration, which included federal job cuts and tariffs, affecting the state’s economic landscape. Moore framed the necessary revenue hikes as tax reforms that largely avoid impacting the middle class while targeting higher-income individuals. The administrative cuts were described as the most significant in Maryland’s budget in nearly two decades.
Senate President Bill Ferguson highlighted the atmosphere of fear and uncertainty that dominated the legislative session from its start in January, pointing out the unpredictable nature of decisions made at the federal level. Despite Republican opposition, which criticized the tax increases and suggested alternative approaches to balancing the budget without additional taxes, the comprehensive budget package was pushed forward.
The legislative highlights sent to the governor for approval include vital budgetary adjustments characterized by new tax implementations and spending cuts exceeding $2 billion. Notable changes include a 3% tax on information technology services and new tax brackets for high-income earners. Additionally, there is a 2% tax on capital gains for those earning over $350,000 and tax hikes on recreational cannabis and sports betting. Despite these financial measures, the state will maintain a $2.1 billion rainy day fund and a surplus of over $300 million.
Lawmakers also approved an energy package to meet the state’s power needs through enhanced use of nuclear, natural gas, solar, and battery storage, alongside a small rebate for electric bills. The session also focused on healthcare initiatives, such as allocating $25 million to an abortion grant program and making health insurance subsidies for young adults permanent. Prescription drug prices will be more tightly regulated, expanding the authority of a state board to impose price limits.
In terms of criminal justice reforms, legislation was passed allowing inmates convicted between the ages of 18 and 25 and who serve over 20 years to request sentence reductions, provided they are not serving life without parole or are sex offenders. Further, the expungement of criminal records will be extended to more residents, with automatic shielding for over 175,000 individuals previously pardoned for minor offenses.
Additionally, Maryland formed a statewide commission to explore potential reparations for slavery and the persisting impacts of racial discrimination. New limits on settlements also were established for lawsuits involving sexual abuse claims against state and private institutions, reducing future liabilities significantly. These legislative efforts underline Maryland’s proactive approach to balancing fiscal responsibility with social justice and public welfare goals.