Governor Wes Moore on August 19, 2023 discusses the guiding philosophies his administration will draw upon to improve Maryland’s troubled economic landscape. Photo by Danielle J Brown
Gov. Wes Moore (D) raised concerns about Maryland’s future economic prospects and made it clear to state and county officials Saturday that the next state budget may face some difficult budget decisions, both for them and for himself as governor.
“It will require the discipline of elected state and local government officials … and yes, it will require the discipline of the governor.” As much as I want to say yes, you’re going to hear some nos,” he told assembled state and county leaders during the concluding remarks at the Maryland Association of Counties Summer Conference in Ocean City.
He didn’t elaborate on what the “no” might mean — budget cuts, local project vetoes, or other options. Instead, he focused on getting MACo participants to work together to help the state realize its full economic potential.
Moore’s comments come about a month after the Department of Legislative Services released a report detailing the state’s structural budget deficits emerging after its first session of the General Assembly, which saw most of its legislative efforts in Annapolis from a were passed by a democratic majority.
The 2028 deficits projected in the report exceed $1 billion, reaching levels not seen since the Great Recession.
Most of the state’s annual budget is set by previous legislative mandates, and senior Moore officials recently noted that 17 of the last 20 budgets required cuts to even the balance.
He argued that predictions that Maryland would face economic troubles had been predicted for several years, even under the then administration. Larry Hogan (right).
“Since at least 2017, the Department of Legislative Services has been forecasting structural budget deficits. These predictions were made under the last government – not this one. Those are their numbers, not ours,” Moore said.
The governor didn’t mention that analysts had forecast moderate surpluses earlier this year due to the influx of federal pandemic funds over the past three years. When Moore presented his budget in January, legislative analysts projected structural surpluses in the hundreds of millions of dollars — $232 million and $263 million in fiscal years 2025 and 2026, respectively.
Budget 2025 is now forecast to start with a deficit of $418 million.
But senior Moore administration officials stuck by some legislation that had slashed future revenue projections, including a measure that increased existing tax credits for some retired military personnel, a permanent extension of the state’s earned income tax credit, and an acceleration of the state minimum wage $15.
These are the types of investments, senior advisers said, are vital to boosting the competitiveness of the state’s economy and the financial well-being of families.
Other budgetary constraints predate the new governor, including the General Assembly’s call for a 10-year, multibillion-dollar education reform plan that legislative analysts have highlighted as contributing to the projected deficits.
Moore said Saturday that inflated federal funding that has helped states weather the pandemic is being phased out, adding to the economic woes Maryland is facing.
“The problems below the surface have been masked by federal money and big stock gains during the COVID-19 pandemic,” he said. “Maryland and every other state in the country have benefited from billions of dollars of federal money to get us through the COVID emergency. As the state of Maryland and every other state has benefited from record highs in the stock market, it has brought tax revenues to keep the budget healthy. But we all knew those days wouldn’t last forever.”
The governor provided some bright spots for the state’s uncertain economic outlook, pointing to achievements that he said would help propel the economy, including raising the minimum wage, investing in transportation infrastructure and providing $2.5 billion in Dollars in the rainy day fund.
Moore and his top officials say the state has untapped potential as one of the most literate and diverse states in the country, with resources like the Port of Baltimore and more than 70 federal laboratories.
By addressing broader economic conditions — the state’s economy has grown at less than half the national pace over the past decade and Maryland’s population is growing more slowly than neighboring states — the state’s revenue conditions could improve, Moore said.
According to the government, an improved economy would be the key to higher income and corporate tax revenues. In 2022, Maryland’s personal income grew 1.3%, while statewide wages rose 2.4%. (However, according to the US Census Bureau, the state has the highest median household income in the country.)
In his closing speech, Moore outlined a handful of guiding principles that he believes will lead to a healthier fiscal outlook going forward, but did not identify any concrete actionable steps his administration will take.
“We’ll be careful. We will be data-driven and prioritize our spending to strengthen our economic engine. Not just for now, but for the future,” he said. “And discipline – discipline will be what drives us forward. The discipline for collaboration. The discipline of being innovative. The discipline to choose the difficult instead of the easy.”
He claimed that if Maryland is able to emerge from its economic stagnation, neighboring states like Virginia, New Jersey, Pennsylvania and Delaware “will look at what we have done and they will envy our strength.”
“This is Maryland time. And our greatness is being achieved here, in this moment, together and in partnership,” Moore concluded.
Despite the uncertainty about the state’s budget outlook, MACo attendees in the room gave the governor a standing ovation after his remarks.
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