The Tax and Fee Man Cometh

Maryland’s Budget Problem Is Coming Home to the Taxpayer. Annapolis avoided the biggest tax fight this year. The numbers suggest it may only have postponed it.

Marylanders might want to keep a little extra room in the family budget next year.

Not because anyone in Annapolis has announced a specific tax increase yet. They have not. But lawmakers are already talking openly about the choices waiting for them after the election, and those choices include higher taxes, higher fees, more spending cuts and giving local governments greater power to raise revenue themselves.

That is not speculation. Montgomery County Delegate Anne Kaiser, vice chair of the House Appropriations Committee, told The Baltimore Sun that “everything’s on the table,” including tax increases and budget cuts.

The reason is simple: Maryland still has a math problem.

State fiscal analysts have warned for months that ongoing spending is growing faster than the revenue available to pay for it. The General Assembly’s Spending Affordability Committee projected a structural deficit of roughly $1.2 billion in fiscal 2027, growing to about $2.7 billion in fiscal 2028 and approximately $3.5 billion by fiscal 2031.

Those are not rounding errors.

And while lawmakers took steps during the 2026 session to reduce the immediate fiscal 2027 structural gap to roughly $600 million, that does not erase the larger problem waiting farther down the road.

Part of the pressure comes from the Blueprint for Maryland’s Future. According to legislative projections, general fund support needed for Blueprint expenses rises from essentially zero in fiscal 2027 to about $1.57 billion the following year and eventually reaches approximately $3.43 billion in fiscal 2031.

That brings Maryland to an uncomfortable question: How much more can taxpayers reasonably be expected to pay?

One idea being studied is to give counties and municipalities more authority to raise money on their own. Maryland has already created a Task Force to Modernize County and Municipal Revenue Structures, and the Department of Legislative Services presented lawmakers with an examination of existing local taxing powers and possible revenue sources this summer.

There is an argument for local control. Different counties have different needs, and a tax that might be politically acceptable in Montgomery County may not make sense in Garrett County, Wicomico County or the Eastern Shore.

But there is another way to look at it.

If Annapolis reduces assistance to counties while giving those counties permission to raise taxes, taxpayers may not experience that as “local flexibility.” They may simply experience it as a higher bill.

The letterhead on the tax notice matters a lot less than the amount due.

Businesses are watching this discussion too.

The National Federation of Independent Business has repeatedly warned Maryland policymakers about the cumulative effect of taxes, fees and regulation on small employers. Maryland NFIB Director Mike O’Halloran said after the 2026 session that small-business owners were relieved lawmakers had avoided some proposed increases but remained concerned about what could happen during the next budget cycle.

Those concerns deserve consideration alongside the argument made by Democrats such as Kaiser, who says Marylanders receive valuable public services for the taxes they pay.

She has a point worth debating. Schools cost money. Roads cost money. Healthcare programs cost money. Public safety costs money. A serious budget discussion cannot pretend government services somehow appear without taxpayers paying for them.

But the reverse is also true.

A serious budget discussion cannot begin and end with finding new ways to collect more money.

Maryland lawmakers have to examine the spending side with the same intensity they examine the revenue side. Which programs are working? Which are not? Which promises can the state actually afford over the next decade? Where can government operate more efficiently?

That is where Republicans are likely to draw the battle lines in Annapolis.

Their argument will be that Maryland should first control spending growth, review large long-term commitments and consider the state’s competitiveness before turning again to taxpayers and businesses.

Democrats will argue that deep reductions could damage education, healthcare and other essential services.

That is a legitimate policy disagreement.

What should not be debatable is the underlying arithmetic.

Maryland faces a multibillion-dollar structural budget problem in the years ahead. Someone eventually has to pay for it, or something eventually has to be cut.

And after the election, Annapolis may finally have to tell Maryland taxpayers exactly which one it intends to choose.

Endnotes

1. Maryland General Assembly, “2025 Spending Affordability Committee Report”
Department of Legislative Services. Includes Maryland’s projected general fund cash and structural deficits through fiscal 2031 and projected Blueprint funding requirements.
https://mgaleg.maryland.gov/Pubs/Committee/2026-legislative-policy-committee-interim-report.pdf

2. Maryland Department of Legislative Services, “Effect of the 2026 Legislative Program on the Financial Condition of the State”
Summary of fiscal actions taken during the 2026 legislative session, including the fiscal 2027 structural budget position and reserve levels.
https://mgaleg.maryland.gov/Pubs/BudgetFiscal/2026rs-fiscal-effects.pdf

3. Maryland General Assembly, “Local Taxing Authority and Revenue Sources”
Department of Legislative Services presentation to the Task Force to Modernize County and Municipal Revenue Structures, July 31, 2026.
https://mgaleg.maryland.gov/meeting_material/2026/mms%20-%20134298287778773674%20-%2002%20UPDATED_FINAL_Local%20Taxing%20Authority%20and%20Revenue%20Sources.pdf

4. Maryland General Assembly, “HB 1142 – Task Force to Modernize County and Municipal Revenue Structures”
Legislative record and testimony concerning Maryland’s examination of local government revenue structures and taxing authority.
https://mgaleg.maryland.gov/mgawebsite/Legislation/WitnessSignup/HB1142?ys=2026RS

5. National Federation of Independent Business, “NFIB Statement on the End of Maryland’s 2026 Legislative Session”
April 14, 2026. NFIB Maryland’s assessment of taxes, fees and the anticipated 2027 state budget debate.
https://www.nfib.com/news/news/nfib-statement-on-the-end-of-marylands-2026-legislative-session/

Lisa Smithfield is a contributor at Direct Line News covering Maryland fiscal policy, energy regulation, and government accountability.

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