Two dozen cabinet agencies told to plan for deep reductions as Maryland heads toward a 2027 session dominated by a projected $3 billion budget gap.
By Michael Phillips | MDBayNews
State agencies across Maryland have been ordered to show how they would absorb cuts they hope never have to make.
The Department of Budget and Management has told every executive branch agency and state university to build fiscal 2028 budget requests around roughly 3% in reductions. Two dozen Cabinet-level agencies got a tougher assignment: show what it would take to cut 10%, according to internal memos reported Monday by Maryland Matters.
It is the clearest sign yet that Gov. Wes Moore’s administration is bracing for a budget year even harder than the last one. The state is heading into the 2027 General Assembly session facing a structural gap that budget officials now peg at close to $3 billion, and growing.
“We’re having these conversations and having the tough conversations, and we’re going to continue to,” Budget Secretary Yaakov “Jake” Weissmann said. He called the 10% exercise a prudent way to size up a shortfall he said could not be solved by trimming around the edges.
“Two dozen Cabinet-level agencies got a tougher assignment: show what it would take to cut 10%.”
A shortfall that keeps growing
Lawmakers left Annapolis after this year’s session with a balanced budget, a legal requirement, for the fiscal year now underway. That has not stopped a deeper structural gap from building. The Department of Legislative Services projected a nearly $2.6 billion structural gap for fiscal 2028 back in June. Budget officials are now working off a figure closer to $3 billion, and current projections show the gap could widen to roughly $3.4 billion in each of the two years after that.
Fiscal 2028 marks the first year the Blueprint for Maryland’s Future, the state’s sweeping K-12 education overhaul, will cost more than its dedicated funding can cover. That leaves the general fund to absorb the difference, at the same time a first-in-the-nation digital advertising tax meant to help pay for the Blueprint sits tied up in litigation. The Maryland Tax Court struck the tax down Aug. 14 in three separate cases brought by Apple, Google and Peacock TV, ordering refunds with interest. Comptroller Brooke Lierman has said her office intends to keep defending the law, meaning the roughly $250 million a year it was projected to raise remains unsettled heading into budget season.
The math is not abstract. Maryland’s overall budget runs about $71 billion, with just under $30 billion of that coming from the general fund, the pool of income and sales tax revenue lawmakers actually control year to year. It is that pool the coming cuts, or new taxes, would have to come out of. Weissmann put the scale of the problem in blunt terms: even eliminating every dollar of general-fund spending outside health, education, public safety and human services would still not be enough to close the gap. A 10% cut across the general fund, by his office’s math, would.
“Even eliminating every dollar of general-fund spending outside health, education, public safety and human services would still not be enough to close the gap.”
The picture is not entirely grim. Comptroller Brooke Lierman’s office reported that fiscal 2026 closed with a larger surplus than expected, and Senate Budget and Taxation Chair Guy Guzzone, D-Howard, said that could be an early signal of better news ahead of a Sept. 24 Board of Revenue Estimates meeting.
Maryland’s credit standing has also been part of the backdrop. Moody’s downgraded the state’s bond rating from Aaa to Aa1 in May 2025, and the state responded this spring by dropping Moody’s as one of its rating agencies altogether, replacing it with Kroll Bond Rating Agency. State officials said the split was not a search for a softer grade, but Republicans were skeptical.
“They’re sort of picking who gives them good ratings and who doesn’t.”
— Del. Jefferson Ghrist
“They’re sort of picking who gives them good ratings and who doesn’t,” said Del. Jefferson L. Ghrist, R-Upper Shore, a member of the House Appropriations Committee.
Standard & Poor’s, which along with Fitch and Kroll still rates Maryland AAA, its highest grade, lowered its outlook on the state’s debt from stable to negative around the same time, citing the same structural gaps driving this week’s cut memos.
Republicans see an opening
For Senate Minority Leader Stephen S. Hershey Jr., R-Upper Shore, the 10% memo is a start, not a solution, and he warned it could end up being used as cover rather than a real plan.
“The goal shouldn’t be to make government 3% cheaper,” Hershey said, arguing that treating every dollar of state spending as equally essential is not a strategy. He said Moore should turn the memo into public action: identify which programs get cut and defend those choices in the legislative session.
A few details from the memos and the process behind them:
- The 3% target is not new. Weissmann said agencies were asked to do the same exercise last year.
- The 10% target is new this cycle, and applies to about two dozen agencies rather than all of them.
- The memos, due at the end of July, had to detail how cuts would hit staffing, operations and services to residents.
- Weissmann would not say whether the administration has settled on an actual cut number to seek from lawmakers.
Democrats in the legislature were more measured. House Appropriations Chair Ben Barnes, D-Prince George’s and Anne Arundel, said it comes as no surprise that the governor is looking at cuts and that “all options are on the table” heading into next year’s session.
House Republicans raised the same point when the session opened in January, when House Minority Leader Jason Buckel, R-Allegany, pointed to the size of the state’s recurring shortfall.
“We once again have a historically large budget deficit,” Buckel said at the time, criticizing what he called unchecked spending growth. House GOP leaders also called in January for a new legislative committee to investigate alleged fraud or mismanagement of state funds. As of that report, Democratic leaders had not responded to the proposal.
Taxes still loom in the background
“Our first reaction is always, always to see what kinds of cuts can be made.”
— Sen. Guy Guzzone
Moore has spent much of his time in office resisting broad, across-the-board cuts, calling them “lazy” last year. A spokesperson for the governor, Rhyan Lake, framed the new belt-tightening memos as consistent with that position rather than a reversal of it, saying the review is “a continuation of Governor Moore’s approach to fiscal discipline.”
Whether that discipline extends to new taxes is the question hanging over the whole exercise. Guzzone said the Senate’s instinct is still to look for cuts first.
“Our first reaction is always, always to see what kinds of cuts can be made,” he said.
But 2027 is the first year of a new term, traditionally the most politically survivable window for a governor to raise taxes. Maryland has not touched its sales tax rate since 2008, when it rose from 5% to 6%. A one-point increase, to 7%, could raise an estimated $1.2 billion. Broader proposals to expand the sales tax to services have failed twice in the legislature, in 2020 and again in 2024.
House progressives could also revive the Fair Share Act, a 2024 package of corporate and high-earner tax increases that had support in the House but was dismissed outright in the Senate. It was projected to raise about $1.6 billion.
For now, the administration’s public posture is cuts first. Whether that holds once agencies report back what a 10% reduction actually looks like, in programs cut and Marylanders affected, is likely to shape the opening weeks of the 2027 session.
What to Watch
- Sept. 24: The Board of Revenue Estimates meets to update the state’s revenue picture, a number both parties will use to argue their case.
- The agency memos: Whether the Moore administration makes the 10% cut scenarios public, or keeps them as an internal planning tool, will say a lot about how serious the exercise is.
- January 2027: The fiscal 2028 budget introduction will show whether “cuts first” survives contact with a newly elected legislature in the first year of its term, a window both parties have called more politically workable for tax increases than an election year, with new taxes still on the table.
Sources: This report draws on original reporting by Bryan P. Sears of Maryland Matters, published Sept. 14, 2026, including on-the-record comments from Budget Secretary Yaakov “Jake” Weissmann, Senate Budget and Taxation Chair Sen. Guy Guzzone, Senate Minority Leader Sen. Stephen S. Hershey Jr., House Appropriations Chair Del. Ben Barnes, and governor’s office spokesperson Rhyan Lake. Budget and deficit figures are drawn from Maryland Department of Legislative Services projections cited in that reporting. Case details on the digital ad tax ruling are drawn from PwC’s Aug. 24, 2026 tax insight on the Maryland Tax Court decision; additional reporting on Comptroller Brooke Lierman’s response comes from The Daily Record (Aug. 17, 2026) and wire coverage of the Aug. 14, 2026 ruling. Details on Maryland’s bond rating history, including Del. Jefferson L. Ghrist’s comments, are drawn from Maryland Matters (May 28, 2026) and The Daily Record (May 29, 2026). House Minority Leader Jason Buckel’s comments are from WJLA/7News (Jan. 13, 2026). MDBayNews has previously reported on Maryland’s structural deficit throughout the 2026 legislative session.
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