Five-year state budget projection foresees ‘enormous gap’ not seen in two decades

Budget cuts, taxes among options to close budget deficits that rise into billions of dollars

State lawmakers will return to Annapolis in January facing a widening structural budget gap that analysts said is on track to become one of the worst fiscal situations in two decades.

One-time fixes including tapping available cash in the Rainy Day Fund could ease the pain, lawmakers were told Tuesday, but doing so could leave the state at risk for an array of other concerns, including a recession.

“The overarching takeaway from today’s meeting is that there’s an enormous gap between the ongoing spending commitments the state has made and ongoing revenues,” said David Romans, a Department of Legislative Services budget analyst, in a presentation for legislative fiscal leaders, including members of the Joint Spending Affordability Committee.

Romans said that in just five years, the state will face “a significant challenge” in paying for those commitments.

“By fiscal 2030 — the final year of our forecast — we are showing the state will only have enough revenue to cover 84% of the expenses we’re projecting the state to incur,” Romans said. “That is the largest gap that we have seen in the last 20 years. It is more significant than the Great Recession.”

In fiscal years 2008 and 2009, during a deep recession, budget projections said the state was on track to have only enough revenue to cover 89% and 87% of its ongoing spending, according to the Department of Legislative Services.

Maryland faces more than $1 billion in combined structural and cash deficits in the current year. That gap more than doubles to $2.7 billion in fiscal 2026 and 2027.

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