2025 Maryland Legislature Grapples with Budget Gaps, Schools, and Transportation Issues In This Preview

November 22, 2024

This article was prepared with the help of advanced AI to analyze the 200 page document “Issue Papers 2025 Legislative Session”.

The Maryland Department of Legislative Services has released its “Issue Papers for the 2025 Legislative Session,” outlining the major topics and challenges expected to dominate this year’s General Assembly discussions. From structural budget deficits to education reform and transportation funding, the report paints a picture of a state grappling with financial hurdles while attempting to address critical policy issues.

Growing Budget Deficits Raise Alarm

Despite closing fiscal year 2024 with a $1.06 billion surplus, Maryland faces an ominous financial forecast. Projections show a cash shortfall of $299 million in FY 2025, ballooning to a structural deficit of $5.7 billion by FY 2030. A key driver of this deficit is the exhaustion of the Blueprint for Maryland’s Future Fund, which supported ambitious education reforms. By FY 2028, the general fund’s education spending is expected to spike from $21 million to $2 billion annually.

These deficits come as revenue growth slows, with ongoing revenues projected to grow only 1.4% in FY 2025. Meanwhile, spending is expected to increase by an average of 5.9% per year. This creates a challenging fiscal environment that will likely dominate budget negotiations.

Education Reform Faces Implementation Challenges

The report underscores difficulties in implementing the Blueprint for Maryland’s Future, particularly in funding expanded pre-kindergarten programs and addressing student cell phone use in schools. While these initiatives aim to improve learning outcomes, local school systems are struggling with execution amid limited resources.

Transportation Funding Shrinks

The Transportation Trust Fund’s six-year capital program has been reduced by $1.3 billion, even as the state anticipates higher revenues. The reduction is attributed to increased operating costs and lower-than-expected federal funding. Local transportation aid, including Highway User Revenues, remains uncertain, creating challenges for infrastructure projects across the state.

Gambling Revenues Decline While Sports Betting Soars

Maryland’s casinos generated $1.96 billion in revenue in FY 2024, a decrease of $96.5 million from the previous year. However, sports wagering has emerged as a bright spot, generating $60.3 million in state revenues, a significant jump since its launch in late 2021. The revenue supports the Blueprint for Maryland’s Future Fund but raises questions about the long-term sustainability of gaming income.

Public Safety and Technology: Emerging Concerns

Juvenile crime, artificial intelligence, and deep fake technology are highlighted as pressing public safety issues. The use of AI in criminal law and the proliferation of deep fakes present challenges for legislators seeking to modernize Maryland’s legal framework.

R&D Tax Credit Under Scrutiny

The state’s research and development tax credit, redesigned in 2021 to foster innovation, has come under fire for its limited impact. A 2024 reevaluation suggests that the program has failed to significantly boost R&D activity in Maryland, prompting recommendations for its termination or redesign.

Mental Health and Problem Gambling: Rising Issues

Adolescent mental health, particularly the impact of social media, is a growing concern for lawmakers. Additionally, Maryland’s Problem Gambling Fund, supported by casino fees, is underfunded relative to the estimated scale of gambling disorders in the state. Efforts to allocate additional resources to this fund stalled in the 2024 session.

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As the 2025 legislative session approaches, the Maryland General Assembly faces tough choices. Balancing the budget, supporting education reform, and addressing transportation and public safety needs will require careful deliberation. Stay tuned to Moderately MOCO for updates on how these issues unfold in Annapolis.

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