As Maryland lawmakers grapple with an anticipated $2.5 billion budget deficit, state Senate President Bill Ferguson warns that lawmakers will likely consider new taxes when they meet for their annual 90-day session in January.
Nonpartisan legislative analysts have said higher-than-anticipated spending in entitlement programs is driving the deficit, a point Ferguson highlighted while speaking with reporters Tuesday.
“These are programs like Medicaid; like the child care subsidy program; as we recently learned, the Developmental Disabilities Administration, which had higher billing than anticipated; things like inmate medical care that came back with significantly higher costs for care than we had previously anticipated,” Ferguson said. “We are not going to throw 50,000 people off of Medicaid. We are not going to throw 20,000 families out on the street to not have child care subsidy credits.”
He said addressing the deficit will require both cuts and new revenues — i.e. taxes.
For example, lawmakers should look at tax credits that are not boosting economic activity and could be repealed, he said. As for a new tax, he suggested looking at certain digital products, such as data broker services.
“There are these entities out here that package your and my private data and then resell it,” Ferguson said. “In my mind, that is a good, but right now it's considered a service.”
Maryland could tax those products the way the state taxes tangible goods, such as books and clothing.
However, Republican leaders said Tuesday they are “very concerned” about any deficit reduction plan that includes new taxes.
“Our private sector economy is stagnant to declining, and raising taxes does not help corporate taxes, income taxes, any kind of broad-based taxes,” House Minority Leader Jason Buckel told reporters Tuesday. “It does not help your economy.”
Republican leaders said a plan to address the budget shortfall needs to include changes to the state’s education funding formulas, referred to as the “Blueprint for Maryland’s Future,” the name of the legislation that altered those formulas a few years ago.
For example, Buckel suggested canceling the state’s planned expansion of pre-kindergarten for 3 year olds, known as pre-k3.
“I have a 3-year-old grandson, and you know, he's not completely potty trained yet,” Buckel said. “I'm not sure that pre-k3 is something that is completely necessary to achieving college and career readiness when you're 18, but it has a significant cost.”
But Ferguson said cuts to the Blueprint would be misguided. The program is fully funded through fiscal year 2027, he said, so any cuts would not yield savings until fiscal year 2028, which begins July 1, 2027.
Buckel said healthcare funding is one place the state ought to look for cuts. Specifically, the state should consider reducing the number of people eligible for state-funded Medicaid.
“Our Medicaid expansion and eligibility has made it to where you have people who are, in some cases in some communities, classified as middle-class based on their household income, and they're qualified for Medicaid,” he said. “I want to see everybody get great health care, but the truth of the matter is, is that our health care spending and Medicaid is really out of whack as adjusted to what our economy is and what our revenues are.”
House Minority Whip Jesse Pippy also suggested cutting the size of all state agencies, which would reverse Gov. Wes Moore’s ongoing plan to fill thousands of vacant government positions. He said 10% cuts across the board would almost close the deficit analysts project could be coming several years down the road.
Hiring more state workers “is the wrong conversation,” Pippy said. “The right conversation is growing our economy, growing our small business sector, and then making government cuts.”
