Gov. Wes Moore used his annual State of the State Address on Wednesday to make a case for his proposed budget, including the tax increases he has suggested for top income earners.
Speaking to a joint session of the General Assembly, Moore said Maryland is being tested.
“We are being tested by a historic fiscal challenge, the likes that we have not seen since the Great Recession,” he said. “And if that wasn't enough, we are now being tested by a new administration in Washington that sows uncertainty and confusion and chaos.”
Moore pointed out that actions by President Donald Trump’s new administration, such as an effort to freeze federal grants and potential layoffs for federal workers, will affect Maryland’s workforce.
Separately, state lawmakers must close a $3 billion budget gap when they pass next fiscal year’s budget.
As a result of these challenges, Moore said, “the easy decisions are done. They're off the table. We only have difficult decisions ahead.”
The Democrat suggested solving the budget issues by investing government dollars in industries that will boost the economy. He said his administration has used data to determine that the best investments for the state are the information technology, aerospace and defense, and life science industries.
“I want Maryland to be the capital of quantum and AI and clean energy and biotech, and I want to make sure that all the sectors that will define the economies of tomorrow will be housed right here in the state of Maryland,” he announced to applause.
Moore highlighted his proposals to increase spending on transportation infrastructure, public schools and environmental causes.
“Investing in conservation, environmental protection and Maryland's Great Outdoors is not just the responsible thing to do; it will help to grow our economy,” he said.
He highlighted his proposal to create a teacher recruitment program, which is part of legislation he has proposed making a wide range of other education-focused changes.
“We want to build out an educator workforce that brings excellence to our classrooms and that looks like our student body, and as part of this initiative, we are building out a debt-free pass to teaching and increasing funding for K 12 schools by $550 million,” Moore said.
To pay for these investments while also closing the $3 billion deficit, Moore’s budget makes cuts to some programs and raises taxes. The governor spent several minutes of his roughly 50-minute speech making a case for those tax increases, or what he calls “tax reform.”
“Right now, someone who is making $30 million a year is in the same tax bracket of a family making 300,000,” he said. “You cannot look at the system that we have right now and say it makes sense.”
Moore’s plan doubles the standard deduction, and creates new tax brackets for top earners — one for those who make more than $500,000 a year, and one for those who make more than $1 million. Officials estimate that under his plan, households that earn more than $700,000 a year will see higher taxes. They say that amounts to just under one in five Marylanders.
House Republican Leader Jason Buckel called Moore’s speech “smoke and mirrors.”
“We're telling people, on the one hand, that we're enacting these massive cuts, but I think what he also just told you is we're actually spending more money on virtually everything under the sun than what we spent last year,” he said.
He pointed out that a new $0.75 fee on deliveries and increased fees on new car purchases will affect people of all income brackets, not just the wealthy. And he said Moore’s proposal to eliminate the ability to itemize tax deductions could mean higher taxes for middle class families who can’t deduct their home mortgage interest.
House Republican Whip Jesse Pippy also pointed out that Moore has been in office for two years — long enough to start to tackle some of the fiscal challenges that Moore said in his speech he has known about since the moment he was sworn in as governor.
“I didn't like the shots that he was taking at the new federal administration, who's been in office for a mere two weeks, blaming, somehow, our financial crisis on potentially, what could come out of the federal government,” Pippy said. “The financial situation we're in here in Maryland is self-inflicted by this administration. I wish I would have heard some accountability.”
