During yesterday’s Spending Affordability Committee meeting, the Department of Legislative Services (DLS) shared its updated budget projections for the next six years. The briefing informed lawmakers that, contrary to earlier forecasts, fiscal 2027 is now projected to end with a shortfall of nearly $1.5 billion, which is almost five times larger than predicted this spring.
Contributing to this shortfall is a General Fund deficiency of $695 million, nearly half of which stems from fiscal 2026 and prior-year costs. More than 25% of the General Fund deficit is tied to provider reimbursements at the Department of Health, and another 25% reflects higher-than-anticipated spending in entitlement and public safety programs. As a result, the cash shortfall eliminates the fiscal 2026 balance legislators previously expected.
The primary driver of ongoing General Fund spending in fiscal 2028 through 2031 is Blueprint for Maryland’s Future costs, which total just over $2 billion in FY 2028 and climb to nearly $3.8 billion by FY 2031.
The DLS briefing also revealed a $259 million structural deficit projected for fiscal 2026. Structural challenges persist throughout the forecast period, ultimately culminating in a projected $3.8 billion structural deficit in FY 2031.
DLS cautioned lawmakers that while it is technically possible to use cash balances from the Rainy Day Fund and the Fiscal Stabilization Fund to offset roughly two-thirds of the fiscal 2027 shortfall, doing so is not recommended. The pull from the combined balances would total nearly $1 billion and would provide only temporary relief. David Romans, DLS’ top budget analyst, warned that using those funds could harm the state’s bond rating now and create significant financial pressures as larger deficits approach. Further, Romans emphasized that this approach “does not provide any structural relief… So it doesn’t do anything for solving fiscal ’28.”
This briefing, which included members of the General Assembly’s fiscal committees, is the first of two briefings that will occur as members begin to prepare for the 2026 session. A second briefing of the Spending Affordability Committee will be held on December 17th at 2:00PM. The Committee is tasked with making spending and budget recommendations to provide guidance to the Governor and General Assembly when formulating and approving the budget for the upcoming fiscal year, FY 2027. The Committee is composed of members of the General Assembly and two public members.
Spending Affordability Committee Briefing – 11/12/2025 Meeting Materials
Lawmakers cautioned on use of reserves to solve nearly $1.5 billion deficit – Maryland Matters
