Maryland’s revenue outlook showed a slight improvement in the latest update from the Board of Revenue Estimates, which occurred on December 12, 2025. However, state fiscal leaders emphasized that the gains fall well short of resolving the significant budget challenges ahead. Projected general fund revenues for FY27 increased modestly by $9.1 million since September, bringing the total to $27.111 billion. While the update reflects stability in the near term, it does little to offset the projected $1.5 billion structural budget shortfall lawmakers will confront during the 2026 legislative session.
State analysts attributed the minor improvement primarily to higher personal income tax collections, roughly half of which stem from capital gains, a notoriously volatile revenue source. Those gains were partially offset by declines in sales and corporate income taxes, resulting in a $45 million increase for the current fiscal year and less than $10 million for the coming year. Board of Revenue Estimates Executive Secretary Robert Rehrmann cautioned that the forecast remains clouded by uncertainty tied to potential federal spending cuts and broader signs of economic slowing that could signal a recession.
Comptroller Brooke Lierman, who chairs the board, described the forecast as positive but incomplete. She noted that while Maryland’s median household income exceeds $102,000, nearly 40% of residents still struggle to afford basic necessities such as housing, food, childcare, and health care. Indicators such as elevated credit card debt, declining restaurant sales, and reduced purchases of taxable goods suggest growing strain on middle-income households. Lierman characterized the trend as a K-shaped economy, where higher-income earners remain insulated while others face increasing financial pressure, a dynamic she warned is unsustainable over time.
As lawmakers prepare to return to Annapolis on January 14, the fiscal outlook is markedly different from last spring, when a $300 million surplus was projected. Governor Wes Moore has ruled out tax increases for FY27, and legislative leaders have signaled reluctance to tap the state’s rainy-day fund due to potential impacts on Maryland’s bond rating. While House leaders warned that credit rating agencies are closely monitoring the state’s fiscal decisions, Treasurer Dereck Davis sought to reassure stakeholders that Maryland remains fiscally responsible and will continue to meet its obligations on time. The next Board meeting will take place on March 11, 2026, at 2:00PM.
The Board of Revenue Estimates’ Presentation can be found here, and the Board report can be found here. You can find the link to the December 12, 2025 meeting here.
Board forecasts slight uptick in state revenues for this year, next – Maryland Matters
