The Spending Affordability Committee met yesterday to make its recommendations to the Governor and General Assembly to guide budget discussions for the upcoming fiscal year. While the Committee’s primary responsibility is to establish a level of spending for the State operating budget that is reflective of the current and prospective condition of the State’s economy, the Committee also makes other budgetary recommendations to guide actions during the upcoming session. At the conclusion of the meeting, the Committee voted in favor of the recommendations and approved them.

Recommendations include:

Operating Budget Spending Limit and Sustainability

    • Reduce the structural gap between general fund revenues and ongoing spending by 50% ($600M).
      • There is a forecasted structural deficit of $1.2B for FY27, that is projected to increase to $3.7B by FY30. Cash shortfalls are expected to grow from $1.6B in FY27 to $3.9B by FY30.

Fund Balances

    • Maintain a Rainy Day Fund of at least 8% of the state’s general revenues, roughly $2.2B, to ensure sufficient resources are available.
    • Achieve a minimum end balance of at least $100M in the General Fund for FY27.
    • Maintain a higher combined balance of $15M in the State Disaster Recovery Fund and Catastrophic Event Fund beginning in FY27.

Capital Budget

  • General Obligation Debt
    • Authorization of $1.75B in new general obligation (GO) bonds for the 2026 legislative session. The level of authorizations should remain at the Capital Debt Affordability Committee (CDAC) recommended level of $1.75B from FY28 through FY31.
  • Higher Education Debt
    • The level of Academic Revenue Bond authorizations should be set at $50M in FY27 and annually through FY31. This is an increase from the $30M set authorization in recent years.
      • University System of Maryland has the capacity within their debt limitation policies to afford an additional $20M of authorization. The extra $20M should be used to fund projects that are already in the capital improvement plan for general obligation bonds.

State Employment

    • Executive Branch maintains the current levels of authorized positions, fills vacancies in mission critical positions, and increases vacancies overall to meet budget turnover.

Transportation

    • Transportation Trust Fund Balance targets a closing FY27 balance of $550M.
      • This is $50M more than the target closing balance assumed by Maryland Department of Transportation (MDOT) in its draft September 2025 financial forecast.
    • An allocation of at least $1.15B in FY27 for spending on system preservation.
      • This is the average annual amount spent over the previous 10 years.

 

12/18/2025 – Spending Affordability Meeting Materials

12/18/2025 – Spending Affordability Decision Meeting

11/12/2025 – Department of Legislative Services’ Fiscal Outlook