Maryland lawmakers approve budget cuts and tax increases amid federal uncertainty

In Maryland, lawmakers concluded their legislative session on Monday, following a challenging budget year that was heavily impacted by uncertainties resulting from the Trump administration's downsizing of the federal government. As Maryland significantly relies on federal jobs and contracts, this situation has strained the state's financial resources. The newly approved budget measures raised approximately $1.6 billion in revenues, alongside substantial spending reductions totaling around $2 billion across various sectors of state government. These measures were necessitated by the need to close a considerable budget deficit and address ongoing fiscal challenges. Among the tax changes, the state implemented a new 3% tax on information technology services, as well as introducing two additional high-income tax brackets for residents earning over $500,000 and $1 million annually. Furthermore, a new 2% tax on capital gains for individuals with incomes exceeding $350,000, along with tax increases on recreational cannabis and sports wagering, were also included in the budget revisions. This marked a significant shift in state fiscal policy, as state officials aimed to balance the budget while addressing the impact of federal cutbacks. The session's conclusion saw the passage of several key legislative priorities, including financial provisions for health care and welfare programs, as well as funds earmarked for an abortion grant program assisting uninsured women. The Maryland Department of Health will receive $25 million to help cover the costs of providing abortion services. Lawmakers also sought to create a commission to study and recommend potential reparations for slavery and its continuing effects on racial inequality within the state. Despite these achievements, the budget's reliance on tax increases led to criticism from Republican lawmakers, who argued that the fiscal issues predated the Trump administration and protested against increased taxation amidst already strained economic conditions. They contended that the state’s balanced budget could have been achieved without imposing further burdens on taxpayers. As Maryland faces ongoing challenges linked to decisions made at the federal level, state officials outlined their commitment to delivering vitally needed public services, but the path ahead remains fraught with uncertainty amid national economic shifts.