Maryland’s State Budget is teetering on the brink of an unprecedented financial collapse. The refusal to address formula-driven mandatory and entitlement spending threatens to thrust the state into a cycle of automatic “runaway” deficits, culminating in a financial “Extinction Level Event” in the near future. Despite the gravity of this crisis, political leaders have shied away from the structural reforms necessary to restore fiscal stability. Without bold action, Maryland’s taxpayers face a perilous future.
At the heart of Maryland’s fiscal woes is the rigid structure of formula-driven mandatory spending. These formulas mandate funding levels for key programs, such as education and Medicaid, irrespective of the state’s revenue performance.
The failure to redefine and adjust the mandatory and entitlement spending based on economic realities is not a trivial oversight; it is a catastrophic misjudgment that will surely lead to a financial collapse from which there is no recovery. The state’s budget will collapse under its own weight—not due to inadequate taxation, not by trimming the discretionary budget, but because of otherwise well-meaning mandatory spending formulas whose costs become prohibitively unsustainable as they approach reality. Senate President Bill Ferguson underscored this reality, acknowledging that entitlement programs constitute the bulk of the growing deficit. Yet, political leaders have made little progress in reforming these spending mandates.
The illusion of fiscal health under the Hogan administration was largely sustained by federal COVID relief funds, which artificially created budget surpluses. These one-time funds masked the structural deficit and deferred difficult financial decisions. However, with the federal COVID money now evaporated, the true extent of Maryland’s budgetary challenges has come into sharp focus. Moreover, the upcoming Trump administration is likely to scale back discretionary federal spending, which has traditionally bolstered Maryland’s economy due to its reliance on federal contracts and agencies. This reduction in federal support will further exacerbate the state’s financial challenges, leaving Maryland ill-prepared to weather the storm.
Another significant drain on the state’s resources is Governor Moore’s commitment to “climate investments.” While addressing climate change is a noble goal, it is fundamentally a national and global issue, not a state-specific one. Maryland’s taxpayers should not be saddled with debt for initiatives that will have a de minimus impact on global climate trends. Prioritizing these expenditures over addressing the budget crisis is fiscally irresponsible and diverts attention from urgent structural reforms.
The recent Gonzales Poll reveals that a majority of Marylanders oppose tax increases to address the budget deficit. More than three-quarters of respondents oppose increases in income, property, and sales taxes. Even among those who strongly approve of Governor Moore’s performance, a significant majority oppose new taxes. This opposition underscores the political peril of pursuing tax hikes without first addressing the state’s spending problem.
While commendable as a good first “baby step”, Governor Moore’s recent proposal to save $50 million through government efficiencies is a drop in the ocean compared to the nearly $3 billion deficit – a deficit that is projected to double by 2030. While symbolic gestures like streamlining laptop procurement and reducing underutilized state vehicles are commendable, they fall far short of the comprehensive restructuring needed and do nothing to adjust mandatory spending.
The Moore Administration’s reliance on outside consultants, such as Boston Consulting Group, further diminishes the credibility of these efforts. Not only will the consulting firm receive 20% of any identified savings, but this agreement could cost taxpayers up to $15 million over two years. This expenditure – which has been billed as a measure to save money- epitomizes the mismanagement of resources that has plagued the state.
In a December 11, 2024, opinion article in Center Maryland, I called upon Governor Moore to “reorganize Maryland’s bloated bureaucracy” for the first time in over 50 years before considering tax increases. This reorganization should include revisiting mandatory spending formulas, recalibrating spending mandates to align with the state’s fiscal realities, addressing unfunded pension liabilities that loom like a ticking time bomb, and eliminating redundant programs through a thorough review of state operations. Recent proposals that have been quietly suggested by legislative leaders such as Senate President Bill Ferguson – such as raising the capital gains tax – fail to address the structural deficit and punish success, should be outright rejected.
Maryland is at a crossroads. The state’s leaders must confront the hard truths about its fiscal trajectory and embrace meaningful reforms. Without immediate decisive action, the combination of formula-driven spending, evaporating federal support, and misplaced priorities will lead Maryland toward a financial catastrophe. The time for half-measures is over; the state’s fiscal survival depends on bold, transformative leadership.
Clayton A. Mitchell, Sr. is a lifelong Eastern Shoreman, attorney, and former Maryland Department of Labor’s Board of Appeals Chairman. He is co-host of the Gonzales/Mitchell Show podcast, which discusses politics, business, and cultural issues.
Howard J. Fiske says
How I think the Governor and General Assembly should BEGIN to solve the problems they have created.
Determine how much the state can afford based on HONEST evaluations of current debts and revenues. Make that the base for total spending. Require across the board cuts to meet that base, NO EXCEPTIONS, and amend or repeal all laws that involve formulas or require spending specific amounts, NO EXCEPTIONS. Any future formula based schemes should be based on a percentage of the state’s total funding, not a fixed amount or a required amount or percentage of increase.
Once the new bases are established–for total spending and individual programs or accounts–let the trading begin. Any agency or program increase will require an offsetting decrease somewhere else–NO EXCEPTIONS. Any top management official who can’t figure out how to deal with, or refuses to implement, a new reality ought to be out ASAP.
I challenge responsible politicians to recommend a better or more fair approach.
Just what are the state’s REAL priorities. If you believe the “Blueprint” scam is the highest priority, what should be cut to fund it? If you believe building a new Key Bridge is a high priority, what will you cut to fund it.
John Fischer says
This important explanation of the critical financial decisions facing the government of Maryland is so well written. Thanks to Mr. Mitchell and congratulations to The Spy.
CLAYTON A MITCHELL SR says
Thanks John!
David Lee spears says
I think Governer Moore needs to think on how he is spending the American people’s money and all of these charging docking stations for these electric cars os another thing that he is waisting our money on i reached out to Governor Moore by writing and email to him about a very very personal problem and he never answered my Message not even once I thought when these people were voted into office they were supose to listen to the American people and not ignore them we’ll I was sure wrong because I guess ifvyou are not rich your questions and messages doesn’t mean nothing so as for me I would never vote for him because he doesn’t care about America are the American people all he cares about is linei g his pickets like the rest of the rich period,because what i had written to him about was of really of significance importance to me but he never responded once well that’s your Governor for you they only anwser the rich and mighty
Donna Watts-Lamont says
Hope folks in Annapolis read this an take necessary steps to avoid this crisis.
CLAYTON A MITCHELL SR says
I hope… but not holding my breath.
Jim Franke says
The State budget deficit was a significant $1.4 billion in 2012. At the time, public opinion polls, similar to this week’s Gonzales poll, showed that more than 70% of respondents opposed any tax increases.
The 2024 shortfall will be about $3 billion.
However, I haven’t noticed— or perhaps missed— any recent polling that asks what specific areas of the budget voters think should be cut. Back in 2012, polls indicated strong opposition (over 70%) to cutting funding for essential areas like education, health, and public safety.
It seems voters want a solution that defies logic—a “magic fix” that avoids both tax increases and cuts to valued services.
Eugene Lauer says
Well stated.
CLAYTON A MITCHELL SR says
Thanks Eugene!
Darlene S Handley says
You mention Social Security s an entitlement. It is NOT that. We have WORKED for it. The Federal government is responsable for the shortfall.It was never supposed to be put in the General Fund for Congress to squander on Welfare, aid to Foreign countries etc.
Darlene S Handley says
You mention Social Security as an entitlement. It is NOT that. We have WORKED for it. The Federal government is responsable for the shortfall.It was never supposed to be put in the General Fund for Congress to squander on Welfare, aid to Foreign countries etc.
Tom Hughes says
Here are some facts to consider.
North Carolina has a land area of 48,000 sq. miles and a population of 10.8 million. Their 2024 budget was $34 billion.
Maryland has a land area of 9,700 sq. miles and a population of 6.2 million. Gov. Moore is proposing a budget of $63 billion.
Where the hell is all the money going?
Reed Fawell 3 says
Money laundering operation?
CLAYTON A MITCHELL SR says
Formula Spending notwithstanding the State’s present financial condition.