Maryland has raised its fiscal 2027 revenue forecast by $319.9 million, but state budget officials say the improvement is too limited and too dependent on unusual collections to erase the difficult choices facing lawmakers next year.
The Board of Revenue Estimates voted September 24 to set the fiscal 2027 projection at $27.44 billion, up from the $27.12 billion estimate adopted in March. Its official release also established an initial fiscal 2028 forecast of $28.35 billion, representing 3.3% ongoing general-fund growth.
The increase largely reflects stronger-than-expected fiscal 2026 collections rather than a major change in the economic outlook. The board's presentation shows fiscal 2026 ongoing revenue finished $563.5 million above the official estimate, helped by personal-income taxes, capital gains and several one-time payments. The state separately ended the year with a $501 million unassigned general-fund balance after lawmakers' fiscal 2027 allocations.
Those gains do not all carry forward. The board expects ongoing fiscal 2027 revenue to decline 0.9% from the prior year. Estate-tax collections included an unusually large payment, while capital gains are volatile and expected to correct. Withholding growth has slowed even as Maryland's labor market has contracted, and the board listed elevated inflation, interest rates and possible additional federal spending or employment reductions among the remaining risks.
The first fiscal 2028 estimate points to renewed growth, but not at a pace that resolves the imbalance. The projected 3.3% increase trails Maryland's longer-run 4% trend, while expected spending continues to rise. Personal-income taxes remain the largest revenue source, making wage withholding, capital gains and employment conditions central to whether the forecast holds.
The sales-tax forecast also absorbed a $280 million one-time reduction after the Supreme Court of Maryland ruled that qualifying utility transmission and distribution equipment is tax-exempt. The decision creates an ongoing general-fund loss of slightly more than $15 million. At the same time, the state's IT and data-services tax produced about $100 million in its first full year, well below the $500 million once projected by legislative analysts, according to state reporting.
The practical budget problem therefore remains larger than the forecast revision. Maryland officials are planning around a structural gap of roughly $3 billion for fiscal 2028. Executive agencies and state universities have been asked to prepare requests with reductions of about 3%, while two dozen Cabinet-level agencies were directed to model cuts of up to 10%, budget reporting shows.
The new estimate gives Gov. Wes Moore and the General Assembly a somewhat stronger starting point for the budget introduced in January. It does not authorize new spending, settle how the unassigned balance will be used or close the gap between recurring revenue and planned obligations. The next Board of Revenue Estimates meeting is scheduled for December 10, when another forecast will refine the numbers before lawmakers convene.
