Maryland Went From a $5 Billion Surplus to a $3 Billion Hole. Here's What Actually Happened.

The Dispatch — Civic Education

A number is getting thrown around in every budget fight in Annapolis right now. The real story behind it is about a promise to Maryland kids that nobody fully paid for.

You've probably seen the headline version: Governor Hogan left Maryland with a $5 billion surplus. Governor Moore turned it into a multi billion dollar deficit. Case closed, pick your side.

That might sound like a simple story about one governor being responsible and another being reckless. It's not. It's about how state budgets actually work, what "surplus" really means, and a ten year education law that Maryland committed to without ever fully deciding how to pay for it.

First: What Is a "Structural Deficit," Anyway?

Imagine your household gets a surprise bonus one year. You use part of it to cover your regular monthly bills, groceries, car payment, insurance. That year, your budget looks great. But your bonus was a one time thing. Next year it's gone, and your regular bills are still there, and they've probably gone up. Now you're short every single month, not because you spent wildly, but because your everyday income was never actually enough to cover your everyday costs. You just didn't notice while the bonus was covering the gap.

That's a structural deficit. It's the difference between the money a government expects to bring in every year and the money it's already committed to spend every year, once the one time windfalls are gone. Maryland's own nonpartisan budget analysts flagged this exact risk back in 2017, years before Hogan left office and years before Moore was elected.

What Happened

In 2020, Maryland's Democratic controlled General Assembly passed the Blueprint for Maryland's Future, a ten year overhaul of public education built on the recommendations of a commission led by William "Brit" Kirwan. It expands pre-kindergarten, raises teacher pay, sends more money to high poverty schools, builds career pathways for students not headed to college, and creates an accountability board to track results.

Governor Hogan vetoed it in May 2020, citing the economic shock of COVID-19. In February 2021, the Democratic supermajority in the General Assembly overrode his veto, and the Blueprint became law without his signature.

At the same time, federal COVID relief money was pouring into state budgets nationwide, and Maryland's tax revenues kept beating projections. When Hogan left office in January 2023, the state had about $5.5 billion in reserves, roughly $3 billion in the Rainy Day Fund and a $2.5 billion structural surplus.

Then the pieces that had been propping things up started disappearing. The federal COVID money ran out. The Blueprint's costs began ramping up exactly as scheduled, since it was always designed to phase in over ten years. Medicaid and pension costs kept climbing. A separate shortfall opened in the Transportation Trust Fund. By 2025, Maryland faced a $3.3 billion structural deficit. Governor Moore and the General Assembly closed it through roughly $1.68 billion in new taxes and fees, spending cuts, and one time fund transfers. Even after that, state analysts projected a new $1.4 billion gap for the next budget year, with deficits potentially climbing back toward $4 billion later in the decade if nothing changes. The Blueprint's own dedicated funding source is expected to run dry by 2028, shifting its full cost onto the general fund.

What Supporters of the Blueprint Say

Education advocates, teachers' unions, and the Maryland State Department of Education argue the state was underfunding high poverty schools for decades, and that universal pre-K and competitive teacher pay are overdue investments, not luxuries. They point out the law was always designed as a ten year phase in with an accountability board built in specifically to track whether the money is working. In their view, a funding gap down the road is a reason to fix the funding mechanism, not a reason the underlying goals were wrong.

What Critics Say

Hogan and Republican lawmakers argue the legislature passed a massive, decade long spending commitment in the middle of a pandemic without locking in a permanent way to pay for it, then overrode a governor's veto to do it. They say Moore and the current General Assembly are now asking Marylanders to cover that gap through new taxes and fees rather than confronting the spending side of the ledger sooner. Some also argue Hogan's surplus reflected genuine fiscal discipline and revenue that outperformed projections, not just federal money, and that the "structural deficit" framing lets Moore avoid ownership of choices made on his watch.

What We Don't Know Yet

How lawmakers close the newly projected $1.4 billion gap for the coming budget year. What happens in 2028 when the Blueprint's dedicated fund runs out and its full cost lands on the general fund. Whether more tax increases, more cuts, or some combination gets Maryland back to a genuine structural balance rather than another round of one time patches. And all of this is unfolding as Governor Moore heads into a 2026 re-election campaign, which means the budget fight isn't just a policy question anymore. It's on the ballot.

What You Can Do

1. Look up your Maryland state senator and delegate and ask them directly how they plan to fund the Blueprint funding gap. Contact info is at mgaleg.maryland.gov.
2. Watch or attend a Fiscal Year 2027 budget hearing before the Senate Budget and Taxation Committee or House Appropriations Committee. Sessions are live streamed at mgaleg.maryland.gov.
3. Check your voter registration ahead of the 2026 election at mdvote.org. State fiscal policy, and who controls it, is on the ballot.

Want the numbers behind this piece, straight from the source? The Maryland Department of Legislative Services, the General Assembly's own nonpartisan fiscal analysts, publishes the structural deficit projections cited above.

See the DLS Fiscal Briefings

In Good Trouble!

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