Maryland Faces Grave Budget Crisis Under Wes Moore

In the last weeks of January, Maryland Gov. Wes Moore (D) released his $70.8 billion proposed operating budget for fiscal year 2027. Moore’s budget proposal eliminates a projected shortfall of $1.5 billion, but it does little to address long-term structural issues at the root of Maryland’s fiscal problems.

Thanks to a lack of fiscal responsibility dating back to previous administrations, budget deficits have become part and parcel of Maryland’s governing process. 

Last year, Maryland faced a $3.3 billion budget deficit. To close the gap, the state’s lawmakers approved $1.6 billion in new taxes and fees. Even as the governor’s proposal eliminates the $1.5 billion shortfall, Maryland will still face a $2.3 billion shortfall in the next term, according to a report by the Department of Legislative Services Office of Policy Analysis. By 2029, the shortfall will be about $3 billion, increasing to $4.1 billion by 2031.

For years, state auditors have warned lawmakers of the consequences of unaddressed financial mismanagement. Christine Timanus, deputy auditor, told the Maryland General Assembly’s Joint Audit and Evaluation Committee that the Office of Legislative Audits had not “seen repeat percentages this high since just prior to 2010,” according to Maryland Matters.

Each year, state auditors compile reports detailing mismanagement and potential abuse. Last August, an audit by the Maryland General Assembly identified $400 million in questionable office leases that should have raised alarms about possible misuse of funds.

In a report issued last December, the Office of Legislative Audits tried once again to draw attention to “underlying systemic deficiencies” in the accounting methods of eight state agencies. These agencies “collectively accounted for approximately $18.1 billion,” or 91 percent of the state’s $20 billion in federal fund expenditures in fiscal year 2025.

Notably, auditors identified $3.44 billion in federal funds owed to the state. The Office of Legislative Audits reports that the agencies “either had not received” or “could not document receipt” of the funds owed, potentially shifting the cost burden to the state’s taxpayers.

In a statement to The American Spectator, Rhyan Lake, a senior communications strategist in the governor’s office, said Moore is “acting without delay to address structural issues within this state’s longstanding accounting processes.” Lake described the risk of not recovering anticipated funds as “low.”

The American Spectator had not received a response from state Sen. Shelly Hettleman (D-Baltimore County) and Delegate Jared Solomon (D-Montgomery County), the Senate and House chairs of the Joint Audit and Evaluation Committee, at the time of publication. The Office of Legislative Audits declined to respond to our questions, stating it does not “conduct media interviews as our audit reports stand on their own.”

Look through the deluge of reports released by state auditors last fall, and a pattern emerges. With little oversight of agency accounting methods and even less accountability for mismanagement, state agencies have all but abandoned fiscal responsibility.

In August of last year, a report on the State Highway Administration found the agency “knowingly charged” $358 million in federal funds on “unauthorized expenses” in an attempt to hide a deficit in the State’s Transportation Trust Fund. In one case, they charged an additional

$3.1 million for a project fully funded at $2.7 million.

A report on 42 state agencies exempt from state procurement law, released last November, found $8.5 billion in spending by those offices last year that lacked proper documentation and raised questions about procurement practices.

In January, the Office of Legislative Audits released its fiscal compliance audit on the Maryland State Department of Education. As in other cases, auditors were unable to substantiate nearly $879 million in accrued federal revenue. The Department of Education was unable to “provide documentation to support the propriety of accrued federal fund revenue entries or the subsequent recovery of the funds.”

According to Fox 45 News, in a November briefing to the Joint Audit and Evaluation Committee, state auditors noted that “34 percent of audits had repeated findings appear in the next probe.” 

Perhaps prompted by the continuing stream of failed audits, Gov. Moore told FOX45 News, “The directive that I have to my agency heads, the directive to my cabinet secretaries is: I don’t care. Fix them.” He added, “We are going to make sure that these systemic or structural problems are not problems anymore, regardless of their origin.”

A spokesman within the governor’s office told The American Spectator that Moore’s fiscal year 2027 budget also includes “$24 million in targeted investments” towards “fiscal management of the State” to “extend the Government Modernization Initiative” and “find cost efficiencies.”

Yet, legislative analysts identified potential issues with the “long-term sustainability” of Moore’s budget, including a “significant structural gap” in the fiscal years ahead. 

The analysis also raises questions about the relationship between Maryland and the federal government. Owing to its proximity to Washington, D.C., Maryland’s budget relies heavily on federal employment and federal aid to the state.

According to budget analysts, “[O]ngoing federal policy changes create substantial uncertainty.” That is the result of relying on federal funds that may never materialize. To become financially solvent, lawmakers must find a way to decouple the Maryland economy from the federal budget.

Across all states, Maryland ranks ninth in long-term debt per capita at $17,418, according to the Reason Foundation’s GovFinance Dashboard.

In a statement to Maryland Matters, Delegate Jefferson Ghrist (R-Upper Shore) said he had “seen nothing in the governor’s budget proposal that addresses the long-term issues that have created these giant budget holes.” He added, “We are just setting Marylanders up for another round of tax increases after the election. It is disappointing.”