BALTIMORE — The cold February rain fell as dozens of public school advocates bundled together in the dark outside the Maryland State House. Holding umbrellas and flashing blue lights as lawmakers gathered for an evening session, they shouted words like “investment” and “full funding,” urging the elected officials not to abandon the landmark education reform plan that was just starting to take off.

“Do we want another broken promise?” Shamoyia Gardiner, then-director of the advocacy group Strong Schools Maryland, asked during the rally for the Blueprint for Maryland’s Future last year.

“No!” the crowd shouted back.

It’s a scene likely to repeat itself — often and with even more urgency — in the next three months as the Maryland General Assembly returns to Annapolis on Wednesday for another annual legislative session.

A nearly $3 billion deficit is expected to ignite the toughest debates over funding priorities in years — with all kinds of stakeholders, from educators pleading for funding to businesses wary of higher taxes, gearing up for a fight.

“We’re going to be holding the pressure even stronger this year than we have in the past because we see this as the way forward, the only way forward,” Riya Gupta, Strong Schools Maryland’s interim executive director, said in a recent interview.

The 90-day lawmaking sprint routinely features intense public hearings and policy battles, backroom conversations with high-priced lobbyists and advocacy days that pack the capital with activists.

But the massive budget shortfall — including a five-year forecast described as the worst in two decades and a separately underfunded transportation system — means almost every constituency has something on the line this year.

“It’s impossible to do all things,” Senate President Bill Ferguson said during a December news conference when asked how the state should prioritize transportation dollars amid a $1.3 billion downturn in spending power over the next six years.

Tough decisions are coming. And key leaders like Ferguson and Gov. Wes Moore have said every option is worth exploring.

Where the tax talks could start

Unlike recent years when topics like juvenile justice or abortion access headlined the annual session, policy discussions in 2025 are set to be dominated by questions of how much money is available and where lawmakers can find more.

Ferguson, in a change of posture after waving off tax proposals in 2024, said taxes will be on the table. Though he stressed that cuts should be the “focus first and foremost,” he pointed to businesses specifically as a potential source of more tax revenue. That could include taxing newer digital services such as data brokering or reevaluating a 2018 law that reduced some businesses’ Maryland income tax liability, he said.

“There are opportunities to look at loopholes,” Ferguson said about nine months after he rejected tax proposals from other Democrats to “close corporate loopholes.”

A sizable portion of Maryland Democrats — including Ferguson’s counterpart in the House, Speaker Adrienne A. Jones — have already backed a measure called “combined reporting,” a way of ensuring multi-state corporations can’t get out of paying Maryland taxes. A similar law is on the books in 28 other states and has been under various levels of consideration in Maryland for decades.

“It’s well past time for this state to follow the lead of dozens of other states, red and blue, to close these enormous corporate tax loopholes so multinational corporations can’t keep dodging Maryland taxes while making record profits from their customers here,” said Ben Orr, CEO of the Maryland Center on Economic Policy.

Business leaders and conservatives, both inside and outside the legislature, are preparing to forcefully oppose the proposals.

“It would send the message out to the business community that the legislature is not serious about creating a pro-growth tax structure,” said Christopher Summers, founder and CEO of the conservative Maryland Public Policy Institute think tank.

The Maryland Chamber of Commerce, a regular presence during the session, also maintains that combined reporting or raising the 8.25% corporate tax rate would make the state less competitive and risk jobs at a time when it’s already struggling to keep up economically.

Mary Kane, the Chamber’s president and CEO, said there’s often a perception that combined reporting is about only large corporations.

“It’s not,” she said. “It’s that guy that has a gas station or restaurant in Maryland and another across the line in Delaware.”

Grason Wiggins, the group’s vice president of governmental affairs who lobbies state lawmakers, said the Maryland Chamber will be continuing to advocate for economic opportunity.

“I would predict that we will be more active this year than we have ever been,” Wiggins said.

Where the tax talks could go

Aside from corporate earnings, lawmakers could look to income taxes for individuals or to the 6% sales tax.

Under a 2024 proposal called the Fair Share for Maryland Act and a previous idea known as a “millionaire’s tax,” Maryland would have added personal income tax brackets for the highest earners. Individuals making more than $250,000 and couples making more than $300,000 currently pay a maximum rate of 5.75%. The proposals would have increased that rate and added others, up to 7% percent for those earning $1 million or more.

Changes to the sales tax would be another direct way to raise money, though some Democrats and Republicans believe this is a more regressive approach because it raises prices for all types of consumers.

Legislation last year called for lowering the rate to 5% but expanding it to other services and products — everything from legal services to car washes.

House Majority Leader David Moon, a Montgomery County Democrat who introduced the bill, said at the time that he intended it more as a conversation starter in a year when it was guaranteed to come up short.

He told The Sun in a recent interview he had no immediate plans to sponsor any tax bills this year, though he anticipated many options would be “floated across the spectrum from both parties” regarding how to address the deficit.

On the chopping block

Those other options could be largely focused on trimming the state’s roughly $63 billion annual spending agenda.

Moore, who is required to present a balanced budget plan Jan. 15, has relied in the past on making cuts and tapping reserves to keep overall spending relatively flat while saying he has a “very high bar” for taxes.

Though he hasn’t specifically previewed his next plan, he said this summer that the Blueprint is one area that may need adjustments — an idea long held by Republicans but repeatedly rejected by Democrats who passed the bill over former Republican Gov. Larry Hogan’s opposition.

“We continue to have a very high bar for any rollback of education reforms,” House Appropriations Committee Chair Ben Barnes, a Prince George’s County Democrat, said during a December meeting about what the state can afford to spend.

It’s unclear exactly how any adjustments to the Blueprint — by either delaying its implementation or cutting entire aspects of it, as many Republicans have suggested — might result in initial financial relief. Lawmakers’ decision to inject more than $1 billion into the plan within the last two years is set to keep it funded for the next two fiscal years.

Gupta, of Strong Schools Maryland, said she doesn’t see any quick fix around the Blueprint that wouldn’t have a “detrimental impact on school systems and students.” She and others say all the pieces of the puzzle go together. If one falls, so could the others.

“This should be protected at all costs,” said sharlimar douglass, chair of Maryland Alliance for Racial Equity in Education, who spells her name with all lowercase letters. “Our young people, our Black and brown students, these particular populations will suffer even more and not receive the kinds of education, the kinds of experience, that they are owed.”

Scaling back other large entitlement programs that are some of the most costly and increasingly expensive reasons for the deficit — like Medicaid or child care scholarships — are also likely to face resistance from Democratic lawmakers.

“Taking the wind out of the sails of child care … pre-K, things of that nature, it has to be looked at in the context of our current worker shortage,” Moon, one of the House’s top Democrats, said.

“I’m not saying there are any lines that should be drawn in this debate,” Moon said, but areas like child care and housing “are things that traditionally we’ve tried to be mindful of.”

Another major driver of costs is personnel. In a state that employs 86,000 public workers and still has thousands of vacant positions, union leaders have voiced concerns that the budget could mean backtracking on hiring and cost-of-living adjustments.

“Our folks are woefully understaffed and underresourced, and you can’t fix the budget by further cutting,” said Patrick Moran, president of the Maryland Chapter of the American Federation of State County and Municipal Employees. “There’s not much else to cut, at least from the standpoint of looking at what there is in terms of staffing for state employees and the amount of work they’re doing.”

With both the governor and the Democratic-supermajority legislators yet to offer specific areas for cuts, the Jan. 15 budget deadline for Moore is setting up to be the real beginning of a debate that will continue through early April.

In the meantime, stakeholders are making their plans and hoping elected officials who’ve made promises in the past will keep them.

“The thing that our policymakers are taking a big risk at is trust,” douglass said, when considering whether threats to the Blueprint could become reality. “Trust is a thing here. I can’t trust you. That’s how I feel.”

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