BALTIMORE — Maryland lawmakers tasked with resolving a daunting multibillion-dollar budget deficit in the coming months will enter those negotiations without any last-minute curveballs — at least on one side of the equation.

The state is on track to collect about the same as previously expected — north of $25 billion — in taxes and other revenues in the current 2025 fiscal year and the next one that begins July 1, the Maryland Board of Revenue Estimates said Thursday.

The update doesn’t change the dynamics ahead for Gov. Wes Moore and members of the Maryland General Assembly, who are wrestling with the largest budget hole in recent memory and the worst five-year outlook in two decades.

But it’s also not the whole picture.

Comptroller Brooke Lierman, who chairs the three-member revenue board, warned that the incoming Donald Trump administration could significantly increase the state’s financial pressures if the president-elect and his allies follow through on promises like reducing large portions of the federal workforce, which makes up 5.9% of Maryland jobs and almost 10% of wages.

Maryland relies heavily on federal jobs and contracts compared to other states because of its proximity to Washington, D.C., and its role as the home of agencies like the Social Security Administration and the National Institutes of Health.

Elon Musk, the world’s richest person, and former presidential candidate Vivek Ramaswamy are aiming to slash the number of federal jobs, and government spending generally, through a new Department of Government Efficiency that Trump tapped them to lead.

Major cuts could mean a hit to a key portion of the state’s tax base.

“States across the country have different industries that they rely on. Texas has oil and gas; we have the federal government,” Lierman said. She added that the state needed a more robust private sector in order to be less dependent on federal jobs.

Tough choices are ahead either way. The 2026 fiscal year budget, which the governor and legislature will craft during the annual 90-day session that begins Jan. 8, has a projected $2.7 billion deficit.

Moore has preferred to cut from existing programs and use temporary revenue measures during his first two years in office, but the worsening picture is expected to ignite more robust discussions about both cuts and tax increases.

Slow growth in the private sector and the uncertainty at the federal level are creating a hazy outlook for revenues ahead, though.

“The risks ahead for Maryland’s economy during this period of federal transition overshadow what might otherwise be some reason for guarded optimism,” Secretary of Budget and Management Helene Grady said.

Moore must present his budget proposal to lawmakers by Jan. 15. That will kick off months of negotiations between Democrats who control a supermajority of the legislature and will amend the governor’s plan through early April. House and Senate leaders clashed earlier this year over whether to raise money through ideas like higher corporate income taxes or legalizing online gambling – though Senate President Bill Ferguson, a Democrat who opposed such efforts, has recently said “everything is on the table” this time around.

Onetime fixes, sluggish economic growth and increasing expenses have driven the dimming budget outlook.

The governor’s office is also evaluating the potential impact of the transition to Trump. Beyond the workforce and federal contracting issues, the state receives about $20 billion in federal revenue annually, which is roughly a third of the state budget. Billions of dollars in other funding the state is hoping to collect for future projects like the Red Line light rail project in Baltimore are also up in the air.

Before Thursday’s meeting, the Board of Revenue Estimates last revealed a “modest” increase in anticipated revenue in September. The roughly $88 million bump in the current 2025 fiscal year was a reversal after five consecutive meetings of the board in which expectations were downgraded.

The latest update is another positive sign, though officials remained guarded in their outlook.

“Compared to prior times, it is less well equipped,” BRE Executive Secretary Robert Rehrmann said of Maryland’s economic ability “to absorb a potential negative impact from the federal government.”

The state is anticipating $25.3 billion in revenue in the 2025 fiscal year, an increase of 1.6%, and $25.4 billion in 2026, a roughly 0.4% increase that officials have described as slow. That funding comes mainly from personal income taxes, corporate and sales taxes and lottery revenues.

Lawmakers have so far focused primarily on higher corporate taxes and personal income taxes for the biggest earners in discussions about where to find new revenue, though some have also talked about changing the state’s 6% sales tax. Moore has said only that he has a “high bar” for new taxes and will maintain that thinking throughout his time in office.

The Spending Affordability Committee, a legislative group that sets the budget deficit projections, is scheduled to meet Tuesday to finalize the parameters for the upcoming budget talks with Thursday’s new revenue numbers. The revenue board, meanwhile, will meet again in March, when lawmakers can make mid-session adjustments as they continue to negotiate over the budget.

“I am optimistic about Maryland’s economy and the resilience of our economy,” Lierman said.

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