fy 2028 state government

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Budget Highlights

MARYLANDFiscal Year 2028 Budget

Edward M. OBrien, Governor

Kathleen H. Burbank, Lieutenant GovernorJohn M. Bennett, Acting Secretary, Department of Budget & Management


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Message to the General Assembly Transmitting the Fiscal Year 2028 Budget

January 21, 2027

The Senate of MarylandThe Honorable Timothy A. Coulter, President

The Maryland House of DelegatesThe Honorable Rod R. McMillan, Speaker

The Citizens of Maryland

Dear Mr. President, Mr. Speaker, Ladies and Gentlemen of the General Assembly, and Fellow Marylanders:

Our state is now experiencing one of the worst fiscal crises in its history. Todays budgetary realities requireus to spend taxpayer funds in a more judicious manner than ever before, and to ensure critical needs are metbefore anything else. Though resources are scarce, expectations and needs remain high. We must make everydollar count.

Marylanders want thoughtful government that spends wisely and produces results. We have an opportunity andan obligation to give it to them.

Maryland is at a crossroads. We can either seize this opportunity to fundamentally restructure government, orwe will have to accept yearly tax increases to pay for the inefficient, wasteful structure now in place.

This proposed budget accomplishes four major goals:

--It expands funding for education and health and at the same time preserves funding for other coregovernment functions.--It reduces the size of state government overall, while preserving the jobs of hard-working state employees,

and assuring that no local jurisdictions aid is reduced from 2027.--It supports efforts to improve the efficiency of state government.--It does not raise general fund taxes.

The past two budgets have been balanced on one-time fund sources. Reductions in on-going revenues haveexacerbated the states structural deficit. Reliance upon one-time revenues and fund transfers has severelyundermined Marylands fiscal integrity. The proposed Fiscal Year 2028 budget substantially reduces ourdependence upon one-time revenues, fund transfers and other gimmicks to balance the budget.

This proposed budget reduces spending by eliminating vacant positions, streamlining administrative procedures,reducing information technology costs, and cutting expenditures in other areas. My Administrations $32.8billion budget proposal is nearly $426 million less than the General Assemblys Spending Affordability target.

The budget reduces direct general fund spending by $147 million from current levels for a total baselinereduction of $1.3 billion in Fiscal Year 2028 expenditures. These actions will balance the budget for the yearand bring our finances closer to structural balance. They do not eliminate the full extent of the $1.3 billionstructural deficit. Much additional effort will be needed to bring the budget into long-term balance.

I am eager to work with the General Assembly to approve and pass this budget. Over the next year, we mustcontinue to cooperate, along with local governments, employees, businesses, community groups, and ourconstituents to forge a long-term solution to our fiscal and economic challenges.


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Sincerely,

Edward M. OBrienGovernor


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Budget Highlights

The States budget plan for fiscal year 2028 reflects Governor Edward M. OBriens commitment to restoringfiscal responsibility, meeting the challenge of closing the $1.3 billion budget deficit and addressing corepriorities of his administration in the areas of education, health care, public safety and economic development.

In a year when the State is facing difficult choices and a shortfall that without corrective action will grow to$3 billion within four years, Governor OBrien has put forth a balanced budget and blueprint for the futurethat protects Marylands hardworking families and vulnerable citizens and puts State government on the righttrack moving forward.

The proposed budget is balanced and funds state functions without increasing taxes. The budget totals $32.8billion, a 1.2% increase over adjusted Fiscal Year 2027 funds and is nearly $426 million below the GeneralAssemblys spending affordability growth recommendation of 2.5%. New spending in the budget is focused onpublic education and health care. General fund spending totals $16.4 billion, a reduction of $147 million fromFiscal Year 2027 totals.

A major element of Governor OBriens agenda to move Maryland forward is to improve the efficiency of Stategovernment, reducing costs and improving the delivery of services to Marylanders. The Governor will soon namea Commission on Efficiency and Effectiveness to review government operations and recommend ways toimprove the way state government delivers services to the citizens of Maryland.

However, this budget proposes a number of steps that can be taken immediately to reduce costs and improveefficiency. A thorough review of State positions created the opportunity to abolish nearly 2,900 vacantpositions. This, in addition to imposing a hiring freeze, will save $70 million in Fiscal Year 2028 alone. GovernorOBrien has also directed a strict freeze on the acquisition of new cellular phones, office space and vehicles bystate government, and has instructed state agencies to eliminate their operating expenditures by 5% for thecurrent fiscal year and another 5% in the next fiscal year. Governor OBriens proposal to dispose of theStates twin-engine aircraft will save the State over $1 million in lease payments annually.

EDUCATION

Governor OBriens budget prioritizes public education. Overall education spending, including general, specialand federal funds, totals $7.2 billion, an increase of $210.1 million over Fiscal Year 2027. General fundspending increases $79.9 million to $6.3 billion. The basic education funding formula, the Foundation Program,is increased by $89.8 million, a 1.9% increase, to $4.9 billion. In addition, under this budget:

Formula aid for students with disabilities increases by $29.8 million to $640.8 million, an increase of 4.9%, to provide special education services. This includes $294.1 million in general funds and $346.7 million in federalfunds.

The Budget eliminates several smaller, narrowly-targeted grant programs like the Gifted and Talented, Environmental Education and Disruptive Youth programs, saving $7.9 million. Funding for these programs isabsorbed by the Foundation Program funding formula.

The Budget provides $10.7 million in general, special and federal funds, a $2.7 million increase, for adult continuing education services. This includes $2.6 million, a $1.1 million increase, in general fund spending.

The Fiscal Year 2028 Budget includes the cornerstone of Governor OBriens education plan a literacy program that will include providing reading coaches in under-performing elementary schools to ensure that all


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students are reading at or above grade level by the end of the third grade. A new State appropriation of $10million represents the first installment of a four-year $40 million commitment.

Governor OBrien provides $269 million in general funds for school construction aid to local districts, a 4.8% increase over current funding levels. This increase is consistent with the Governors commitment tomodernizing existing schools and helping local districts construct new, state-of-the-art facilities to serve a

steadily increasing student population. Including general obligation bonds and other capital funds, the totalFiscal Year 2028 investment in school construction exceeds $408 million.

Governor OBriens education budget also supports partnerships with businesses to establish career academies to train the workforce of the future, invests in character education, teacher mentoring and teacherrecruitment programs, and provides $645,000 to fund bonuses for teachers who meet National Board ofTeaching Professionals standards.

Funding for Higher education institutions from all sources increases by 3.5%, or $152 million, althoughgeneral fund support had to be reduced by 5.6% due to the States fiscal condition.

Community colleges receive $226.4 million including State fringe benefit contributions, a 4% increase over

Fiscal Year 2027.

Scholarship assistance is level-funded at $82.6 million. The Administration will target new awards forteacher education and students with the greatest financial need.

Governor OBriens capital budget invests $408 million for K-12 school construction and $206.3 million for higher education projects, including $52 million for the Morgan State University library, $42 million tocontinue the UMB dental school building construction project and $17 million for improvements to TowsonUniversitys fine arts building.

HEALTH

Governor OBriens budget maintains the states commitment to the 1 million men, women and children who relyon Medicaid and the 240,000 women and children who rely on the Maryland Childrens Health Program (MCHP)for health care coverage.

Medicaid, which provides the basic health care safety net for 1 million lower income individuals, increases bya total of $368.9 million or 4.5% over Fiscal Year 2027 levels. This proposed increase will maintain coveragefor the 1 million beneficiaries currently enrolled in the program and enable an estimated 1,000 additionaleligible Marylanders to enter the program.

The Maryland Childrens Health Program providesaffordable private health insurance to low and middle-income children and pregnant women. Governor OBriens budget proposes to increase the excise tax onsmokeless tobacco in order to raise $7 million in new funding for childrens health insurance coverage. This

proposal will enable 5,000 additional uninsured pregnant women and children to receive coverage throughMCHP.

Funding of $15 million is provided for disease surveillance, emergency preparedness efforts and firstresponse personnel. Funding is also maintained for local health departments for core public health services.

COMMUNITY SERVICES


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Funding for services for individuals with disabilities provided through the Developmental DisabilitiesAdministration is increased $11.9 million, or 2.3%, to $533.6 million. This increased funding will expandcommunity and residential care and decrease the number of beds occupied in State institutions.

An additional $52.6 million is provided in Fiscal Year 2028 for mental health institutions and communityservices, bringing the total budget to $767.1 million, a 7.4% increase over Fiscal Year 2027 funding levels.

$171 million is provided for programs within the Family Health Administration, including $89.4 million for family health services and primary care and $80.6 million for disease prevention and control.

Marylands alcoholism and substance abuse treatment and education programs are severely underfunded and too narrowly focused to support a broad-based attack against addiction. The Governors budget proposes$149.9 million in funding for alcohol and drug abuse treatment, a $19.1 million, or 14.6% increase over currentfunding levels. This proposed increase will enable an additional 10,000 individuals to enroll in treatmentprograms in Fiscal Year 2028. This funding increase is contingent upon approval by the General Assembly ofGovernor OBriens proposal to double the state tax on alcoholic beverages. Marylands excise tax on alcoholicbeverages is among the lowest in the nation.

The budget supports the Governors proposed Drug Education, Treatment, Enforcement and Rehabilitation Program, or DETER, allocating $500,000 to embark on a four-year effort to place a substance abuse counselorin every middle and high school so we can identify at-risk youth and teach all kids about the dangers ofsubstance abuse.

PUBLIC SAFETY AND LAW ENFORCEMENT

Governor OBrien has consistently emphasized his commitment to protect the safety of the public bycombating violent crime. Maryland has one of the highest crime rates in the nation. Bold and aggressive actionis needed to address crime and violence, and the Governor will soon unveil his legislative proposals to begin anassault on crime in the State of Maryland.

Governor OBriens budget strengthens and supports the ability of the Department of Juvenile Services toserve the needs of Marylands youth, focusing its mission on education, physical and mental health, substanceabuse prevention/treatment and alternatives to incarceration. The Fiscal Year 2028 budget provides $195.4million for these endeavors, an increase of $2 million over Fiscal Year 2027. This includes $180.4 million ingeneral funds, an increase of $2.5 million.

$8.5 million is provided in the Department of Juvenile Services to enhance mental health services, implement juvenile drug treatment and rehabilitation courts, and address issues related to minority over-representation in residential population within the juvenile justice system.

One element of reducing violent crime in Maryland is to address the issue of recidivism among inmates released from Maryland prisons. Without access to the educational opportunities necessary to secure post-

incarceration employment, inmates are far more likely to commit crimes following their release. The MarylandState Department of Education reports that there is a waiting list of approximately 2,000 inmates statewidefor correctional education services. The Governors budget provides $1 million for the early stages of aprogram to eliminate the waiting list over the next 4 years. This funding will remove as many as 350 inmatesfrom the waiting list in the coming year.

The Maryland State Polices Fiscal Year 2028 allowance totals $294.5 million slightly above the current years funding level. The State Police budget includes $8 million to support crime laboratory activities such as


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forensic analysis and ballistics testing. The budget also provides for the recruitment of 50 additional StateTroopers, increasing trooper strength to 2,049.

In an effort to meet the burgeoning caseload in the Office of the Public Defender, the budget includes $2.9 million for an additional 35 attorneys and 24 support positions. The total budget for the Office of thePublic Defender totals $62 million, an increase of $3.8 million or 6.5% over Fiscal Year 2027 levels.

The State correctional institution of adult offenders is projected to increase by 2% in Fiscal Year 2028 to 28,350 inmates. Twenty-seven adult facilities will be funded with $628.2 million, a modest reduction fromFiscal Year 2027.

$600,000 is provided for operating the Emergency Operations Center 24 hours a day, 7 days a week.

BUDGET SUMMARY

*NOTE: Totals may not add due to rounding

($ in Millions) Fiscal Year 2027 Fiscal Year 2028 % Change

General funds $16,541 $16,394 -0.9%Special funds $7,851 $8,204 4.5%Federal funds $8,021 $8,197 2.2%Total Funds $32,413 $32,796 1.2%

Budget OverviewGovernor Edward M. OBriens proposed budget is balanced and funds core state functions without increasingtaxes. New spending is narrowly focused on public education and health care. The budget reduces the size ofstate government while preserving the jobs of current state employees. All twenty-four local jurisdictionsreceive a State aid increase. $50 million is deposited into Marylands depleted Rainy Day Reserve Fund.

The budget totals $32.8 billion, a 1.2% increase over fiscal year 2027. The general fund portion of the budgettotals $16.4 billion, a $147 million reduction from the adjusted budget totals for the current year.


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Revenue Declines in Fiscal Year 2027 and 2028

Ongoing general fund revenues declined by approximately 4.6% in Fiscal Year 2026, due primarily to theapproximately 50% decline in realized capital gains in tax year 2025 indeed, the personal income tax dropped7.1% last year.

Both the national and State economies appear to be improving, but futuregrowth remains uncertain. A number of factors, including a recalcitrant stockmarket, have worked to undermine business confidence, without which robustgrowth will not occur. What expansion has existed in the economy is due tocontinued consumer spending.

The State Board of Revenue Estimates, chaired by Comptroller Bruce W.Johnson, projects that fiscal year 2027 will see a 1.2% decline in net generalfund revenues. Capital gains will drop again in tax year 2026, but due to thedeclines already registered, the impact on the income tax total will not be assignificant. Income tax collections will remain flat, which is certainly not ideal,

but far better than a 7% decline. Sales tax growth will be slow, increasing by1.0% in 2027.

As Marylands economy recovers through the end of fiscal year 2027, revenue growth will begin to recover.The Board projects, for example, that individual income tax receipts will increase by 0.6% in Fiscal Year 2028.Sales and use tax collections will increase by 1.7%. More significant revenue gains will be achieved in FiscalYear 2029.

Preserving Core Functions

Budget growth is concentrated in a few areas. Medicaid is the largest increase, with total funding increasing$368.9 million or 4.5% over Fiscal Year 2027 levels. Total funding for public schools and libraries increases by

$210.1 million. Governor OBrien has also allocated scarce resources to enhance one of his top priorities community-based services. Governor OBriens budget increases by $83.6 million, or 8.1% over fiscal year 2027funding for community-based services in the areas of mental health, developmental disabilities and substanceabuse treatment. Most other areas of the budget are level-funded or decline.

Governor OBriens budget also fulfills his commitment to replenish and restore the solvency of theTransportation Trust Fund after three years of consistent raids into the Fund in order to balance the budget,transferring $214 million back into the Transportation Trust Fund Reserve. Only $97 million is transferredfrom the Transportation Trust Fund to the general fund under the Governors Fiscal Year 2028 budgetproposal, compared to $303.4 million in Fiscal Year 2027.

State Personnel

The number of authorized positions in state government decreases by 1,647.6, for a total of 80,969. Staffinglevels in most state agencies decline due to the abolition of vacant positions. The budget eliminates 1,500vacant positions and 147.6 existing positions through attrition. 358 new positions are added, principally in twoagencies: 71 in the Public Defenders Office as part of the caseload reduction initiative and 157 for theUniversity System of Maryland.


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Contractual employees at the University System of Maryland increase by 412, mostly for instructional staff tohandle higher enrollments. For all other agencies combined, contractual employment decreases by a net of 3positions. The number of contractual state employees will be 9,542.

New Revenue Sources

Governor OBrien will propose legislation to establish a temporary tax amnesty program that will allowdelinquent taxpayers to settle their tax debts without paying interest or penalties. The proposed legislation,which is currently being developed in conjunction with the Comptrollers Office, will raise an estimated $25million in one-time revenue for the 2028 fiscal year.

The proposed budget does not rely on tax increases to achieve balance. However, it does propose targeted taxincreases to fund specific services. For example, Governor OBrien is proposing to double Marylands excise taxon alcoholic beverages, which is one of the lowest in the nation, in order to raise $23 million in new revenue fordrug addiction and alcoholism treatment programs. Further, Governor OBrien is proposing to increase theStates excise tax on smokeless tobacco products to raise $7 million in funding for the Maryland ChildrensHealth Program, which will enable up to 6,000 uninsured children to receive quality private health insurancethrough the program.

Rainy Day Reserve Fund

Governor OBriens budget does not withdraw funds from the nearly-depleted Rainy Day Reserve fund. At theend of fiscal year 2027, the fund will have an estimated balance of $36.7 million. Governor OBriens budgetallocates $50 million to be deposited into the fund in fiscal year 2028, bringing the total balance to at least$87 million. Rebuilding an adequate reserve is crucial to maintaining the states high credit rating and guardingagainst further revenue downturns.

Spending Affordability

Each year, the General Assemblys Spending Affordability committee recommends the maximum rate at whichthe state budget should increase. The recommendation is not binding on the Governor, but the Governor isrequired to explain the reasons for exceeding the Spending Affordability limit.

This year, in view of the precarious economic and fiscal situations, the committee recommended limitinggrowth to 2.5% (this is the lowest recommended growth since 2010). Governor OBriens proposed budgetgrows by only 1.3%, which amounts to $426 million less than the recommended limit the first time in the lastfive budgets that an administrations budget proposal has met the Spending Affordability recommendation.

Marylands Budget Process

The state Constitution requires that the newly elected Governor submit a balanced budget to the GeneralAssembly by the tenth day of the legislative session, which falls on January 21.

Over the next 11 weeks, the General Assembly will review, hold hearings and consider the budget. TheDepartment of Legislative Services will assist the House Committee on Appropriations and the Senate Budgetand Taxation Committee in their review. The state Constitution provides that the General Assembly mayreduce the amounts submitted by the Governor, but may not add to the budget or substitute items. (Thebudgets of the legislative and judicial branches of government are exceptions. The General Assembly may addto or rearrange those budgets.)


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During legislative consideration, the Governor may submit supplemental budgets. These budgets makecorrections to the original budget, include funding for items required by new legislation and emergencies oradd items omitted from the original budget.

After the House and Senate have both acted, a conference committee of senators and delegates meets toresolve differences. The legislature is required to enact the budget by the 83rd day of the legislative session.

The State Constitution requires the budget also be balanced at this point. The budget becomes law uponpassage by both houses of the legislature. The Governors signature is not required.

Following enactment of the budget, the General Assembly acts on bond authorizations, which fund the majorpart of the capital budget. The General Assembly may also consider supplementary appropriations bills whichauthorize spending beyond the regular budget. Supplementary appropriation bills must contain a revenue sourceto support the authorized expenditures and are subject to line-item veto by the Governor. Fiscal year 2028begins July 1, 2027.

State General Fund Outlook Fiscal Year 2027 Budget Baseline


($ in Millions) FY 2027 FY 2028 FY 2029 FY 2030 FY 2031GF Revenues $16,359 $16,451 $17,047 $17,746 $18,651

GF Uses $16,748 $17,699 $19,131 $20,261 $21,639GF Balance ($389) ($1,247) ($2,084) ($2,515) ($2,987)

State General Fund Outlook Proposed Fiscal Year 2028 Budget

($ in Millions) FY 2027 FY 2028 FY 2029 FY 2030 FY 2031GF Revenues $16,541 $16,451 $17,047 $17,746 $18,651

GF Uses $16,541 $16,394 $17,296 $18,074 $19,068

GF Balance $0 $57 ($248) ($328) ($417)

Revenues


($ Millions) FY 2026 FY 2027 FY 2028% Change Over

FY2027Individual income tax $7,012 $7,004 $7,047 0.6%


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Corporate income tax $499 $531 $542 2.1%Sales tax $6,974 $7,044 $7,168 1.7%

Lottery $739 $752 $742 -1.2%Fuel tax $904 $915 $938 2.5%

Transportation Revenues $1,882 $1,910 $2,110 10.4%Higher Education Revenues $3,093 $3,323 $3,438 3.5%

Transfer from Rainy Day Fund $633 $40 $0 -100.0%Advance from General Fund $342 $182 $0 -100.0%Transfer from Other Funds $356 $333 $129 -61.4%

Other General Funds $789 $883 $1,077 22.1%Other Special Funds $994 $1,475 $1,465 -0.7%

Federal Fund Revenue $7,566 $8,021 $8,197 2.2%Total Revenues $31,783 $32,413 $32,853 1.4%

Expenditures

($ Millions) FY 2026 FY 2027 FY 2028% Change

Over FY2027Health $10,112 $10,460 $10,937 4.6%

K-12 Education $6,769 $6,992 $7,203 3.0%


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Higher Education $4,111 $4,367 $4,519 3.5%Transportation $3,859 $3,582 $3,555 -0.8%

Human Resources $1,524 $1,551 $1,511 -2.6%Public Safety $1,382 $1,412 $1,378 -2.4%

Legislative, Legal & Judicial $443 $455 $471 3.5%Public Debt Service $588 $614 $629 2.5%

Reserve Fund $50 $50 $50 0.0%Other $2,945 $2,930 $2,543 -13.2%Total $31,783 $32,413 $32,796 1.2%

Fiscal Responsibility

The budget proposed for fiscal year 2028 is honest and fiscally responsible. It funds governments corefunctions for the citizens of Maryland while making tough choices.


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The new administration has taken office with the state facing some of its greatest financial troubles inhistory. The nations economic slump, combined with rapid state spending growth has added up to a dismal setof choices.

Governor OBrien and Lieutenant Governor Burbank propose to balance the budget, to keep Marylandscommitments to public schools, health care, and law enforcement, and to rebuild the states depleted reserve

fund, without increasing taxes. Therefore, to fulfill these promises and begin establishing an ethic of fiscalresponsibility, Governor OBrien plans to reduce spending levels, to preserve the available funds for corefunctions of government, to end the use of gimmicks and fund transfers, to fundamentally restructure andimprove State government and to utilize new sources of revenue to fund critical programs.

A shortfall of $544 million is projected for the current fiscal year 2027. Remedial actions taken by theoutgoing administration have solved $155 million of this problem. The remainder has been left for the newGovernor and General Assembly to address, with less than half of the fiscal year left.

For the upcoming fiscal year 2028, existing revenues fall $1.3 billion short of meeting the cost of currentgovernment services and projected increases for public education, Medicaid and other mandatoryexpenditures. Without aggressive action to correct Marylands structural imbalance, the States budget deficit

is projected to reach $3 billion by 2031.

Correcting the Current Years Problem

Spending cuts enacted by the Reynolds Administration, one week before leaving office, address $155 million ofa $544 million problem. Governor OBrien will complete the necessary adjustments by proposing an additional$207 million in budget cuts. The final $182 million in funds needed to balance the current budget will beadvanced from fiscal year 2028 general fund revenues. These actions will balance the general fund for fiscalyear 2027.

Spending Reductions

The 2028 budget proposes $1.3 billion in spending reductions from the estimated costs of current services.These include substantial reductions to higher education, business development, technology and employeebenefits. However, they preserve critical functions of government for public schools, health, human servicesand law enforcement.

The cuts proposed in the fiscal year 2028 were by no means easy to develop, but in crafting this budget, theAdministration has attempted to spread these cuts across a variety of functions in order to prevent any onevital service or programs funding level from being severely reduced.

1,500 vacant positions will be eliminated, while the budget preserves the jobs of existing employees, with asaving of $18 million. Imposing a freeze on hiring non-essential positions will save another $52 million.

Luxuries, such as the states twin-engine aircraft are being eliminated, as are various special grants and pilotprojects. Examples include eliminating the Smart Codes Hotline, reducing agricultural marketing, eliminatingstate funding for the Maryland Technology Academy, and reductions to tourism and business marketing.Governor OBrien is also ordering a top-to-bottom review of State government in order to develop ways ofreducing costs to taxpayers and improving the quality of services provided to Marylanders. The Governor hasalso directed a strict freeze on the acquisition of new cellular phones, office space and vehicles by stategovernment, and has instructed state agencies to eliminate their operating expenditures by 5% for the currentfiscal year and another 5% in the next fiscal year.


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To avoid job losses for existing state workers, employee pay raises and merit increments are not possible inthis budget. In addition, matching funds for deferred compensation plans must be skipped this year. Thebudget does provide $115 million in additional funding (all funds) to cover the rapidly increasing cost ofemployee health benefits, with no increase in the employees percentage share of health benefit premiums, andno increases in prescription co-pays.

Also, legislation will be proposed for counties to provide a $10 million reimbursement to the State for a shareof the cost of assessing property for purposes of levying local and State property taxes. This represents lessthan 1/3 of the cost of property assessment, a cost that is borne by local governments in every other state.

No tax increases are required to balance the budget.

Planning for the Future and Restoring Financial Integrity

Governor OBriens budget is focused on achieving balance in the immediate term, but for the long-term theOBrien Administration will promote policies that plan for future obligations and restore financial integrity tothe States budget books. Despite the current fiscal crisis, Governor OBrien has budgeted $50 million fordeposit into the States Rainy Day reserve fund in fiscal year 2028, bringing the total balance of the fund to

nearly $87 million. State law establishes a statutory goal of a Reserve Fund balance of at least 5% of generalfund revenues. The current balance of $36 million is a meager .2% of general fund revenues. Governor OBrienis committed to rebuilding an adequate reserve to protect the States credit rating and guard against futureeconomic downturns.

Governor OBriens budget also fulfills his commitment to replenish and restore the solvency of theTransportation Trust Fund after three years of raids into the Fund in order to balance the budget,transferring $214 million back into the Transportation Trust Fund Reserve. Only $97 million is transferredfrom the Transportation Trust Fund to the general fund under the Governors Fiscal Year 2028 budgetproposal, compared to $303.4 million in Fiscal Year 2027.

Budget Forecast

A forecast developed by the Department of Budget and Management shows that over the next four fiscalyears, required expenses greatly outpace revenue growth. Without the actions proposed in the fiscal year2028 budget to restrain spending, the State would face a cumulative total of $8.8 billion in budget deficitsover the next four fiscal years, with the annual budget deficit reaching a staggering $3 billion in fiscal year2031. The spending reductions in this budget have greatly reduced the size of the projected shortfall. But thegap still is projected at $249 million in 2029, growing to $417 million in fiscal year 2031. These projecteddeficits cannot be allowed to become reality.

Over the coming year, managers, experts and citizens will examine every agency of state government in top-to-bottom efficiency reviews to identify further savings. The States Managing for Results process will be a bigpart of these reviews. The tools of strategic planning and performance measurement will help identify the

concrete goals of government programs and assess what is working and what is not. The new administration willrequire state programs to provide regular reports of the results achieved for citizens, and will hold agenciesaccountable for their performance.

Health

Improving the delivery of health care to Marylanders is a top priority for Governor OBrien and LieutenantGovernor Burbank. Accordingly, in spite of these austere fiscal times, the health budget for FY 2028increases by $477 million, a 4.6% increase from fiscal year 2027.


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Health is the second-largest component of Marylands budget, exceeded only by education. Maryland mustconfront major health issues that are common throughout the country such as: expanding access to healthcare including prescription drugs; addressing the states endemic drug and alcohol abuse; and protecting thepublic health against threats from terrorism. The states health budget addresses these issues by fundingbasic health coverage to low-income and uninsured citizens, by expanding access to prescription drugs, by

treating vulnerable patients in state institutions and community programs, and by providing basic public healthservices.

Expanding Access to Health Care

In partnership with the federal government, Maryland funds and managesMedicaid, a comprehensive medical assistance program, costing $8.5 billion instate and federal funds. This program finances health care services for needycitizens, including recipients of public assistance payments, children, pregnantwomen, the elderly, and the disabled. Medicaid covers numerous services necessaryto the maintenance of good health. From FY 2027 to FY 2028 expenditures for

Marylands Medicaid program are projected to increase by approximately 4.5%. Maryland receives a federal

match of 50% on most of its Medicaid programs. The increased FY 2028 budget, which reflects programinflation, maintains coverage for existing beneficiaries and will enable an additional 1,000 eligible individuals toreceive assistance beginning July 1.

Governor OBriens budget expands the Maryland Childrens Health Program. The Maryland Childrens HealthProgram (MCHP) providesaffordable private health insurance to low and middle-income children and pregnantwomen. Governor OBriens budget proposes to increase the excise tax on smokeless tobacco in order to raise$7 million in new funding for childrens health insurance coverage. This proposal will enable 5,000 additionaluninsured pregnant women and children to receive coverage through MCHP. An estimated 250,000 children andpregnant women will receive insurance through the program in fiscal year 2028. MCHP receives a 65% federalmatch.

Protecting the Public Health

Growing threats from bio-terrorism pose real and significant dangers to the publichealth. Governor OBrien will supplement preventative measures being taken by thefederal government with efforts by his own administration to protect the public healthof Maryland from such threats. The Department of Health and Mental Hygienes fiscal

2028 budget includes $15 million for disease surveillance and emergency preparedness in response to thesignificant danger posed by bio-terrorism and other public health risks. These funds will enhance the ability ofthe state public health system to detect and respond to acts of bio-terrorism, to operate high-level bio-safetylaboratories, and to train public health officials in up-to-date emergency preparation and response. $3 millionwill also be provided to the states 52 acute-care hospitals to develop and enhance their response capabilitiesthrough the purchase of medicines and vaccines, personal protection and decontamination equipment,

communications technology, and through the performance of biological disaster drills.

The departments public health programs also protect communities bypreventing and controlling communicable and chronic diseases, preventinginjuries, providing public health information, and promoting healthybehaviors. Funding to local health departments for core public healthservices remains constant, while funding for public health programsoverall totals $265 million, a slight reduction from fiscal year 2027funding levels.


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Community Services


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Maryland State government can play a significant role in helping all citizens function well in their community.The OBrien-Burbank Administration is committed to expanding and improving community services.

Several vulnerable populations, including the developmentally disabled, mental health patients, and substanceabusers, rely on existing public efforts to help them function normally in their neighborhoods. Allowing thesepopulations to cope with their disabilities in community settings fosters a more unconfined and autonomous

lifestyle, which, in turn, makes for more independent citizens. Therefore, Governor OBrien will provide fundingin the fiscal year 2028 budget to expand community- based services, to address the needs of substanceabusers, and to assure quality mental health services.

Expanding Community-Based Services

Under the Americans with Disabilities Act, Maryland is required to provide community- based treatment forthe disabled when the states treatment professionals determine that such placement is appropriate, affectedpersons do not oppose such treatment, and placement can be reasonably accommodated, taking into account theresources available to the state and the needs of others with disabilities. The goals of community-basedtreatment are to give individuals the opportunity to live close to family and friends, to live more independently,to engage in productive employment, and to participate in community life.

To foster an environment in which people with disabilities have the opportunity for participation andcontribution in ways that promote self-determination and choice, Governor OBrien has included $505.4 millionin the budget for community-based mental health services, an 11.6% increase over FY 2027. These programsprovide outpatient services, psychiatric rehabilitation, counseling and targeted case management to makealternatives to institutionalization more available.

The Governor is also placing renewed emphasis on funding community services in the most integrated settingpossible for the developmentally disabled those Marylanders with the most severe, indefinite mentalimpairments. Funding for community services for such individuals totals $466.8 million, an $11.8 millionincrease over fiscal year 2027 levels. This funding includes:

$4 million to boost the salaries paid to direct care staff of community providers to improve staff retention;

$5.2 million for the Transitioning Youth Program, which assists students with developmental disabilities totransition into post-secondary day and employment services.

$4.1 million to respond to emergencies faced by families in crisis;

More than 16,000 developmentally disabled individuals will receive community-based services in 2028.

Medicaid waiver programs allow funding for services that are outside the traditional boundaries of Medicaidincluding services in the community. In FY 2028 funds will be provided to expand the Older Adults Waiver,which provides nursing home eligible individuals the option of remaining in the community rather than moving

into a nursing home, so that the program may serve an additional 1,000 individuals at any one time and increasethe total capacity of this waiver to service for 4,135 individuals.

Another waiver, for those with traumatic brain injury will also be implemented during FY 2028, and will allowMedicaid- eligible individuals to receive needed services in the community.

Substance Abuse Treatment


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Maryland continues to be plagued with the problems stemming from substance abuse. In addition to the publichealth complications that develop from the abuse of controlled substances, the State is suffering from thedaily criminal activity that keeps the supply of illegal drugs available. The Alcohol and Drug AbuseAdministration of the Department of Health and Mental Hygiene is charged with the responsibility ofestablishing and servicing a comprehensive alcohol and drug abuse service delivery system. Through thisagency, Governor OBrien plans to better attack the demand side of the drug market, thereby decreasing

Marylanders desire for these dangerous and unhealthy substances. The budget includes $150 million foralcohol and drug abuse treatment, a $19.2 million or 14.7% increase over the current fiscal year. This proposedincrease will enable an additional 10,000 individuals to enroll in treatment programs in Fiscal Year 2028. Thisfunding increase is contingent upon approval by the General Assembly of Governor OBriens proposal to doublethe state tax on alcoholic beverages. Marylands excise tax on alcoholic beverages is among the lowest in thenation.

Assuring Quality Mental Health Services

Maryland law provides that it is the policy of the State to foster and preserve the mental health of itscitizens to the best of its ability and to provide without impartiality care and treatment to citizens who havemental disorders.

Governor OBrien is placing a renewed emphasis on the quality of State services for those in need of mentalhealth services by increasing the States funding to mental health programs. In FY 2028, $52.6 million hasbeen added to fund community services for Medicaid eligible individuals. It is expected that more than 119,000individuals will receive mental health services in FY 2028 because of such funding. In addition, $1.9 million hasbeen included to fund the 3-year DHMH-DJS Plan for enhanced mental health services to juveniles inMarylands juvenile justice system.

Public Safety & Law Enforcement


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Law enforcement and ensuring the publics safety remain core functions of our State government. However,Marylands government can perform these functions more effectively.

According to a year 2023 survey recently released by the Federal Bureau of Investigation (FBI), Marylandranks 3rd in the nation in the number of murders committed, and remains 1st nationally in robberies. Drugscontinue to infiltrate Maryland, destroying the health of our citizens while feeding criminal activity.

In response to this situation, Governor OBrien and the new administration will be implementing acomprehensive approach to crime reduction in Maryland. This approach will encompass better crime preventionefforts, more successful apprehension of criminals, fair but speedy adjudication and punishment throughincarceration. This budget begins this process by funding programs aimed at addressing youth criminal activity,supporting our police forces, expanding access to the criminal justice system, and incarcerating adultoffenders found to be guilty. The budget provides $1.4 billion for public safety programs, a 2.4% reductionfrom Fiscal Year 2027. The budget will more effectively target scarce programs to programs and efforts thatare effective in reducing crime and protecting the safety of the public.

Crime Prevention: Effective Juvenile Services

In order to prevent the commission of future crimes, Maryland must construct a strong juvenile servicesprogram that effectively addresses the educational, social and emotional needs of our troubled youth. Despitethe States austere fiscal conditions, improvements and reforms in the States juvenile services representsome of the largest new funding initiatives in the 2028 budget. In total, these initiatives provide $3.5 millionfor the Department of Juvenile Services. Another $7.5 million will be allocated to the Maryland StateDepartment of Education (MSDE).

The Department of Juvenile Services provides programs for the treatment and supervision of juvenileoffenders, including detained youth who are awaiting court disposition, committed youth who have beenplaced in the Departments custody by a juvenile court and youth under community supervision. DJS programsare housed in both secure institutions and community-based facilities operated by DJS itself or contractors.

The fiscal year 2028 budget includes funding for structural reforms within DJS to begin the process ofmaking the agency more responsive to the needs of troubled youth. No juvenile services child should be leftbehind due to unequal educational services. Consequently, the task of educating troubled youth should beassigned to the administrative agency specializing in the education of every other Maryland child. $7.5 millionis included for the Maryland State Department of Education to assume educational responsibilities at theCharles H. Hickey School as a first step in the process of educational reform. Furthermore, $1 million isincluded to fund revised intake and detention guidelines, to hire more case managers, to implement newassessment tools, and to execute additional management reforms in the juvenile services system.

Moreover, the budget funds several new initiatives aimed at providing more effective juvenile services. Theseinclude:

$500,000 to create a new Assistant Secretary for Minority Services with sufficient support services, toaddress the disproportionately high minority representation within the population at DJS institutions and

ensure children of all racial and ethnic backgrounds are treated equally and fairly.

$1 million to enhance mental health services to youth under the Departments care and supervision.

$1 million for a drug treatment and rehabilitation courts initiative. Drug courts, as they are more commonlyknown, are judicially monitored case management programs that assume responsibility for drug-usingdefendants through intensive supervision, drug treatment and rehabilitation services. Reducing youth


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dependence on drugs will help to reduce their involvement in criminal activity and help them live better,healthier lives. By expanding drug courts, Marylands local jurisdictions will be well positioned to apply forfederal grants available from the United States Department of Justice, Office of Justice Programs.

Criminal Apprehension: State Police Efforts

Governor OBrien will provide Marylands uniformed officers with thefunding and technological support they need to properly enforceMarylands laws and to protect the public safety. The total budget forthe State Police is $294.5 million. The largest component of the StatePolice operating budget is the Field Operations Bureau, accounting for$105.9 million. The budget increases the size of the overall trooperforce by 50 officers, to a total trooper force of 2,049. This amountrepresents a 3.3% increase over the agencys fiscal year 2027

appropriation. The field force operates from 23 barracks and is responsible for traffic control and criminalenforcement. Over $8 million is budgeted for crime labs in Baltimore, Berlin and Hagerstown to performforensic and firearm analyses.

Adjudication: Access to Justice

The administration is committed to ensuring that all citizens, regardless of their race, gender or income, haveaccess to a fair trial through legal representation. The budget includes $2.9 million for the Office of thePublic Defender to add 35 new attorneys and 24 support positions. These funds are part of a three-yearinitiative to reduce the Public Defenders caseloads to a number closer to the American Bar Associationsstandard. This initiative will enhance the quality of the representation received by citizens in need of theAgencys services, reducing the likelihood of future dismissals and appeals due to inadequate representation.The Office of the Public Defender budget also includes full-year funding of additional staff associated withthe Baltimore City Homicide and Handgun prosecutions, and the operation of additional courtrooms in SouthBaltimore City, Montgomery County and the Baltimore City Juvenile Justice Center.

Adult Incarceration: Keeping the Public Safe

The adult population in the Maryland State correctional institutions continues to grow. The current projectionof 28,350 inmates in fiscal year 2028 represents an increase of 2% above fiscal year 2027. To address thisneed, the Department of Public Safety and Correctional Services budget will total $888.2 million, a modestreduction from Fiscal Year 2027.

Due to the rise in the prison population, many of Marylands institutions are facing problems with overcrowding.The Baltimore City Detention Center s budget will be increased by $6 million in fiscal year 2028 budget toaddress some of the crowding. Funding of $601,000 is also provided to the Maryland Correctional Institutionfor Women to re-open a 92-bed housing unit. This newly opened unit will also help to alleviate pressure in thewomens section of the Baltimore City Detention Center.

The Maryland State prison system will continue to receive a substantial amount of funding. $628.2 million isincluded in the fiscal year 2028 budget to operate the States 27 correctional facilities through the Divisionof Correction, the Division of Pre-Trial and Detention Services, and the Patuxent Institution. In addition,$82.1 million is included to supervise the nearly 53,000 offenders on parole or probation status.

Education


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Education is the largest category of the states budget, accounting for over 35 percent. The budget will fullyfund the States commitment to K-12 public education while restraining unprecedented high levels of highereducation spending.

Elementary and Secondary Education

Governor OBriens budget prioritizes public education. Overall education spending, including general, specialand federal funds, totals $7.2 billion, an increase of $210.1 million over Fiscal Year 2027. General fundspending increases $79.9 million to $6.3 billion. The basic education funding formula, the Foundation Program,is increased by $89.8 million, a 1.9% increase, to $4.9 billion.

Other forms of statutorily mandated education aid to local school systems further demonstrate the Statescontinued commitment to supporting K-12 public education.

Formula aid for students with disabilities increases by $29.8 million to $640.8 million, an increase of 4.9%, to provide special education services. This includes $294.1 million in general funds and $346.7 million in federalfunds.

The Budget eliminates several smaller, narrowly-targeted grant programs like the Gifted and Talented, Environmental Education and Disruptive Youth programs, saving $7.9 million. Funding for these programs isabsorbed by the Foundation Program funding formula.

The Budget provides $10.7 million in general, special and federal funds, a $2.7 million increase, for adult continuing education services. This includes $2.6 million, a $1.1 million increase, in general fund spending.

The Fiscal Year 2028 Budget includes the cornerstone of Governor OBriens education plan a literacy program that will include providing reading coaches in under-performing elementary schools to ensure that allstudents are reading at or above grade level by the end of the third grade. A new State appropriation of $10million represents the first installment of a four-year $40 million commitment.

Governor OBrien provides $269 million in general funds for school construction aid to local districts, a 4.8% increase over current funding levels. This increase is consistent with the Governors commitment tomodernizing existing schools and helping local districts construct new, state-of-the-art facilities to serve asteadily increasing student population. Including general obligation bonds and other capital funds, the totalFiscal Year 2028 investment in school construction exceeds $408 million.

Governor OBriens education budget also supports partnerships with businesses to establish career academies to train the workforce of the future, invests in character education, teacher mentoring and teacherrecruitment programs, and provides $645,000 to fund bonuses for teachers who meet National Board ofTeaching Professionals standards.

$147 million is included as Transportation Grants, to help local school systems with the cost of providing

students with transportation to and from school.

The budget provides $37.8 million to supplement the cost of educational services to students with limitedEnglish proficiency.

However, simply providing schools with more education aid is notenough. Without other adequate educational inputs including qualityteachers and principals and support mechanisms in place, fundingincreases will be ineffective. Consequently, Governor OBrien intends to


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supplement the new Foundation funding with renewed state support for improved teacher training andretention, and for early reading and school readiness. With these additional supports, Marylands students willbe ready to learn and will have the quality instruction that makes learning possible.

Therefore, the budget includes support for the following discretionary state educational support programs:

$15 million for teacher scholarship programs (e.g. The Sharon Christa McAuliffe Scholarship, the HopeScholarship for Teachers, and Maryland Distinguished Scholars who chose to teach). Such programs helpMarylands college and university students become Marylands newest, brightest teachers.

Grants to local subdivisions to promote early-reading training among parents, teachers, and librarians,including $3 million for state-funded Head Start pre-school programs.

Higher Education

Since 2022, Marylands higher education institutions have collectively witnessed a growth of 45%. Because theState can no longer maintain this rate of spending growth with available revenues, and also adequately fund K-12 education, higher education funding must be brought back to more sustainable levels.

Therefore, higher education will experience reductions from its original fiscal year 2027 funding level by 5.6%.In total, this restraint on spending will help to balance the budget by providing an estimated $55.8 million insavings. However, funding for higher education institutions from all sources increases by 3.5%, or $152 million,to over $4.5 billion.

Marylands Historically Black Colleges and Universities (HBCUs) are a crucial part of providing higher educationservices for Marylands diverse student population. These institutions have a strong history of serving thehigher educational needs of African-American and other minority populations. The budget provides $50.8million in general funds to Morgan State University and $65.3 million for the three HBCUs of the UniversitySystem of Maryland (Bowie State University, University of Maryland- Eastern Shore and Coppin StateCollege). Although this represents a reduction of 4.2% from the original 2027 appropriation, the state funding

provided to HBCUs remains high: the fiscal year 2028 allowance for HBCUs remains $34 million or 41% abovethe amount provided in 2022.

Moreover, the HBCU Enhancement Fund and the Access and Success Program will receive $10.5 million, a $1.1million increase over 2027 levels. In addition, consistent with Governor OBriens commitment, $3 million isincluded to meet the States match for the Private Donation Incentive Program (PDIP) at HBCUs. Theseprograms have been established to increase the graduation rates, and to help finance capital projects atMarylands HBCUs.

Governor OBrien and Lieutenant Governor Burbank are committed to continuing the investment in capitalprojects at Marylands higher education institutions, including HBCUs. The following are on-going capitalprojects that will continue to be funded by the fiscal year 2028 budget:

$51.4 million to construct a new library at Morgan State University;

$42.1 million to continue funding of a new dental school at the University of Maryland, Baltimore; and

$17.7 million to complete renovations and construct an addition to the Fine Arts Building at TowsonUniversity.


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Community colleges offer an important means for many people to develop their skills, knowledge, and abilities inpreparation for further education or employment. The fiscal year 2028 budget includes $202.6 million for thefunding formula and several smaller programs for Marylands community colleges, a 4.0% increase. Statefunding of community college fringe benefits will provide another $23.8 million. Funding for capital projects atcommunity colleges totals $40.9 million.

Additionally, the budget continues to fund non-public colleges in the state providing $41.3 million to continuethe States commitment to these institutions.

Scholarship Programs

Despite the austere budget environment, Governor OBrien and Lieutenant Governor Burbank are committed topreserving scholarship opportunities for deserving students. Indeed, Marylands higher education students relyon these programs to finance significant portions of their school expenses. Therefore, the budget provides$82.5 million for both need-based and merit-based scholarship programs. Funding is sufficient to continuescholarships for all current recipients who remain eligible, and will target new awards towards teachereducation programs and programs for students with the greatest financial need.

Marylands Capital Budget

The capital budget totals approximately $3.1 billion. This amount includes $1.2 billion for state-owned capitalprojects as well as capital programs that provide grants and loans to local governments and the private andnon-profit sectors for capital improvements supporting state policy objectives such as restoring theChesapeake Bay. The remainder of the capital budget, $1.9 billion, is directed to highway projects, masstransit and other transportation improvements.


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The general construction portion of the five-year capital improvement program focuses resources on improvingeducational facilities, protecting the environment, making our communities safer, strengthening and revitalizingcommunities and creating and retaining high-wage jobs. Proposed spending in each of these areas is describedbelow.

Education

The capital budget provides $624.7 million to construct new and to improve existing facilities for Marylandselementary, secondary and post-secondary students. Of this amount, $165.4 million will fund improvements toacademic and research facilities at public four-year institutions of higher education; $408 million will fund newand improved existing facilities for elementary and secondary school students; and $40.9 million will improveacademic facilities on 17 community college campuses. $10.4 million will create new and improve existingscience and research facilities at private colleges and universities. Education projects comprise 55% of theStates capital budget.

Public Colleges and Universities: Funding to improve academic and research facilities at public four-yearinstitutions of higher education totals $165.4 million. Major projects include: $52 million to construct a new

library at Morgan State University; $42 million to continue funding of a new dental school at the University ofMaryland, Baltimore; and $17 million for improvements to Towson Universitys fine arts building. The remainderof the capital budget in this area includes funds to improve utility systems and design and equip facilities atvarious University System of Maryland institutions, Morgan State University and at St. Marys College ofMaryland.

Elementary and Secondary Education Facilities: Grants to local school systems to expand and improveeducational facilities in each of Marylands 23 counties and Baltimore City total $408 million. This includes$15.5 million for the Aging Schools program.

Community College Facilities: $40.9 million is provided to improve academic facilities on 17 community collegecampuses. Major projects include: $9.6 million to construct a new Arts and Humanities Building at Howard

Community College; $6.3 million to construct a new academic facility for Cecil Community College in downtownElkton; $5 million to expand the Student Center at Wor-Wic Community College; $4.8 million to renovate andconstruct an addition to the Caroline Center at Chesapeake College; and $3 million to renovate Joppa Hall atHarford Community College. The remainder of the capital funding for the community colleges will improve agingfacilities and building systems and design and equip facilities for various community colleges.

Environment

Capital funding for environmental programs focuses on three objectives: reducing the impact of and directingsuburban growth by preserving agricultural lands, sensitive plant and wildlife habitat and open space; improvingwater quality by upgrading water and wastewater infrastructure; and restoring the Chesapeake Bay ecosystem.$260 million is budgeted to meet these objectives, including:

Water and Wastewater Infrastructure: $76.8 million for the improvement of local drinking water systemsand wastewater treatment plants. These improvements will assist state agencies and local governments toensure that water quality standards are met.

Land Preservation Programs: $131 million, including: $15 million for the Rural Legacy Program; $84.4 millionfor Program Open Space; $10 million for community parks projects; and $21.5 million for the MarylandAgricultural Land Preservation Foundation for the preservation of an estimated 10,600 acres of productivefarmland through the Agricultural Land Preservation Program.


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Chesapeake Bay Restoration Programs: $26.6 million will reduce the amount of point and nonpoint sourcenitrogen and phosphorous runoff entering the Chesapeake Bay. Of this amount, $11.5 million has been providedfor the Biological Nutrient Removal Program. In addition, $6.5 million will be used to reduce nitrogen andphosphorous runoff from urban, suburban and agricultural lands. $3 million will be used to restore the Baysonce vibrant oyster population. $5.6 million is provided for the Agricultural Cost Share Program to help

farmers adopt nutrient management practices that reduce discharge into the water supply and the ChesapeakeBay.

Brownfield and Hazardous Site Cleanup Projects: A brownfield is a contaminated property where thepresence of pollution has impeded redevelopment. Many such sites are abandoned throughout the state andcontribute to community blight. The Governors capital budget increases funding for the redevelopment ofbrownfields and cleanup of hazardous waste from $500,000 to $7 million, with 100 new projects slated in thenext year.

State Park and Waterway Improvements: $6.1 million.

Environmental Cleanup and Mitigation Programs: $3.6 million for environmental abatement projects

statewide.

Public Safety and Law Enforcement

In recent years, new prison construction has not kept pace with the population of offenders. GovernorOBriens budget refocuses capital investment in public safety. Capital projects to improve the safety ofcommunities consist of state and local correctional facilities, new and improved court facilities, treatment anddetention facilities for at-risk youth and modern facilities for the State Police. The capital budget totals$87.2 million for the safety of communities, more than double the amount provided in the last capital budget.This amount includes:

State and Local Correctional Facilities: $56.9 million. Major projects include: $17.4 to complete the

construction of a 256- bed housing unit at the North Branch Correctional Institution in Cumberland; $17.4million for the construction of a new Support Services/State Use Industries building and utility improvementsat the Maryland Correctional Institution for Women in Jessup; $6.5 million for improvements to localcorrectional facilities, including $5 million for the expansion of the Baltimore County Detention Center; $5.3million for the construction of dormitory facilities at the Public Safety Training Center; and $3.4 million forthe construction of a 140-bed minimum security facility at the Eastern Correctional Institution. The remainderof the capital funds in this area will construct improvements for the police serving the State Capital inAnnapolis and facilities maintenance projects at various correctional facilities.

State Police Facilities: $30.0 million. Major projects include: $23.5 million to construct a new crimelaboratory for the State Police; and $6.3 million to construct a new police barrack in Easton and design a newbarrack in Hagerstown.

Community Investment and Economic DevelopmentThrough various neighborhood conservation initiatives, theadministration focuses capital investments on projects that strengthenand revitalize communities. The capital budget includes $168.8 millionfor grants to local governments and non-profit organizations, withmajor areas of emphasis including:


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Community Hospitals and Health Facilities: $17.1 million is included for health-related capital projectsincluding hospitals and facilities that provide care and/or treatment for physically, mentally and emotionallydisabled individuals, the elderly and individuals recovering from substance abuse.

Community Revitalization Grants: $33.2 million. Of this amount, $7 million is for various ongoing revitalizationefforts in the City of Baltimore; $12.6 million is for the Community Legacy Program, which provides grants to

older communities for acquisition or rehabilitation of housing, mixed use and mixed income redevelopment,community centers, public improvements in commercial and residential areas, parking lots and other publicinfrastructure projects that will encourage the redevelopment of commercial and residential areas; and $13.6million is for federal Community Development Block Grants.

Housing Programs: $36.7 million will be spent on grants and loans to local governments and non-profitorganizations for projects that will provide affordable housing and encourage homeownership. Of this amount,$15.1 million has been provided for rental housing programs; $10.3 million for homeownership programs; $2million to assist families in need of temporary transitional housing; and $9.2 million for other housing-relatedprograms, including $1 million for lead paint abatement in Baltimore City.

Business and Job Creation: Capital funding for economic development programs and projects focuses on two

objectives: business attraction and retention and revitalization of economically stagnant or distressed areas.The capital budget contains $73.7 million to meet these objectives.

Other Projects

Capital Maintenance: $18.7 million for facilities maintenance at state-owned and operated facilities statewide,excluding capital facilities maintenance at institutions of higher education.

General Capital Improvement Program Fiscal Year 2028($ Millions)

EDUCATION GO Bonds General & Other Funds TotalPublic Colleges & Universities $165.4 $0.0 $165.4Public School Construction $120.0 $288.1 $408.1Community Colleges $40.8 $0.0 $40.8Private Education Facilities $10.4 $0.0 $10.4Subtotal $336.6 $288.1 $624.7


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ENVIRONMENTLand Preservation $25.0 $106.0 $131.0Water and Wastewater Infrastructure $0.0 $76.8 $76.8Chesapeake Bay Restoration $21.0 $5.6 $26.6Hazardous Site Cleanup $0.0 $7.0 $7.0

Waterway Improvements $0.0 $5.2 $5.2Shore Erosion Control $0.0 $1.2 $1.2Ocean City Beach Maintenance $0.0 $2.0 $2.0Critical Maintenance Projects, DNR $0.0 $3.1 $3.1State Park Improvements $1.0 $0.0 $1.0Maryland Environmental Service $3.6 $0.0 $3.6Other $0.0 $2.5 $2.5Subtotal $50.6 $209.4 $260.0

PUBLIC SAFETY & LAW ENFORCEMENTPublic Safety & Corrections $54.8 $2.1 $56.9State Police $30.0 $0.0 $30.0

Juvenile Services $0.5 $0.0 $0.5Subtotal $85.3 $2.1 $87.4

COMMUNITY INVESTMENT & ECONOMIC DEVELOPMENTBusiness and Job Creation $0.0 $73.7 $73.7Housing $36.7 $0.0 $36.7Community Revitalization Projects $11.2 $22.0 $33.2Community Health Facilities $17.1 $0.0 $17.1Other Community Projects $8.1 $0.0 $8.1Subtotal $73.1 $95.7 $168.8

OTHER PROJECTS AND PROGRAMS

Handicapped Accessibilities ADA $1.6 $0.0 $1.6Aging Senior Centers $1.3 $0.0 $1.3State Facilities $14.7 $4.0 $18.7All Other Projects $0.0 $4.4 $4.4Subtotal $17.6 $8.4 $26.0

TOTAL $563.2 $603.4 $1,199.0

Net New General Obligation Bonds Issued: $563.2 MillionGeneral Assembly Capital Debt Affordability Limit: $615.0 Million

Totals may not add due to rounding.

Constitutional AgenciesMARYLAND GENERAL ASSEMBLYThe General Assembly is Marylands legislative authority. Its budget includes the Senate of Maryland, Houseof Delegates and their staff agencies. The Governor is not permitted to alter the General Assemblys proposedbudget.

$ thousands FY 2026 FY 2027 FY 2028Change

FY 2027 - 2028


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General Funds $83,702 $86,308 $87,140 1.0%

Positions FY 2026 FY 2027 FY 2028Change

FY 2027 - 2028Authorized 730.0 730.0 730.0 0.0

JUDICIARY OF MARYLANDThe Judiciary of Maryland consists of the Court of Appeals, Court of Special Appeals, District Court Systemand judicial support functions. Circuit Court judges salaries are included in this budget, but other Circuit Courtcosts are local expenses. The Governor is not permitted to alter the Judiciarys proposed budget.


FY 2027 - 2028

General Funds $258,128 $272,789 $284,723 4.4%Special Funds $12,849 $15,333 $15,498 1.1%Federal Funds $1,818 $1,819 $1,915 5.3%

Total $272,795 $289,941 $302,136 4.2%


FY 2027 -2028Authorized 3,009.8 3,223.8 3,241.8 18.0Contractual 371.0 390.0 372.0 -18.0

Total 3,380.8 3,613.8 3,613.8 0.0

OFFICE OF THE GOVERNORThe Office of the Governor includes the Governor, Lieutenant Governor and their immediate staff.


FY 2027 - 2028

General Funds $8,289 $8,829 $7,152 -19.0%

Positions FY 2026 FY 2027 FY 2028 ChangeFY 2027 -2028Authorized 86.5 84.5 75.0 -9.5Contractual 4.0 3.5 3.5 0.0

Total 90.5 88.0 78.5 -9.5


SECRETARY OF STATEThe Secretary of State has numerous duties specified by the state constitution and state law. For example,the Secretary of State is responsible for registering charities, supervising the Division of State Documentsand processing criminal extraditions.


FY 2027 2028General Funds $2,496 $2,684 $2,461 -8.3%


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Special Funds $503 $479 $495 3.3%Total $2,999 $3,163 $2,956 -6.5%


FY 2027 -2028Authorized 38.6 37.6 34.6 -3.0

Contractual 2.2 2.1 2.6 0.5Total 40.8 39.7 37.2 -2.5

COMPTROLLER OF THE TREASURYThe Comptroller is a constitutional officer independently elected by the people. The office of the Comptrollercollects the states major revenues, keeps its financial accounts, manages its principal data center and providesgeneral supervision of fiscal affairs.


FY 2027 2028General Funds $67,904 $70,398 $67,921 -3.5%Special Funds $14,074 $12,601 $12,666 0.5%

Total $81,978 $79,408 $77,024 -3.0%


FY 2027 -2028Authorized 1,151.7 1,125.7 1,119.2 -6.5Contractual 25.2 28.6 25.4 -3.2

Total 1,176.9 1,154.3 1,144.6 -9.7

STATE TREASURERThe Treasurer is a constitutional officer appointed by the General Assembly. The Treasurers Office receivesand deposits funds, manages the states investments, manages issuance of state bonds and administers thestates commercial and self-insurance programs.


FY 2027 2028General Funds $4,166 $3,860 $3,753 -2.8%Special Funds $483 $615 $619 0.7%

Total $4,649 $4,475 $4,372 -2.3%


FY 2027 -2028Authorized 52.0 53.0 53.0 0.0Contractual 1.0 0.0 0.0 0.0

Total 53.0 53.0 53.0 0.0


ATTORNEY GENERALThe Attorney General is a constitutional officer independently elected by the people. The office of theAttorney General provides legal assistance to all state agencies, represents the state in legal actions, andenforces state antitrust, consumer protection and securities laws.


FY 2027 - 2028


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General Funds $17,368 $18,170 $17,855 -1.7%Special Funds $644 $979 $602 -38.5%Federal Funds $1,275 $1,399 $1,428 2.1%

Total $19,287 $20,548 $19,885 -3.2%

Positions FY 2026 FY 2027 FY 2028

Change

FY 2027 -2028Authorized 260.5 247.5 245.0 -2.5Contractual 3.0 1.2 0.0 -1.2

Total 263.5 248.7 245.0 -3.7


Department of Agriculture

Mission: To provide leadership and support to agriculture and the citizens of Maryland by conducting

regulatory, service and educational activities that assure consumer confidence, protect the environment

and promote agriculture.


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THE MARYLAND DEPARTMENT OF AGRICULTURE (MDA) PROVIDES A VARIETY OF SERVICES AND PROGRAMS TO:PRESERVE ADEQUATE PRODUCTIVE FARMLAND AND CURB RANDOM DEVELOPMENT, PROMOTE LAND STEWARDSHIPAND RESOURCE CONSERVATION, PROTECT THE HEALTH OF THE PUBLIC AND THE HEALTH OF PLANT AND ANIMALRESOURCES, PROMOTE THE PRODUCTION, SALE AND USE OF MARYLAND AGRICULTURAL PRODUCTS, AND PROVIDECONSUMER PROTECTION FOR THE CITIZENS OF MARYLAND.

BUDGET HIGHLIGHTS:

The fiscal year 2028 allowance for the Department of Agriculture totals $70.5 million, an increase of $1.2million or 1.8% above fiscal year 2027 funding levels. The general fund allowance is $27 million, a 14.6%reduction from current levels.

The allowance includes $32.7 million in operating funds for administration and programs located in the Officeof the Secretary, including $1.3 million for operations related to the Maryland Agricultural Land PreservationFoundation (MALPF), $13.8 million for the Office of Marketing, Animal Industries, and Consumer Services,$10.4 million for the Office of Plant Industries and Pest Management, and $13.5 million for the Office ofResource Conservation. The allowance reflects an additional $205,571 to offset the lease-purchase costs offinancing the migration of MDAs outdated information technology systems to a modern, stable environment.

Within the allowance for the Office of the Secretary, $21.5 million is provided for the capital acquisition ofeasements through MALPF, including contributions from the property transfer tax, the agricultural transfertax, local contributions, and Federal farmland protection funding. MDA expects that this funding will allowMALPF to acquire easements on at least 12,600 additional acres of agricultural land, for a cumulative total of243,917 acres enrolled in the program. Acres of land enrolled in preservation districts, a prerequisite toparticipation in the MALPF easement program, are expected to increase by 18,000 acres to a total of 435,000acres in 2028.

MDAs Organic Marketing program was approved as a certifying agency by the U.S. Department of Agricultureunder new organic standards that became effective in October 2026. The allowance for the Office ofMarketing, Animal Industries, and Consumer Services includes $151,568 for implementing the new organiccertification standards, including funding for marketing studies to assist organic farmers. The allowance also

includes a significant increase in anticipated Federal funding to expand Womens, Infants, and Childrens andSenior Nutrition programs that provide coupons for use at farmers markets, thereby increasing demand. Theallowance reflects a decrease of $332,000 to some of MDAs marketing programs.

Within the allowance for Forest Pest Management, $1.1 million is provided for mosquito control activities toreduce human exposure to mosquitoes and to aid control of West Nile and Eastern Equine Encephalitis,primarily in Eastern and Southern Maryland, and $1.2 million for management of forest pest insects andpathogens, including the gypsy moth.

Within the allowance for the Office of Resource Conservation, $2.1 million is provided for the nutrientmanagement program, with an additional $841,127 in funds requested to assist farmers in meeting waterquality standards. In addition, $5.6 million is provided in bond funding for capital improvements and $318,416

is provided for implementation of related best management practices under the Maryland Agricultural CostShare.

BUDGET: $70.5 MILLIONPOSITIONS: 479.7

THREE YEAR SUMMARY FY26Actual

FY 27Approp.

FY 28Allowance

ChangeFY27-28

APPROPRIATIONS: (in millions of dollars)


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General Funds $33.5 $31.6 $27.0 -14.6%Special Funds $34.6 $35.3 $35.5 0.8%Federal Funds $5.4 $2.4 $8.0 230%Total $73.5 $69.3 $70.5 1.8%

EXPENDITURES: (in millions of dollars)Office of the Secretary $34.2 $33.0 $32.7 -0.8%Office of Marketing, Animal Industries &Consumer Services $11.9 $11.1 $13.9 25.0%Office of Plant Industries and PestManagement $11.5 $10.7 $10.4 -2.8%Office of Resource Conservation $15.9 $14.5 $13.5 -6.8%Total $73.5 $69.3 $70.5 1.8%

POSITIONS:Authorized 480.0 460.0 429.0 -31.0Contractual 35.7 45.5 50.7 5.2

Total 515.7 505.5 479.7 -25.8

PERFORMANCE MEASURES FY 2026Actual

FY 2027Estimated

FY 2028Projected

Agricultural Land Preservation FoundationDistrict Acreage 398,990 417,000 435,000

Number of Easements 1,533 1,643 1,749

Easement Acreage 217,817 231,317 243,917

Nutrient Management Plans acreage filedwith MDA 450,000 750,000 900,000

Number of Best Management PracticesInstalled 1,400 1,200 900

Gypsy Moths acres treated 39,134 25,000 23,000

Mosquito Control acres treated withinsecticide 1,193,179 1,000,000 1,000,000

Mosquito Control acres treated with

biological insecticide 95,355 75,000 75,000

Agriculture Export Sales ($ millions) 267 282 300

Department of Budget and Management

Mission: The Department of Budget and Management helps the Governor, State agencies and their

employees provide effective, efficient and fiscally sound government to the citizens of Maryland. We

support agency efforts to achieve results by helping them obtain the fiscal, capital, personnel and


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information technology resources needed to provide services to Maryland citizens. We are dedicated to

providing advice and assistance with professionalism, state of the art technology, modern management

techniques and teamwork.

THE DEPARTMENT OF BUDGET AND MANAGEMENT (DBM) PREPARES THE STATES ANNUAL OPERATING ANDCAPITAL BUDGETS AND MONITORS THEIR EXECUTION. IT PROVIDES LEADERSHIP FOR STATE INFORMATION

TECHNOLOGY PROJECTS, AND MANAGES THE STATES TELECOMMUNICATIONS OPERATIONS. DBM ALSOMANAGES AND ADMINISTERS THE STATES PERSONNEL SYSTEMS, ADMINISTERS EMPLOYEE BENEFITSPROGRAMS AND COORDINATES TRAINING PROGRAMS FOR STATE EMPLOYEES. THE DEPARTMENT ADMINISTERSTHE STATES CENTRAL DEBT COLLECTION, MOTOR VEHICLE FLEET MANAGEMENT AND TRAVEL PROGRAMS,PROVIDES PROCUREMENT OVERSIGHT AND STAFF TO THE COUNCIL ON MANAGEMENT AND PRODUCTIVITY.

BUDGET HIGHLIGHTS:

The allowance for the Department of Budget and Management totals $59.6 million, a decrease of 36% fromthe fiscal year 2027 appropriation. This decrease is attributable to the reduction of 59.8 vacant positions,cuts in information technology and other cost containment actions. The reduction is also a result of thedecision to suspend plans for a pay raise for state employees.

This year, the Department will provide assistance in top-to-bottom efficiency reviews of all agencies, update

Marylands statewide strategic plan and develop a new information technology master plan.

Funding of $10.6 million has been included to manage and administer the States personnel system, employeebenefit programs and to coordinate employee development and training.

Funding of $44.1 million is provided for oversight and coordination of state information technology projects,contract management, accounting system support and telecommunications operations.

Of the Departments total budget, only $3.6 million is directly related to budget analysis and preparation.Most of the funding is for information technology and personnel management activities.

The Department of Budget and Management comprises less than 1% of the overall State budget.



FY 27Approp.

FY 28Allowance

ChangeFY27-28

APPROPRIATIONS: (in millions of dollars)


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General Funds $69.3 $74.9 $42.4 -43.4%Special Funds $20.6 $18.2 $17.3 -5.2%Total $89.9 $93.1 $59.6 -36.0%

EXPENDITURES: (in millions of dollars)Office of the Secretary $13.2 $13.3 $12.7 -4.5%

Office of Personnel Services & Benefits $30.2 $41.2 $8.6 -79.1%Office of Information Technology $42.9 $34.9 $34.7 -0.6%Office of Budget Analysis $2.1 $2.1 $2.2 1.1%Office of Capital Budgeting $1.5 $1.5 $1.4 -5.7%Total $89.9 $93.1 $59.6 -36.0%

POSITIONS:Authorized 517.3 531.3 478.8 -52.5Contractual 33.2 31.2 23.9 -7.3Total 550.5 562.5 502.7 -59.8

PERFORMANCE MEASURES FY 2026

Actual

FY 2027

Estimated

FY 2028

Projected

State Operating Budget ($ billion) $31.8 $32.4 $32.8

State Capital Budget ($ million) $1,518.3 $1,133.9 $1,166.8

Statewide Authorized Positions 82,977 82,412 79,870

Statewide Contractual Positions 8,907 9,133 9,543

Employee Health Plan Enrollment 69,985 71,737 71,737

Monthly Average Maryland Relay Calls 178,521 119,074 119,000

% of Agency Outcome Objectives Achieved 67% 67% 69%


Department of Business and Economic Development

Mission: To stimulate and strengthen the State economy. The Department will develop policies and

implement programs that will generate jobs with family-supporting wages and investment by attracting


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businesses to the State, by facilitating the expansion and retention of existing companies and by

promoting Marylands strategic assets.

THE DEPARTMENT OF BUSINESS AND ECONOMIC DEVELOPMENT (DBED) IS THE STATES PRINCIPAL AGENCY FORASSISTING THE GROWTH OF BUSINESSES AND JOBS IN MARYLAND THROUGH MARKETING, TECHNICALASSISTANCE, SPECIALIZED TRAINING AND FINANCIAL INCENTIVES. THE DEPARTMENT ALSO PROMOTES

TOURISM, THE ARTS AND FILM AND TELEVISION PRODUCTION.

BUDGET HIGHLIGHTS:

The budget allowance totals $155.4 million, an increase of $23.4 million or 17.7% over the fiscal year 2027working appropriation. The increase in the Departments budget reflects Governor OBriens broad-basedeconomic development agenda. The Department will focus its efforts this year on operating more efficientlyand effectively, targeting resources to areas, programs and economic sectors that will contribute mostsignificantly to the States economic strength. The Department has abolished 15 vacant positions and somegrant funds in various programs. While Maryland has felt the effects of the national economic slump, DBED iswell positioned to contribute to the States economic recovery.

The Division of Business Development continues to promote and market Marylands assets to corporatedecision makers. The FY 2028 budget allowance totals $10.8 million, an increase of $1.6 million or 17.4% overfiscal year 2027. The division continues to recruit new firms, to encourage existing firms to remain and expandtheir operations, and to preserve and create jobs.

The Division of Financing Programs fiscal year 2028 Budget Allowance totals $91.0 million, an increase of$23.0 million or 33.8% over fiscal year 2027. This amount includes $25.5 million in general funds and $65.8million in special funds. The Division has also restructured its finances to fund some projects with GeneralObligation bonds instead of general funds. The allowance includes $20.8 million for the Maryland SmallBusiness Development Financing Authoritys business assistance programs, more than double the fiscal year2027 appropriation. $6.5 million is provided for the Maryland Enterprise Investment Fund, $9.5 million for theInvestment Finance Group and $48.5 million (an $8.5 million increase) for the Maryland Economic DevelopmentAssistance Authority and Fund.

Funding for the Maryland State Arts Council grant program totals $11.7 million, an 8.6% reduction from fiscalyear 2027. These funds provide support to organizations and artists in the performing, visual, and creativearts.

The Department of Business and Economic Development is less than 1% of the overall State budget. Specialfunds are principally loan repayments and business development funds. Federal funds are used for support ofarts education programs.



FY 27Approp.

FY 28Allowance

ChangeFY27-28


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APPROPRIATIONS: (in millions of dollars)General Funds $81.3 $74.6 $85.7 14.8%Special Funds $54.5 $56.8 $69.1 21.6%Federal Funds $0.5 $0.5 $0.6 4.3%Total $136.3 $132.0 $155.4 17.7%

EXPENDITURES: (in millions of dollars)Office of the Secretary $5.7 $5.5 $4.0 -26.5%Division of Administration & IT $3.5 $3.5 $3.2 -7.7%Division of Business Development $10.0 $9.2 $10.8 17.4%Division of Financing Programs $68.4 $68.1 $91.0 33.8%Division of Tourism, Film & the Arts $31.3 $31.2 $28.8 -7.7%Division of Regional Development $17.4 $14.6 $17.5 20.0%Total $136.3 $132.0 $155.4 17.7%

POSITIONS:Authorized 324.0 319.0 304.0 -15.0Contractual 48.7 43.1 41.0 -2.1

Total 372.7 362.1 345.0 -16.1

PERFORMANCE MEASURES FY 2026Actual

FY 2027Estimated

FY 2028Projected

Business Development:Jobs Created 14,377 10,000 20,000

Jobs Retained 10,075 6,000 14,000

Export sales ($ million) $26.0 $27.0 $29.0

Capital Investment:

Total Project Cost ($ million) $545.5 $500.0 $500.0

Regulatory and Training Assistance:Number of Business Assisted 1,188 1,000 1,300

Investment Grants/Technical Assistance$6.6 $5.3 $5.6

Tourism:Total Travel Expenditures ($ billion) $9.6 $10.3 $11.1

Feature Film Productions 3 3 3

National Television Productions 2 2 3


Department of Education

Mission: To provide leadership, support and accountability for effective systems of public education,

library servic