‘Staggering’ error drives slight uptick in MD budget deficit

Maryland’s budget deficit for the next fiscal year has risen to nearly $3 billion, in part because of a “staggering” error in projecting costs in the state’s Developmental Disabilities Administration, state analysts said in a meeting Tuesday with top legislators.

The DDA, which is the main state agency helping to cover services for people with intellectual and developmental disabilities, is projected to be short $350 million.

“It’s a pretty staggering miss,” David Romans, the lead fiscal and policy analyst for the Maryland Department of Legislative Services, said to legislators during a Tuesday meeting of the Spending Affordability Committee, which makes recommendations to the governor each year.

A spokesman for the Maryland Department of Health, of which the DDA is a part, didn’t respond to an email request for comment.

Romans said that his team met last session with health department officials to discuss the risk of a shortfall in DDA’s budget, but that “the health department’s answers suggested they did not believe they had a problem … and what’s happened since shows that they were incorrect.”

Romans said that legislators should bring DDA officials in for a hearing to understand what led to the deficit and how they plan to get a better handle on their budget.

Senate President Bill Ferguson said during a press conference following the Spending Affordability Committee meeting that invoices from the DDA’s care providers have been higher than expected, but that it wasn’t immediately clear why.

Ferguson said he had a few “hypotheses,” including that the agency underestimated the extent to which personnel costs for health care providers would increase as they struggled to fill workforce gaps.

The DDA’s budgeting blunder was the main reason that the state’s projected budget deficit jumped from $2.74 billion in November to $2.95 billion as of Tuesday, but slightly higher-than-expected revenues and lower-than-expected Medicaid costs offset the increase by a bit.

The Spending Affordability Committee also voted along party lines to forward a set of recommendations to Gov. Wes Moore. Members of his administration are preparing their fiscal year 2026 budget proposal for release in January.

Among the committee’s recommendations was a call for the state to continue filling vacant positions. The executive branch had a vacancy rate of 10.4%, or more than 5,300 positions, as of October, according to the Department of Legislative Services.

Republicans said repeatedly that they’re concerned Democrats will use the growing budget deficit, which is projected to reach nearly $6.3 billion in five years, as an excuse to raise taxes and fees to generate revenue and avoid cuts to projects and services.

Neither the governor, the presiding officers nor the budget committee chairs, all of whom are Democrats, has outlined a proposal to raise taxes yet.

With Democrats holding a supermajority in the legislature, Republicans feel shut out from the decision-making process. The minority party has advocated for across-the-board cuts, among other measures.

“It would be charitable to call that a perfunctory meeting,” House Minority Leader Jason Buckel said during a virtual press conference following the committee’s vote on recommendations for Moore.

Sen. Jim Rosapepe, a Democrat and a committee co-chair, said the recommendations were “sound” and “balanced,” and that spending decisions will become more clear after the Moore administration releases its budget plan and after a few months with President-elect Donald Trump and his team in office.

“We’ll see what the situation is to balance the budget and promote economic growth,” Rosapepe said.