DBM defends salary increases amid DLS budget recommendations for fiscal 2026

The Maryland General Assembly's Appropriations Committee convened on February 26, 2025, to discuss critical budgetary recommendations and disagreements between the Department of Budget and Management (DBM) and the Department of Legislative Services (DLS). The meeting highlighted significant issues regarding salary increases, vacancy rates, and health insurance funding for the upcoming fiscal year.

A central topic of discussion was DLS's recommendation to eliminate funds for a 1% general salary increase and merit raises for fiscal year 2026. DBM opposed this recommendation, emphasizing the importance of honoring negotiated agreements with employee bargaining units. DBM argued that the proposed 1% cost-of-living adjustment (COLA) represents a budget-saving measure compared to the previously assumed 2% increase, which was factored into earlier budget projections.

The committee also examined DLS's suggestion to reduce funding for salary actions by $85 million, citing anticipated vacancy savings and a projected turnover rate of 8.6%. DBM countered this by noting the state's progress in reducing vacancy rates and the potential negative impact of such reductions on agency budgets. They highlighted that the executive branch's turnover rate is budgeted at 9.22%, which is already close to current vacancy trends, and expressed concerns that the recommended cuts could lead to future budget shortfalls.

Additionally, the adequacy of budgeted funding for health insurance was addressed. DBM asserted that the governor's proposed budget is sufficient to cover projected health insurance costs, clarifying that there is a $62 million gap, rather than the $90 million previously mentioned, between budgeted amounts and projected receipts from state agencies.

The discussions during this session underscore the ongoing challenges faced by Maryland's government in balancing budgetary constraints with the need to support state employees and maintain essential services. The committee's decisions in the coming weeks will be crucial in shaping the state's fiscal landscape for the upcoming year.