Governor’s FY2026 plan narrows shortfall but depends on tax changes, fund transfers and program cuts, fiscal briefing says

Tanya Zimmerman, presenting a fiscal briefing to the House Economic Matters Committee on Thursday, Jan. 23, said the governor’s proposed fiscal 2026 budget narrows December’s projected shortfall but relies heavily on tax-law changes, transfers and one-time shifts to balance the year.

“The package of personal income tax modifications would generate about $820,000,000 of revenue in fiscal 2026,” Zimmerman said, summarizing the largest single revenue element in the plan.

Zimmerman told committee members the governor’s spending plan increases total funding by about $791 million, or 1.2 percent, from fiscal 2025 to fiscal 2026 but reduces general fund spending by roughly $274 million. The proposal would leave a general fund closing balance of about $106 million and a rainy day fund balance of about $2.1 billion, roughly 8 percent of general fund revenue, she said.

Nut graf: The budget reduces an expected fiscal 2026 structural shortfall from a December Department of Legislative Services forecast of roughly $2.47 billion to about $186 million for fiscal 2026, Zimmerman said, but longer-term pressures—particularly costs connected to the Blueprint for Maryland’s Future education funding—drive the structural gap higher by 2030.

Most of the fiscal 2026 gap-closing measures are included in the Budget Reconciliation and Financing Act (BRFAA), Zimmerman said. The BRFAA proposal contains a package of personal income tax changes (including standard deduction increases, the elimination of state-level itemized…