Maryland Department of the Environment seeks steady funding while defending enforcement settlements and modernization plans

The subcommittee reviewed the Maryland Department of the Environment's (MDE) fiscal 2026 operating budget and multiple programmatic items, with Department of Legislative Services analyst Andrew Gray presenting the DLS analysis and Secretary Serena McElwain testifying for the agency.

Andrew Gray opened the DLS briefing noting the fiscal 2026 allowance of $247,300,000, an increase of $16,200,000 or about 7%. He highlighted performance measures, permitting backlogs, and the agency’s use of settlements in fiscal 2024 to cover some operating shortfalls. Gray said that MDE reported two substantial enforcement settlements used to support appropriations: an $8,000,000 multi‑year settlement with Purdue Agribusiness LLC and a $1,100,000 settlement with Fleischmann’s Vinegar Company. DLS recommended MDE provide more sustainable fee revenues rather than rely on settlements for recurring needs.

Secretary Serena McElwain told the panel MDE’s budget “is appropriate because it’s based solely on funding just the essential investments so that we can continue to protect the environment and support Maryland’s growing economy.” McElwain outlined agency improvements she credited to recent management reforms: increased inspections (MDE reported a 31% increase in inspections), reduced “zombie permits” by 81%, digitization of records and permitting, and tree‑planting efforts (the agency reported planting 1,000,000 trees).

Key issues DLS raised and the agency addressed:

- Fee legislation and contingent appropriations: DLS described a fee bill (departmental bill) pending that is intended to stabilize revenues. DLS said some special fund contingent appropriations in the executive budget are larger than projected fee receipts and asked MDE to explain whether a general‑fund deficiency might be necessary if anticipated fee revenue does not materialize; agency officials said they do not currently anticipate a general‑fund deficiency.

- Climate pollution and program accounting: DLS reviewed the state’s greenhouse‑gas spending inventory and the Maryland Climate Pollution Reduction Plan’s estimate of roughly $1 billion in additional public funding needs to meet plan goals. DLS asked for better programmatic tagging and georeferencing of climate funding to verify benefits for disproportionately affected communities. MDE noted the plan and funding inventory and said it will work on improved reporting.

- Building Energy Performance Standards (BEPS): DLS noted that final energy‑use intensity targets could not be included in rules before the end of FY26 because required analyses and reporting will not be complete until late FY26; MDE said the agency followed budget language restrictions and has not used restricted funds inappropriately.

- Recycling needs assessment and producer responsibility: The statewide recycling needs assessment required by 2023 law was delayed; DLS noted the report’s late delivery and possible reimbursement of costs by the producer responsibility entity once implemented. MDE said it is working to complete the assessment and will report back.

- Information technology and modernization projects: DLS asked why MDE shifted procurement models for two IT modernization projects and why cost projections increased despite the move; the agency said it is moving to more agile, consultant‑led approaches and will explain cost drivers and risk mitigation in follow‑up materials.

Committee members asked about the status of a long‑range water and wastewater needs study for Hagerstown, the used tire cleanup program and remaining tire stockpiles, and whether infrastructure projects funded with strategic energy investment fund transfers would meet statutory community benefit requirements. MDE said Hagerstown work is in progress, the tire backlog is shrinking, and staff are reviewing statutory requirements tied to certain CIF/DPA uses.

Why this matters: MDE oversees programs critical to public health, air and water quality, waste management, and climate policy. The department’s budget and fee structure directly influence inspection capacity, permitting timeliness, and administration of multi‑year environmental programs. DLS recommended the subcommittee require additional reporting on fee projections, program accounting and specific IT project cost drivers.

Provenance: DLS presentation began with the departmental budget briefing and concluded with Secretary McElwain’s testimony and committee Q&A.