BALTIMORE — Living in Maryland next year could cost more, as state lawmakers consider raising taxes to address projected budget shortfalls and giving local governments greater power to raise revenue themselves.

This year, Democratic leaders cut services and pushed costs to the local level to keep their promise not to increase fees, a move Republicans alleged was meant to avoid voter backlash ahead of the upcoming November election. But the underlying budget problem remains, leaving lawmakers after the election to consider tax increases, additional cuts or shifting more costs — and potentially more taxing authority — to local governments.

“Everything’s on the table … from different tax increases to different [budget] cuts,” Montgomery County Del. Anne Kaiser, a Democrat and vice chair of the House Appropriations Committee, told The Baltimore Sun of next year’s budget talks.

Sen. Karen Lewis Young, a Frederick County Democrat on the Senate Budget and Taxation Committee, said lawmakers are considering amending Maryland law to allow local governments to introduce or raise taxes without the General Assembly’s approval.

Young is part of a state task force studying how counties and municipalities raise revenue that will make recommendations to the governor by Dec. 1.

The prospect raises questions about how much of the state’s budget burden could ultimately fall on local taxpayers and businesses.

“It’s something smartly political because the legislature is facing a budget crisis, but at the same time, there may be a tacit acknowledgement that not all counties are going to be equally able to bear an additional tax burden,” JP Krahel, an accounting professor at Loyola University, said. He added that residents could move out of counties that hike fees to cover costs the state passes to them in the coming years.

Mike O’Halloran, Maryland State Director of the National Federation of Independent Business, said companies could also exit the state, potentially hurting Maryland’s economic competitiveness.

“Whenever [taxes] are raised, that means that a small-business owner has much less money to reinvest in their business, in their employees, and even in their customers,” O’Halloran said.

Growing budget pressure

State spending is projected to outpace revenue for the next five years, according to estimates from the Department of Legislative Services. Maryland will see a projected $3.1 billion shortfall in fiscal year 2028, which begins next July, according to the department’s forecasts, and that number increases to $3.9 billion by fiscal year 2031.

Lawmakers have attributed some of the pressure to declining federal funding for health care, education and food assistance, among other state priorities. Lewis Young also noted this, adding that counties have often relied on state aid to balance their budgets.

Now, Lewis Young said, the state can’t afford to provide the same level of support.

“The only way we’re going to reduce that dependency is to empower [counties] to choose or not to choose certain opportunities for them to do more localized, targeted tax policy,” she said.

The case lawmakers could make for higher taxes

Kaiser said lawmakers are “obviously” always concerned about taxpayers’ reaction to state fiscal decisions. However, she said Maryland residents receive valuable services in return for the taxes they pay.

“We have to make a good case in Maryland that we get what we pay for in terms of really good services and great schools and great healthcare and so many other things,” she said. “And we just have to remind people that when we pay for things, we actually get something really good.”

Gov. Wes Moore’s office did not respond to a comment request by publication deadline about whether he would support state tax increases or expanded local taxing authority next year.

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