BALTIMORE — Maryland is projected to collect more revenue in fiscal year 2028, but the increase won’t be enough to close the state’s projected $3.1 billion budget shortfall, according to new estimates released Thursday.

The state is projected to collect roughly $28 billion in revenue in fiscal year 2028, a 3% increase from fiscal year 2027, according to data from the Maryland Board of Revenue Estimates, which helps set the state’s budget expectations. Much of the increase is driven by gains in taxes on residents’ personal income, business profits and the sale of goods.

But Jake Weissmann, Maryland’s budget and management secretary, said the stronger revenue outlook won’t eliminate the state’s budget problems. “We know that a significant budget shortfall lies ahead, and addressing it will take hard work and difficult choices in the next legislative session,” Weissmann said.

The multibillion-dollar shortfall is projected for fiscal 2028, which begins next July. Tax and fee hikes are on the table, lawmakers who spearhead budget negotiations have told The Baltimore Sun. The gap is expected to grow over the next five years, reaching $3.9 billion in 2031, according to estimates from the Department of Legislative Services.

Maryland’s Department of Budget and Management has asked cabinet-level departments and state schools to cut 10% of their budgets, months ahead of next year’s negotiations, which will take place during the 2027 legislative session. Separately, lawmakers are considering whether to give local governments more authority to raise taxes and fees, including property-related taxes, as counties and municipalities face rising costs.

Lawmakers often consider the board’s data as they balance the state budget, which ultimately affects what services Marylanders can access and how much they pay in state taxes and fees.

The revenue estimate drew competing reactions about what Maryland should do next.

Maryland Comptroller Brooke Lierman said Thursday’s figures show that the state’s economy remains resilient, while also pointing to continued financial pressures on workers.

“Job losses have narrowed this year, fortunately, but employment remains below early 2025 levels, while wage growth has slowed slightly, and elevated inflation is really eroding workers’ purchasing power,” she said. “This trend suggests that rising costs and other economic headwinds are beginning to weigh on the economy.”

Economists and tax advocates said Thursday’s revenue data is a call to action for lawmakers to address the state’s budget problems.

Fair Share Maryland, a group that advocates for tax equity, called on lawmakers to close corporate tax loopholes and to raise income tax rates on individuals earning more than $1 million a year.

“When Maryland’s wealthiest residents and wealthy corporations pay what they owe, our state will be able to fully fund our public schools, invest in essential state services, and protect Marylanders from federal health care cuts,” the group said in a statement.

Anirban Basu, CEO of Sage Policy Group, said Maryland’s revenue growth is not enough to support additional spending without new revenue sources. He called the increase “mediocre.”

“When you only have a 3% increase in revenues, that means that to the extent that a state wants to expand its spending in real terms, it really can’t unless it finds a new source of revenue,” Basu said. “Those new sources of revenue often take the form of new taxes or additional fees.”

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