Maryland’s fiscal 2026 budget leaves little room to maneuver.
The Department of Legislative Services’ annual report on mandated appropriations and entitlements shows that mandated and entitlement spending is consuming a growing share of available dollars, reducing the space for discretionary spending.
For fiscal 2026, mandates and entitlements total $28.5 billion, accounting for 58.4% of State-sourced spending in the allowance. That share marks the highest level in the ten years covered by the report.
The growth comes mainly from education and health programs. Together, PreK-12 education and health spending account for roughly two-thirds of all mandated and entitlement spending in fiscal 2026.
Limited Flexibility in the Budget
After accounting for mandates, entitlements, and funds with statutorily dedicated purposes, only about 18% of State-sourced spending remains nonmandated in fiscal 2026. Even that portion primarily supports core functions, including personnel costs, public safety operations, and agency administration.
As mandated costs rise, budget flexibility tightens. DLS shows that mandated and entitlement spending has increased from about 52% of the budget in fiscal 2017 to more than 58% in fiscal 2026. The trajectory continues upward across the forecast window.
Where Mandated Dollars Go
Note: DLS categorizes education aid as “local government” spending, but that label misleads more than it clarifies. In practice, the lion’s share of “local aid” funds public schools directly. Counties and municipalities receive only a fraction of “local aid” for non-education services, such as public safety and public health.
“Local governments” receive the largest share of mandated and entitlement spending. In fiscal 2026, roughly $11.5 billion, or 40% of all general and special fund mandates and entitlements, flows to “local governments,” driven primarily by education aid and shared service programs.
Individuals receive the second-largest share, mainly through Medicaid and other health programs. State government functions account for a smaller portion of mandated spending.
This distribution matters because changes to mandated programs directly affect local planning, staffing, and service delivery. When adjustments occur mid-year or funding assumptions shift, local governments must absorb the operational impact.
Mandate Relief and Adjustments
The report also documents mandate and entitlement relief actions taken during the 2025 session. Legislative and budget actions reduced general fund mandated and entitlement spending by a net $427.9 million between the introduced allowance and the final appropriation for fiscal 2026.
Those reductions reflect short-term budget balancing rather than structural change. DLS notes that many mandates remain unchanged through fiscal 2027, while others expire or reset to higher levels in future years.
What the Report Signals Going Forward
Mandated spending continues to consume a larger share of the budget. That leaves fewer dollars available for policy choices and less flexibility when revenues tighten.
For counties, the label matters. When the report refers to “local government,” it essentially means funding that flows to public schools. It does not reflect new discretionary money for counties or municipalities.
Counties still must balance their budgets, fund required programs, and manage timing and cash flow when assumptions change. As mandates grow, counties shoulder more responsibility without gaining control over the funds that drive those costs.
