The segments below provide an overview of MACo’s work on State budget policy in the 2026 General Assembly session.
County governments depend on a wide range of State-funded programs to deliver essential services. Changes in the State budget — whether in funding formulas, cost sharing, or program structure — can have broad and immediate impacts on county budgets. MACo advocates for predictable funding, protects against unfunded mandates, and supports targeted enhancements that align with local priorities.
Maryland’s 448th legislative session convened amid substantial concern over the State’s fiscal situation, with weakened revenues and cost increases across many services at every level of government.
Despite the fiscal limitations, a wide range of policy issues received a full debate, with many resolutions arising from the 90-day annual process. MACo’s legislative committee guided the association’s positions on hundreds of bills, yielding many productive compromises and gains spanning counties’ uniquely broad portfolio.
Follow these links for more coverage on our Conduit Street blog and Legislative Database.
As the 2026 session concludes, the State’s fiscal 2027 budget reflects a balanced approach to a challenging fiscal outlook. Lawmakers closed a projected gap for the upcoming fiscal year through a combination of spending restraint, fund transfers, and targeted adjustments, while preserving reserves and maintaining core commitments. At the same time, the plan does not address the larger structural gaps projected for the years ahead, leaving significant fiscal pressure on future budgets.
State leaders framed the $70.8 billion budget as a response to affordability concerns facing Maryland residents. The plan avoids new broad-based taxes or fees and includes targeted actions to address rising energy costs. Lawmakers paired the budget with separate utility reform efforts expected to reduce energy bills for ratepayers. In contrast, the budget itself redirects existing resources, including energy-related funds, to provide near-term relief.
The budget meets spending affordability targets, preserves more than $2.4 billion in reserves, and reduces general fund spending compared to the prior year, while still advancing targeted investments in education, economic development, and core services. It fully funds the Blueprint for Maryland’s Future and increases direct aid to local school systems, alongside additional investments in behavioral health, community programs, and economic growth initiatives.
For counties, the most significant impacts come through the Budget Reconciliation and Financing Act (BRFA), which lawmakers enacted, making several key decisions affecting local funding and responsibilities.
Several major proposed reductions to local funding did not advance. The General Assembly rejected a proposal to cut $27 million from the Disparity Grant program and freeze funding for multiple years. The Disparity Grant remains a primary tool to address differences in local tax capacity, supporting counties with more limited revenue bases. Preserving this funding helps avoid widening fiscal disparities and maintain support for core services.
Lawmakers also rejected proposed changes to the 9-1-1 Trust Fund that would have expanded allowable uses beyond core emergency communications. Counties and Baltimore City rely on these funds to operate and modernize 9-1-1 systems, including Next Generation upgrades. Maintaining the current structure preserves a dedicated funding stream for public safety.
At the same time, the BRFA includes a partial shift of teacher, community college, and library pension costs to counties. The adopted $39.3 million shift represents roughly half of the year-over-year increase, rather than the full $78.6 million proposed by the Department of Legislative Services. While this outcome avoids a larger transfer, it still creates new ongoing costs for county governments tied to systems governed at the State level.
The final agreement also retains the provision that ties State Aid for Police Protection funding to compliance with State law governing immigration enforcement agreements and delays by one year the requirement to implement a centralized system for collecting local hotel taxes on short-term rentals.
On assisted outpatient treatment, lawmakers revised the original proposal and adopted a phased approach. Counties that do not establish a program will face a gradual cost share beginning at 25% in fiscal 2028 and increasing over time. The plan includes a first-year waiver option for counties that submit a cost-benefit analysis supported by data from the Maryland Department of Health, allowing for a more measured implementation.
Taken together, the final budget preserves core State commitments and reflects a more measured approach to fiscal challenges. For counties, lawmakers avoided several significant cost shifts while advancing targeted policy changes that will influence local budgets and operations in the years ahead.
Useful Links
MACo: State Budget Plan Pressures Counties Toward Higher Taxes or Service Cuts
House Appropriations Committee Rejects AOT Cost Shift, Budget Moves to House Floor
Conference Committee Documents
- 2026 – Conference Committee Report on Senate Bill 282 – the Budget Bill
- 2026 – Conference Committee Summary Report on SB 282 and SB 284 (BRFA)
Supplemental Budgets
