Details about the budget framework agreement between Gov. Wes Moore and the Maryland General Assembly leadership are still limited, leaving many questions unanswered.
Spotlight on Maryland obtained an informational handout provided to House Ways and Means and Appropriations Committee members on Thursday regarding the revised budget proposal.
The budget document failed to give the committees detailed insight into the proposed budget cuts — and more than two dozen proposed tax increases — that the governor, along with Senate President Bill Ferguson and House Speaker Adrienne Jones, reportedly agreed to.
Still, the House committees voted to approve over $1.6 billion in proposed tax increases for individuals and businesses.
Mary Kane, president and CEO of the Maryland Chamber of Commerce, said concerns regarding the amended tax plan are growing.
“This is not going to help our business environment at all in Maryland, which is not very good to begin with,” Kane said. “We are actually starting to tax the very industries that, just a couple of weeks ago, were going to be our focus on growing our economy.”
“It’s been very confusing, as far as the talking points from both the general assembly and the governor’s office,” Kane said.
The updated budget proposal that passed the House committees on Thursday included a restructured version of the business-to-business services tax, limiting the scope to a 3% technology tax. This change is estimated to generate $497 million in new state revenue. The new technology tax raised questions from state lawmakers, prompting the budget’s architects in the Ways and Means Committee to clarify which business services would be included in the new sales tax.
George Butler, the Ways and Means Committee counsel, told lawmakers that technology companies offering data processing, hosting and related services could be affected by the technology tax. The committee’s attorney added that information and related computer system design services might also have to contend with the 3% technology sales tax increase.
The business classification codes potentially affected by the new technology tax that consumers may incur include cloud storage services, such as Google Drive, AWS, Dropbox and iCloud. Video and audio streaming services, such as Netflix and YouTube, may also be subject to taxation, alongside web hosting and server management services.
Based on Butler’s guidance during Thursday’s hearing, customers using business software service providers (such as Microsoft and Adobe products), along with companies offering ‘Software as a Service’ (SaaS), (including Salesforce, Stripe, and possibly PayPal) may also be affected.
U.S. Census data shows that Maryland is currently home to 15,366 businesses potentially impacted by the technology tax. These businesses represent 99,437 jobs in the state that fall directly under the proposed technology tax codes.
Any taxes on the business community is not going to be a pro-growth budget,” Kane said. “The emphasis should be on helping the business community. Taxing it, when they already have slim margins, is basically sending a signal of, ‘We aren’t really concerned about you, so you can go elsewhere, businesses in Maryland.’”
In addition to the technology tax, the budget framework agreement presented to the House committees also proposed a revised version of the sugary drinks and salty foods tax, which Gov. Moore had previously said would be eliminated from the budget. Instead, the framework agreement would impose a new 6% sales tax on all items purchased from vending machines.
It is unclear whether the new vending machine tax would also apply to health and beauty products, clothing, over-the-counter medications, personal care items, feminine hygiene products and electronics purchased from vending machines. The vending machine tax is estimated to generate $9 million in new state revenue.
The framework plan would also double the fees for titling new and used vehicles to $200, increase the maximum vehicle emission fee to $30, speed up the registration fee increases for specific vehicles, and raise the excise tax on cars from 6.0% to 6.8%. Under the plan advanced by the House committee, the new transportation fees in Maryland could generate $365 million in additional state revenue.
The first floor debate on the budget is expected to take place in the House on Tuesday, despite the detailed list of $500 million in additional cuts announced by Gov. Moore being unknown.
Spotlight on Maryland sent Gov. Moore’s office on Friday afternoon several questions, including:
- Will Gov. Moore sign any additional spending bills that will add to the state’s structural deficit?
- Can we obtain a list of the $500 million in additional spending cuts announced on Thursday?
- Was the vending machine tax a repackaged version of the snack and sugary drink taxes?
- Does the governor feel it is misleading to say the middle class will receive a tax break when basic fees eliminate any potential savings?
The governor’s office responded, saying they are “continuing to work” to balance the budget “with more strategic cuts and less taxes on individuals, while still delivering high-quality services to Marylanders.”
“The itemization of the additional $500M in cuts will be transparent as the budget makes its way through the rest of the legislative process, which started [on Thursday] with the actions approved by Appropriations — as is the standard process followed year after year in Annapolis,” the governor’s office said.
Spotlight on Maryland asked Gov. Moore on X on Saturday for the list of proposed cuts since the amended budget was approved by House committees hours after the budget agreement was announced. Neither the governor nor his office responded.
The limited budget documents reviewed by Spotlight on Maryland showed that an average Maryland household, comprising a family of four with approximately $100,000 in taxable income, could expect a decrease of about $53 in state income taxes for fiscal year 2026.
Spotlight on Maryland is a joint venture by FOX45 and The Baltimore Sun. Contact Gary Collins at gmcollins@sbgtv.com.