House Majority Leader David Moon (D-Montgomery), said a proposed tax on some business-to-business services “hard reality of the moment that we’re at right now.” (File photo by Bryan P. Sears/ Maryland Matters).

Legislators are preparing for a new round of battles with businesses intent on again stopping a proposed sales tax on some services.

The proposal — identical bills in the House and Senate — would tax certain business-to-business transactions including lobbying, accounting and tax preparation services and some computer and IT services. That could generate roughly $1 billion, depending on which services end up being taxed.

The bills come as the House is moving closer to finalizing its version of the budget before sending it to the Senate in less than two weeks, and at a time when the General Assembly is grappling with solving a $3 billion deficit and growing angst over potential budget-busting cuts at the federal level.

The bills, sponsored by Del. David Moon (D-Montgomery) and Sen. Shelly Hettleman (D-Baltimore County) propose a 2.5% tax on certain business-to-business services.

“This comes at a time when we need to generate a menu of options for dealing with a large budget problem,” Moon said. “In the past, we’ve gone to other options. I think we’d be unwise not to put additional options on the table at the moment.”

The House of Delegates is finalizing its changes to the budget proposed in January by Gov. Wes Moore (D). The House was originally scheduled to send its version to the Senate by Wednesday, but that timeline was pushed back until March 18 or 19 in order to build in time to adjust to updated state revenue projections, as well as the potential for a federal government shutdown.

If the House intends on including the sales tax expansion, a hearing would likely come next week.

The bill was immediately criticized by Republicans who have vowed to oppose tax increases this session.

Senate Minority Leader Sen. Stephen S. Hershey Jr. (R-Upper Shore). (File photo by Bryan P. Sears/Maryland Matters).

 “In the Maryland Democrats’ obsession to raise taxes, they have now concocted a new business-to-business sales tax that will make it even more expensive to operate a business in Maryland,” Senate Minority Leader Stephen S. Hershey Jr. (R-Upper Shore) said in a statement. “With most of Maryland being an hour or less from the border of another state, many companies will seek out-of-state businesses to provide a variety of services to avoid paying this new tax.”

Hershey said the bill “solidifies Maryland as one of the most unfriendly states for business” and puts Maryland businesses “at a distinct disadvantage to competitors in other states.”

Republicans, a small minority in the House and Senate, are unable in and of themselves to derail the bills.

In recent years, the House and Senate have taken different approaches. The House over the last two years has urged tax increases. The Senate then, as now, has leaned toward budget cuts.

Moon said the service tax proposal would provide balance to any spending reductions.

“I think that’s just the hard reality of the moment that we’re at right now,” Moon said.

Because it was filed late, Moon’s bill must first come out of the House Rules Committee. That panel meets on Monday. So far Moon’s bill is not on the hearing list.

The bills reopen a years-old debate over whether the state should subject services to a sales tax.

A year ago, Moon was the lead sponsor of a proposed expansion of the sales tax to all services. The bill, once phased in, was projected to raise $3 billion.

Moon at the time, and on Tuesday, called the 2024 bill a “conversation starter.” Moon said the pared down version this year took into account what he heard last year.

“For me personally, part of the process was sticking through the hearing testimony and actually taking it to heart,” he said. “We really did take feedback from the bill last year.”

This year, Moon said the focus was to avoid services that affected housing, energy, or impacting blue collar workers.

Included on the list are taxes on accounting and tax preparation services, businesses that hire lobbying or public relations firms, permanent and temporary employment services; photography, design and printing; heavy truck and bus repair; appraisal services; sports and performing arts advertising.

The bill, he said, could raise about $1 billion. The final amount could go up or down as lawmakers finalize the list of businesses to which the tax would apply.

Businesses have successfully beaten back previous attempts to impose a service sales tax.

Moon expects business groups will “inundate” lawmakers again over the final month of the session.

“We should expect lots of those groups coming in over the next couple of weeks,” he said.

A final budget agreement between the House and Senate will likely include a tax package, legislative sources said.

The form of a final tax package remains in flux.

Senate President Bill Ferguson (D-Baltimore City) said such a tax will receive serious consideration.

“We need to have a tax system that matches the economic realities of the state of Maryland and business services are a part of that reality from financial services to accounting to a number of areas that we know we have seen have significant growth instead of just a goods-based, manufacturing-based economy,” he said. “We’re looking at it very seriously in terms of the context of what’s ahead, knowing that things are going to get worse based on what’s happening with the federal cuts.”

On Tuesday, federal officials issued a proposed list of federal properties in Maryland that could be sold.

“Let me be clear: the federal offices across our state house hardworking employees who provide critical services to the American people day-in and day-out. From the Centers for Medicare and Medicaid Services in Woodlawn to Veterans Benefits Administration offices in Baltimore to the Census Bureau in Suitland and NOAA facilities in Silver Spring – these offices are critical to connecting Americans with vital services,” U.S Sen. Chris Van Hollen said in a statement

“While no one is opposed to bringing greater efficiency to our government, this haphazard proposal has no basis in efficiency, and – like other actions we’ve seen from the Trump-Musk Administration – this will only cause greater chaos and confusion, ultimately harming the American people and their access to Medicare, Medicaid, veterans’ services and more,” he said.

Moore in January introduced a tax proposal as part of his fiscal 2026 budget.

It is unclear how much of that plan — if any — would remain as part of the legislature’s final budget.

Included in Moore’s plan are modest tax cuts — about $173 on average — for many residents. Moore and the Board of Revenue Estimates project six-in-10 taxpayers will see a reduction. High earners would pay more with the creation of two new tax brackets and a 1% surcharge on some capital gains earnings.

The Board of Revenue Estimates review of the proposal also estimated that some taxpayers in nearly every tax bracket would pay more.

Parts of the plan including Moore’s elimination of itemized deductions face legislative opposition. Moore proposed a quarter of a percentage point corporate income tax cut beginning in fiscal 2028 that is contingent upon the legislature adopting a plan to close the so-called “combined reporting loophole.”

House Ways and Means Chair Vanessa Atterbeary was not available for an interview.

“Nothing is settled,” said Senate Budget and Taxation Chair Guy Guzzone (D-Howard) said when asked about the budget and any potential revenue plans. “There’s a lot of moving parts.”

Lawmakers will get some clarity on one of those moving parts Thursday when the Board of Revenue Estimates provides its last revenue projections before the end of the 2025 session.

Sources familiar with the projections said projected revenues will decrease by roughly $300 million. The amount represents a combined reduction over the current fiscal year and fiscal 2026.

Another moving part is the potential for federal budget cuts that could throw the state budget into even more turmoil.

Ferguson has warned for weeks that substantial changes in the federal budget, changes in Medicaid cost shares with the state and substantial federal employee layoffs could cause additional problems. The state, he said, would likely be unable to absorb all the costs and then have to resort to more cuts.

Federal lawmakers continue to hammer out a spending plan as a deadline approaches next week. In Maryland, state lawmakers believe a federal shutdown is possible.

Ferguson, speaking to reporters Tuesday, said a sales tax on services to businesses should be considered.

“It makes sense from my perspective,” Ferguson said. “Where we’ve seen the economy change, going from a goods-based economy to a service-based economy is really what Maryland has done.”

Ferguson said lawmakers need to find sustainable funding for public safety, education, health care and transportation.

In the past, proposals to tax services have met with stiff resistance from the business community.

“Couple this with the other proposals raising taxes on job creators, small businesses are faced with a massive increase in the cost of doing business in Maryland,” said Mike O’Halloran, state director of the National Federation of Independent Business. “This is the tech tax all over again. Maryland accounting firms, design companies, and consultants will lose while those in Pennsylvania and Virginia will reap the rewards. ”

The Maryland Chamber of Commerce, in a statement, called the proposal “a direct hit to Maryland’s small businesses.”

“When we talk to our members—from Main Street shops to manufacturing facilities—they tell us they’re already navigating thin margins and fierce competition,” Mary D. Kane, chamber president and CEO, said in a statement. “This B2B tax makes Maryland a more expensive place to do business, pushing companies to consider neighboring states like Virginia and Delaware, where they wouldn’t face these extra costs. We should be working to attract businesses, not driving them away.”

The chamber said such a tax will force businesses to raise prices or cut jobs.

“That’s not an economic growth strategy. It’s an economic misstep,” the chamber said in its statement.

Moore has made growing the economy and improving the state’s business climate a key focus for this session as part of addressing long-term budget problems.

A Moore spokesperson did not comment directly on the service tax proposal.

“The governor is proud to have introduced a budget that cuts taxes for two-thirds of all Marylanders, lowers the corporate tax rate, and eliminates Maryland’s unique burden as the only state with both an inheritance tax and an estate tax,” Carter Elliott, a spokesperson for the governor, said in a text message. “The governor will continue to work with the State Legislature, local leaders, and all partners involved to ensure that we pass a budget that will reform Maryland’s tax code, grow the economy, and invest in Maryland families.”

by Bryan P. Sears, Maryland Matters
March 5, 2025

Maryland Matters is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Maryland Matters maintains editorial independence. Contact Editor Steve Crane for questions: [email protected].

Judicial Proceedings chair says there likely isn’t enough support to move the bill on in the Senate

A decade-long fight over whether to let terminally ill patients hasten their deaths with physician oversight returned Monday in a two-hour House hearing,  but lawmakers again said the Senate is likely to be the stumbling block this year.

“The votes aren’t there. Not in committee and not on the floor,” Senate Judicial Proceedings Chair Will Smith (D-Montgomery) said Monday evening.

His comments came just hours after a joint hearing by the House Judiciary and the Government and Operations committees on House Bill 1328, the End of Life Option Act, which would allow certain terminally ill patients to request medical aid in dying with the help of a physician.

In order to qualify under the bill, patients would have to have the capacity to make their own medical decisions and have less than six months to live. The legislation requires both an oral request and written request with two witnesses and a required wait time to ensure that the patient wants to go through with the measure, among other restrictions.

Debate on the bill is  often emotionally charged, a challenge to lawmakers’ moral values that does not cut cleanly on party lines. But the bill’s main sponsor, Del. Terri Hill (D-Howard), says it provides “compassion and autonomy to those facing imminent death.”

Medical aid-in-dying has had a dramatic history in the General Assembly over the past decade. In 2019, the bill failed on a 23-23 tie in the Senate after one senator opted to not vote, saying he “could not bring myself” to vote one way or the other. In 2024, advocates and Senate leadership thought it would come to the floor, but it stalled Judicial Proceedings amid concerns that there were not enough votes to pass it out of committee.

by Danielle J. Brown and Bryan P. Sears, Maryland Matters
March 4, 2025

Maryland Matters is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Maryland Matters maintains editorial independence. Contact Editor Steve Crane for questions: [email protected].

Gov. Wes Moore (D) called on his own state agencies, as well as the private sector and nonprofits, to step up and hire federal employees and contractors purged by President Donald Trump (R).

Moore, in a Friday afternoon press conference, said his administration will look for ways to streamline state hiring and cherry-pick displaced federal employees and contractors.

“Now my background is, I was a soldier, and I know that in the Army they teach you, if you get attacked, you don’t just sit there and take it,” Moore said. “You mobilize and in Maryland, this is our moment to mobilize.”

The announcement is on top of an online public servants resource hub launched two weeks ago by the state after the U.S. Office of Personnel Management advised federal agencies to sack probationary employees. Moore said as many as 10,000 probationary employees in Maryland could be on the chopping block.

The governor on Friday announced a series of agency directives, resource websites and workshops and information sessions. The aim is to match state jobs with well-qualified federal employees.

On the list is an effort to fill more than 1,600 vacant teaching positions across the state.

The initiative includes a website to match federal employees with teaching vacancies in the state. Federal employees with post-secondary degrees and subject matter expertise may be able to use existing programs to obtain teaching certifications and licensing.

Moore also directed the Maryland Department of Transportation to develop a Federal Workers Navigation webinar and guidebook.

The effort will focus on helping federal employees match their experience to state jobs. That effort will launch in March.

Hiring a new state employee can be time consuming, often taking four months. Department of Budget and Management officials said Friday that they hope to shorten that timeline to 30-45 days.

State officials were not able to say Friday exactly how many state positions are vacant right now, but they acknowledge that there will not be enough openings to absorb every displaced federal worker and contractor. There were also no estimates on how many displaced federal employees might actually be able to find a job with the state.

“I’m not issuing the rule of saying, ‘You must hire x and you must hire y,’” Moore said, adding that each department will have its own needs.

“I can tell you that this is the moment when Maryland is going to get creative,” he said. “That’s why the announcement today wasn’t just a callout to our state agencies and our departments.

“It was a callout to the private sector, saying we have some really talented people who I’m sure you want to know more. It’s a callout to our nonprofit organizations who are doing the work right now to serve and support the people of our state, who are saying there is a lot of talent and people who are true public servants and true patriots, who are ready to do the work, and who are ready to continue their mission,” Moore said.

There are roughly 160,000 federal employees in the state. It’s a number that does not capture the full reach of the effects of Trump’s federal budget clear-cutting.

More difficult to count are employees at agencies such as the National Security Agency. Contractors and those who receive federal grants are not typically included in the federal employee counts.

Moore told House and Senate fiscal committees this week that they know of about 1,300 employees in Montgomery and Prince George’s counties who have already lost their jobs.

So far, more than 450 federal employees or contractors have applied for unemployment benefits, according to administration officials. The governor said he expects the number of displaced workers to grow.

Officials said they will look to “recruit top talent” starting with a March 7 “Join Team Maryland” virtual information session. In-person job fairs will be held in Prince George’s County and Baltimore City later in March.

There will also be a series of local hiring fairs.

Other state resources for federal workers:

The state Department of Labor also offers displaced federal workers and contractors:

• A website with information on unemployment and career transition for federal employees and contractors.
• Frequently asked questions to help fired federal employees file for benefits.
• A free virtual workshop for former federal employees and contractors seeking new jobs. The workshops are held each Wednesday and participants can register by email.
• Two other websites — the state American Job Centers and the Professional Outplacement Assistance Center — offer resumé workshops, career guidance, mock interviews, skills assessments, job search strategies, and support services.

by Bryan P. Sears, Maryland Matters
February 28, 2025

Maryland Matters is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Maryland Matters maintains editorial independence. Contact Editor Steve Crane for questions: [email protected].

It’s a good thing state leaders found money to defer cuts to the Developmental Disabilities Administration, and not just because it will allow services to continue.

Turns out the state may not have had permission to make some of the cuts they were proposing to start on April 1.

State analysts said last week that the Moore administration “was not accounting for” required approval from the Centers for Medicare & Medicaid Services when it unveiled plans in January to cut the DDA by as much as $200 million by the end of this fiscal year.

Budget and Taxation Chair Sen. Guy Guzzone (D-Howard) said the failure to account for CMS approval for the initial proposal was “clearly a mistake.”

“It shouldn’t have happened. They should have known. They should have known that it would have been an issue to try to make that apply in (fiscal) ’25,” he said at a Friday press conference. “There’s no other answer to that.”

The issue may be moot for fiscal 2025: Gov. Wes Moore (D) and legislative fiscal leaders said in a joint statement last week that they had found funding to defer most of the fiscal 2025 cuts from April 1 to July 1.

But it could still apply to cuts the administration has discussed for fiscal 2026, which also have yet to receive the needed waivers amendments from CMS.

In briefing papers last week, the Department of Legislative Services said that state officials had not even applied for CMS waiver amendments for some of the cuts being proposed. Requests for such amendments typically include a 90-day review period and a 30-day public comment period.

One of the biggest cuts for fiscal 2025 that would need approval is the proposal to do away with the “geographical differential,” which boosts pay for providers of developmental disability services in Calvert, Charles, Frederick, Montgomery and Prince George’s counties.

“A waiver amendment has not yet been submitted for any of the items that require CMS approval,” according to DLS’ Feb. 20 report. “Since the geographical differential elimination is not able to go into effect in fiscal 2025, the savings of $28.0 million ($14.0 million in general funds) for this item in fiscal 2025 will not be included in the cost containment reductions.”

When asked if the timeline for the geographical differentials was a “mistake,” a spokesperson for the governor said in a prepared statement that “The Moore-Miller Administration is working closely with legislators and stakeholders to identify paths forward on DDA funding.”

The DDA helps support those with developmental disabilities, usually through a Medicaid waiver that uses state and federal funds to help provide services to some 20,000 Marylanders.

In January, Moore presented his budget proposal, which included a $200 million cut to the DDA at the end of the fiscal year 2025 and to continue into fiscal 2026.

Even though those cuts have now been deferred until fiscal 2026, time is running out for the state to get CMS approval to cut the geographic differential, along with other proposed DDA cuts, in time for the July 1 start of the fiscal year, DLS said.

“The timeline for CMS approval of waiver changes includes a 90-day review period and a 30-day public comment period. Considering this timeline, the earliest that DDA could receive approval for cost containment actions approval for cost containment actions is July 1, 2025,” the report said.

“This would require DDA to submit a waiver amendment by February, 26, 2025. Because of the timeline required for CMS approval, it is unclear whether the geographical differential … will be fully implemented in fiscal 2026,” it said.

Two other cost-containment efforts planned for fiscal 2026 also require CMS approval.

One would place a $5,000 cap on items purchased through the Individual and Family Directed Goods and Services program, for those who self-direct their developmental disabilities services. If approved by CMS, the cap would save the state around $14.5 million in general funds in the next budget year, or $29 million once federal funds are included.

The other proposed cut that would need federal approval is a plan to direct new DDA participants away from self-directed services and toward community group programs. The state education system supports students with developmental disabilities until they are 21, which is when the DDA takes over their services.

Those who self-direct their DDA services hire their own staff to help them in their day-to-day lives, opposed to those who join an established program through an organization such as the Arc of Maryland. Officials at the Department of Health say the self-directed services program has had “unsustainable” growth in recent years, which has contributed to higher-than-anticipated spending.

The department is hoping to nudge more transitioning youth to community services, potentially saving the state around $9.2 million.

But Guzzone says that while the cuts originally intended for FY ’25 have been pushed off until July 1, there is still a lot of discussion ahead on which cuts will actually stick around to the final budget for fiscal ’26.

“We’ve still got a long way to go, hundreds of millions of dollars at issue for ’26 that we have to go through,” Guzzone said Friday. “This is a very complicated department, complicated formulas. You may have heard the director of Legislative Services saying this was a ‘black box’ … that’s because it’s confusing.”

“The (fiscal) ’26 part is really uncertain. We will do what we can as we move along,” he said.

by Danielle J. Brown, Maryland Matters
February 24, 2025

Maryland Matters is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Maryland Matters maintains editorial independence. Contact Editor Steve Crane for questions: [email protected].

 Health Secretary Laura Herrera Scott (right) and DDA Deputy Secretary Marlan Hutchinson on a panel during a Budget and Taxation Committee hearing. (Photo by Danielle J. Brown/Maryland Matters)

Gov. Wes Moore’s proposal to slash $200 million in funding for a state administration that supports residents with developmental disabilities sent shockwaves into the community that relies on those supports.

It’s one of the largest cuts in the governor’s attempt to fill a $3 billion budget deficit this year — particularly notable given that the agency only serves about 20,500 Marylanders.

While Moore’s proposed budget funds the Developmental Disabilities Administration (DDA) at $1.3 billion in fiscal 2026, officials say cuts are necessary to contain growing costs for the DDA, which has seen unsustainable increased expenses and enrollment in recent years.

But how did Maryland get to a point where the agency is over $200 million in the hole? Analysts and legislators are still trying to piece together details.

“I don’t think any of us want to cut DDA – we certainly don’t want to cut DDA more than we need to,” Sen. Clarence Lam (D-Anne Arundel and Howard) said in a recent interview.

“I am curious as to how our forecasting hasn’t predicted the need would increase this significantly,” he said. “Any cuts, particularly in services for those in need, are difficult. We are obviously facing a very difficult budget situation currently, so fiscal decisions need to be made.”

State analysts are combing through details for future budget discussions but have found some factors that contributed to the unanticipated shortfall.

DDA’s ‘black box’ budget

In a recent hearing in the Senate Budget and Taxation committee, David Romans, a budget analyst for Department of Legislative Services, said that the General Assembly budgeted just over $1 billion in general funds for the current fiscal year for DDA’s community services, which is 97% of the agency’s expenses.

But actual spending has overshot by some $450 million, “about 42% higher than what was originally appropriated and thought to be the correct amount for the fiscal 2025,” according to Romans.

It’s not the first time the DDA overspent its budget.

The DDA began overspending its annual budget in 2021, with significant spending increases in 2023 and 2024. But state analysts are not entirely clear why costs are rising for the agency.

State analysts say expenses for the Developmental Disabilities Administration has outpaced annual budgets since 2021. Courtesy of the Department of Legislative Services 

Romans said that part of the challenge has been an ongoing lack of transparency from the DDA — along with inadequate probing from state oversight agencies.

“The DDA budget has always been a little bit of a black box … It’s never been easy to tease out what is driving changes in the budget, and that’s been true for decades,” Romans told the committee in January. “That makes it very hard for DLS, DBM [Department of Budget and Management], any of these oversight groups to be able to understand what’s going on. It puts a lot of reliance on getting information from the health department.”

Romans said responses from the department were “vague” and “in retrospect, incomplete” whenever DLS followed up on changes in the budget and expenses.

“They do provide numbers that add up to the allowance,” Romans said. “You can’t easily figure out what are the rate increases — and in recent years there’s been a lot of unusual things related to COVID and some of the federal flexibilities that the state received that the DDA took advantage of. But you couldn’t pull that out of the data that was being submitted so you had to go back to the department and ask for information.”

Budget and Taxation Committee Chair Guy Guzzone (D-Howard) asked if the shortfall was due to “essentially an accounting failure — it’s not at a sophistication of accounting that other agencies have provided.”

“I think that’s fair,” Romans said. He wished his department pushed harder for answers.

“It’s really important … to have more transparent DDA budget process,” Romans said. “I wish we had asked more questions than we did. Sorry that we didn’t – and that we didn’t raise more concerns … about the somewhat vague answers.”

New payment schedule for providers

While the DDA’s spending has exceeded its annual allocated budget since 2021, the 2024 fiscal year showed the largest difference between the actual spending and the DDA’s appropriated funds.

That year, the DDA community service expenses exceeded its allotted $1.8 billion budget by $865 million. Some cost increases were expected due to provider rate increases that year.

But some cost increases emerged during a transition on how providers were paid by the state, according to analysts.

“We knew that the payments under the new system were going to be larger than under the old system, and that was by design, that wasn’t a surprise,” Romans said. “But we weren’t quite sure how much larger they were going to be.”

The DDA administers Medicaid waivers that allow Marylanders with developmental disabilities to receive a wide variety of services, from live-in caregiver supports to transportation, respite care, employment services and more. The Medicaid waivers primarily are split between state and federal funding, and the state health department issues payments to providers for their work with waiver recipients.

Prior to 2019, the DDA used a prospective payment model meaning that providers were paid in advance and costs were reconciled later.

The state moved to a fee-for-service model starting in 2019, called the Long Term Services Support System (LTSS), where providers would be reimbursed after services were provided. Most providers switched the new payment model in 2023 and 2024, and as of September 2024, all providers were using the fee-for-service payment model.

But as more providers transitioned into fee-for-service, costs appeared to have increased by about $300 million, though DLS is not completely sure why that happened.

“The LTSS seems to be the big driver here,” Guzzone said. “Is it your impression that $300 million more services were provided? Or the same services, costing $300 million more?”

“I believe that it’s the same services, though there could also been an increase in utilization,” Victoria Martinez, DLS policy analyst, responded.

Despite apparent increasing costs under the fee-for-service model, Secretary Laura Herrera Scott says that the new system is more stable and predictable.

A graph showing Developmental Disability Administration expenses under two payment systems. The orange line represents prospective funding that would be later reconciled, while the green line represents a fee-for-service model. Courtesy of the Maryland Department of Health. 

“Under the prospective model payment system, providers received payments that would be reconciled at a later date,” she told the committee. “As claims and expenses came in, they would have to be reconciled against that large upfront payment … it was difficult to predict expenditures moving forward because you were always reconciling advanced payments with the services that were rendered after the fact.

“The current system reimburses providers based on claims as they’re rendered. So you can match the payment to the actual services that were rendered,” Herrera Scott said. “We can track the expenses, so given the transition into the new system, payments are now relatively stable and easier to project … That’s not something that DDA had ever prior to transitioning.”

Growing costs of self-directed services

An ongoing concern for the health department is an “unsustainable” growth in enrollment and costs in the state’s self-directed services.

In 2024, there were 16,827 Marylanders who selected a community model Medicaid waiver, where people join an established organization for disability care. But 3,632 waiver recipients elected the self-directed model, where the waiver recipient or their family hires individual employees for services.

According to the health department, enrollment for self-directed services have increased over 30% in both 2023 and 2024, particularly among young people who transition into the Medicaid waiver from school.

Annual enrollment increases for Developmental Disabilities administration, showing a greater increase in self-directed services. Courtesy of Maryland Department of Health. 

The Maryland school system oversees students with developmental disabilities until they age out at 21. Herrera Scott said that up until 2024, most transitioning youths would choose to join a community service provider, but now they’re more likely to choose the self-direction option.

“In prior years, about 80% of our transitioning youth chose traditional services over self-directed services, and this year, that number flipped that we saw about 75-80% of our transitioning youth selecting self-directed services.”

The governor’s budget proposes a $13 million reduction to eliminate certain wage increases for self-directed service staff. The budget also proposes a cap on certain goods and services that a self-directed waiver recipient can buy with Medicaid funds.

Those proposals have led to led to an outcry from self-directed Marylanders with disabilities who feel that their model is being unfairly targeted compared to the total budget concerns.

Department of Budget and Management Secretary Helene Grady told the Budget and Tax committee in January that there is “still more work to do … to understand what level of data we need on an ongoing basis to understand what’s happening within these costs and how best to optimize general funds across this universe towards the best outcomes for the clients.”

“We did not have a solid understanding … of the precise cost drivers, how much of the cost increase was true structural recurring costs, verses temporary costs related to the transition in reimbursement models and billing systems,” Grady said. “Those are key questions for us.”

“But this work is not done,” she said.

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by Danielle J. Brown, Maryland Matters
February 10, 2025

Maryland Matters is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Maryland Matters maintains editorial independence. Contact Editor Steve Crane for questions: [email protected].

 Lawmakers listen as Gov. Wes Moore (D) delivers his third State of the State address Wednesday. (Photo by Bryan P. Sears/Maryland Matters)

Gov. Wes Moore used his third State of the State address to call for bipartisan cooperation from lawmakers to solve the mounting fiscal challenges facing the state.

While his previous addresses to a joint session of the House and Senate tended to be focused on promise, Moore’s address Wednesday was focused on problems. The first-term Democrat also tried to make the case for why his plan, focused on changes to the tax code and on growing the state economy away from its reliance on the federal government, is the right medicine, even if it seems unpalatable.

“Many Marylanders are scared,” Moore said, in closing his 49-minute speech. “They’re trying to figure out where things are and how things are going for them and their families. They’re looking to us to provide solutions, to know they’re going to be OK.”

Marylanders are looking for elected officials “to make the tough choices,” Moore said.

“I know we’re not going to agree on everything, but I want us to agree on this: Let’s stand united in our commitment to working together, Democrats and Republicans, to do what is required in this moment,” Moore said. “Let’s put the politics to the side. Let’s answer this crisis with courage. Let’s rally together as one state and as one people, and let’s render these two storms, as we always have and as we always will, together.”

For the most part, Moore’s speech was a recitation of proposals already made public, including a desire to grow the state economy.

“Growth will continue to be our north star, because a growing Maryland leads the rest of the nation and has the resources and the willpower to deliver the results for the people that we serve, no matter the obstacles that are,” said Moore, noting a focus on “lighthouse industries” — information technology, life sciences, aerospace and defense.

“I want Maryland to be the capital of quantum and AI [artificial intelligence] and clean energy and biotech, and I want to make sure that all the sectors that will define the economy of tomorrow will be housed right here in the state of Maryland,” he said.

Moore called out Harry Coker Jr., his new secretary of Commerce, who he said would bolster those efforts.

“He is widely regarded as one of America’s most respected leaders in defense, intelligence and cyber security,” Moore said. “So, at a time when Maryland is ready to make some big bets on industries and the future, it is a very big deal that Harry Coker is going to help.”

Moore also touched on a newer proposal focusing on men and boys — reducing suicide and incarceration rates while increasing labor participation and college attainment.

“I want to be clear; this administration remains steadfast in our support for all Marylanders, regardless of their gender or their background,” Moore said. “As the father both a son and a daughter, I want both of my children to grow up with all of their God -honoring and God-given opportunities. But if we want to truly unleash the power of Maryland’s labor force, we need to make sure that our men and boys are all right and … are not continuing to fall behind.”

Part of the solution to the state’s budget problem is a spending plan that cuts 1% of the general fund budget (the total budget including federal funds grows by 1%), and adjusts the tax code.

“You cannot look at the system we have right now and say it makes sense,” Moore said.

Moore said his proposed changes would mean 82% of taxpayers would pay less or see no change in their taxes. The remaining 18% — Moore among them — would see increases.

“We’ll be asking people that have done exceptionally well to pay a little bit more so we can invest and grow our economy,” he said.

The governor did not directly declare the state of the state, leaving that to the audience.

When asked, House Majority Leader David Moon (D-Montgomery) said the state of the state “can only go up.”

“I think a good portion of the governor’s remarks were highlighting some of the challenges that Maryland is facing, both in terms of its budget and in terms of the onslaught of changes from the Trump administration that both affect our budget and our residents,” Moon said.

Moon said neither the “hard-nosed reality” nor the solutions presented Wednesday were “necessarily moments for applause.”

Republicans had tougher characterizations.

“Dire,” said House Minority Whip Del. Jesse T. Pippy (R-Frederick)

“I really, truly think we’re at a crossroads,” House Minority Leader Del. Jason Buckel (R-Allegany) said after Moore’s address. Buckel delivered a Republican view of the state in a broadcast speech taped a day before Moore’s address.

But Republicans make up less than 30% of the General Assembly. In previous years, the Democratic supermajority lavished Moore with thunderous applause, but this year — beleaguered by federal politics, stark budget realities and, in some cases, dissatisfaction with the executive — those same lawmakers were less effusive, more sober, more subdued.

Privately, some Democrats characterized the governor’s proposals as bolstered with fake cuts. Those that were real, such as reductions for services for people with developmental disabilities, were seen as a way to force tax increases.

Some cuts were flatly opposed. Dels. Vanessa Atterbeary (D-Howard) and Ben Barnes (D-Prince George’s and Anne Arundel) — chairs of the House Ways and Means and the Appropriations committees, respectively — vocally opposed the administration’s proposed changes to the education reform plan, the Blueprint for Maryland’s Future.

Publicly, other Democrats praised Moore’s speech.

Judicial Proceedings Chair Sen. Will Smith (D-Montgomery) called the speech a “great effort” to encourage lawmakers and Marylanders amid the budget shortfall and the “unsteady head” of the federal government.

“It was a very encouraging speech … in tremendously uncertain times,” Smith said.

Former Gov. Parris Glendening has been in Moore’s shoes. Glendening, who was governor from 1994 to 2003, said Moore did “a good job” balancing what the state does well with problems it faces. But he said the address also has to represent bipartisanship and while supporting your political base.

“When you put all that together, it’s tough,” Glendening said outside the State House. “It’s always a challenge because the State of the State is a mixture to help people feel good, no matter what.”

Glendening said one of Moore’s toughest challenges is “the total chaos” from the Trump administration, including his push to slash the number of federal federal workers, more than 160,000 of whom live in Maryland.

“He must wake up every morning and say, ‘What the heck is going to hit us today?’” Glendening said. “[Moore] did his part in trying to pull people together, and at the same time, expressing total concern about the chaos of the national government.”

Del. Jheanelle K. Wilkins (D-Montgomery), chair of the Legislative Black Caucus, called it Moore’s best and most substantive State of the State speech yet.

“He did a great job of characterizing the challenges we’re facing, but also how we’re working together to address them,” she said.

That doesn’t mean the Black Caucus agrees with all of Moore’s proposals. It has particularly criticized his call to limit the Blueprint’s plan to expand community schools, which provide a range of services beyond classroom teaching in some of Maryland’s poorest neighborhoods. That’s likely to be a topic of conversation Thursday morning, when Moore will host the caucus for a breakfast at Government House.

“I don’t view that as a move forward,” Wilkins said.

The governor  has also proposed slowing the  growth of per pupil funding and delaying funding for “collaborative time” in the Blueprint.

But the administration has also included $134 million for a four-year program to increase the number of teachers, another four-year, $48 million grant program to let schools start implementing collaborative time, programs to develop principals and other school-based leaders, and a national campaign to attract out-of-state teachers to Maryland. Moore said the Blueprint remains vital to the state’s future.

“But if history teaches us anything, it’s that laws of enormous consequence must be adjusted in order to endure changing times,” he said of the law the created the Blueprint three years ago. “Working together to make the Blueprint more successful and sustainable does not mean we are backing down. It means we are stepping up.”

Atterbeary said she and Barnes disagree “100%” with the governor’s “cuts” to per pupil and collaborative time funding.

“As far as we stand right now, we are not changing the Blueprint,” Atterbeary said after the speech.

She said Moore’s plan to cut community schools funding affects students in most need.

Gov. Wes Moore (D) delivers his third state of the state address on Wednesday. (Photo by Bryan P. Sears/Maryland Matters.)

Howard county Executive Calvin Ball (D) in the State House for the 2025 State of the State address. (Photo by Bryan P. Sears/Maryland Matters.)

Del. Robbyn lewis (D-Baltimore City) before the 2025 State of the State address. (Photo by Bryan P. Sears/Maryland Matters.)

Former Gov. Parris Glendening and Montgomery County Executive Marc Elrich talk before the 2025 State of the State address. (Photo by Bryan P. Sears/Maryland Matters.)

Del. Karen Simpson (D-Frederick) had one of the biggest reactions to Gov. Wes Moore’s speech when Moore highlighted highway projects in her county during his State of the State address. (Photo by Bryan P. Sears/Maryland Matters.)

House Ways and Means Chair Del. Vanessa Atterbeary (D-Howard) said she disagrees with Gov. Wes Moore’s budget proposals that would delay implementation of portions of the Blueprint for Maryland’s Future education reform plan. (Photo by Bryan P. Sears/Maryland Matters.)

House Appropriations Chair Ben Barnes (D-Prince George’s and Anne Arundel) chats in the House chamber before the 2025 State of the State address. (Photo by Bryan P. Sears/Maryland Matters.)

Senate President Bill Ferguson (D-Baltimore City) addresses a joint session of the House and Senate. (Photo by Bryan P. Sears/Maryland Matters.)

Sen. Stephen S. Hershey Jr. (R-Upper Shore) hugs Del. Stephanie Smith (D-Baltimore City). (Photo by Bryan P. Sears/Maryland Matters.)

Del. Diana M. Fennell (D-Prince George’s). (Photo by Bryan P. Sears/Maryland Matters.)

House Environment and Transportation Committee Chair Marc Korman (D-Montgomery). (Photo by Bryan P. Sears/Maryland Matters.)

“That is not what we should be doing, particularly in this climate with the federal government erasing help to those in need financially, getting rid of DEI [diversity, equity and inclusion programs], getting rid of anything related to LGBTQ+ plus communities,” she said. “We need to be more supportive of those populations and that is not what he’s proposing.”

Her and Barnes’ committees plan to hold a joint hearing on the House version of the Excellence in Maryland Public Schools Act, which includes the proposed changes to the Blueprint. Atterbeary challenged Moore to testify on behalf of his proposal, saying “it’s his bill. I think he would.”

Senate Majority Leader Nancy J. King (D-Montgomery) said the governor did well in his speech with a focus on helping the business community, but also acknowledging concerns about the budget and the uncertainty of new leadership in the federal government in nearby Washington, D.C.

“I think he’s on the right track,” King said about Moore.

She agrees with his proposal to pause funding to expand collaborative time – out-of-classroom time for teachers to do planning or work with students – because the state has a teacher shortage, especially with up to 15,000 teachers needed to make it work next school year.

“Even if it is 1,000 teachers, where are we going to get them?” King asked. “That’s the problem. If you look at how much the Blueprint costs, we don’t have the money to do all that yet, and we don’t have the people.

“You can’t just snap your fingers and have that come about,” she said. “We’ve got to be cultivating and inducing people to go into teaching. We all have the right direction in mind with the Blueprint, but we’ve got to use common sense along with it.”

King is a co-sponsor of the Senate version of the Excellence in Maryland Public Schools Act. The Senate’s  Budget and Taxation and its Education and Energy and the Environment committees are scheduled to hold a joint hearing on the bill on Feb. 12.

House Environment and Transportation Committee Chair Marc Korman (D-Montgomery) said Moore’s address fit the current national political dynamic appropriately.

“It was a sobering speech because it is a sobering moment, especially with what’s going on in Washington,” he said. “He accurately characterizes the storm from Washington. I think he was a little gracious. I would have used another four-letter word before the word storm.”

But Senate Republican leaders said the governor’s speech lacked specifics on how the state will pull itself out of the budget shortfall.

“I think if the Maryland public were going to listen to this, they’d want to hear a little more of the details on how we’re going to get out of the most important issue that we face this session, and that’s the budget,” said Senate Majority Stephen S. Hershey Jr. (R-Upper Shore).

“I don’t think the governor gave a lot of solutions there,” he said. “We did not hear one thing about energy. And if you talk to legislators down here outside of the budget, that is the most important issue that we’re dealing with.”

Hershey also believes that Moore’s use of the word “chaos” in reference to the Trump administration is problematic, especially as the state relies on federal funding and grants that could be on the line under President Donald Trump. He said chaos is “not an endearing term.”

“It’s certainly not a recommendation from us to criticize the Trump administration when you’re relying so heavily on funding that comes from them – especially on big projects like the Key Bridge,” Hershey said.

Senate Minority Whip Justin Ready (R-Frederick and Carroll) said Maryland should take a cue from the Trump administration’s scrutiny and evaluation of programs that the federal government spends money on.

“The idea that it’s somehow chaos – that’s what our state needs to be doing,” he said. “It’s going top to bottom, looking at every spending program, Marylanders are literally just suffering right now – high cost of living, high taxes, high energy prices.

“The governor alluded to an effort to try to find some efficiencies in state government. We need to go hard-core on that,” Ready said.

by Bryan P. Sears, Josh Kurtz, William J. Ford and Danielle J. Brown, Maryland Matters
February 6, 2025

Maryland Matters is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Maryland Matters maintains editorial independence. Contact Editor Steve Crane for questions: [email protected].

Advocates for people with developmental disabilities rallied at the State House Monday night in opposition to $200 million in cuts proposed by Gov. Wes. Moore (D) in his fiscal 2026 budget. (Photo by Bryan P. Sears/Maryland Matters)

 

Hundreds of people with developmental disabilities, their families and support staff, gathered at the State House on Monday evening to demand the legislature reject a proposal to cut hundreds of millions from the state agency that oversees services and financial support for the community.

“We will not be silent, we will be heard,” said Mat Rice, executive director for People on the Go Maryland, “but what has to be clear is these budget cuts have got to go.”

The crowd of hundreds began to chant: “Hey Hey! Ho Ho! These budget cuts have got to go!”

The advocates say that the state’s $3 billion budget deficit is being balanced on the backs of the disability community, due to a proposed $200 million cut to the Maryland Developmental Disabilities Administration to help offset the shortfall. State health officials have said the cuts are needed to rein in unsustainable growth in the agency and provide additional financial accountability for those services.

But advocates and organizations with the Maryland Developmental Disabilities Coalition say that cuts should not come at the expense of the community the agency supports.

“We should not have to suffer for the mistakes of the Department of Health. We should not be victims of accounting errors,” Rice said.

The rally comes at a time when lawmakers face tough decisions about the state’s fiscal outlook as they evaluate Gov. Wes Moore’s (D) proposed $67 billion budget for fiscal 2026. Uncertainty about the reliability of future federal fund under the Trump administration strains the financial picture further.

One of the more challenging elements to the proposed budget is the $200 million cut to the Developmental Disabilities Administration, which oversees Medicaid waivers that provide resources and financial help for about 20,500 Marylanders with disabilities.

Hundreds packed Lawyers Mall outside the State House for Monday’s rally. (Photo by Bryan P. Sears/Maryland Matters.)

 Sen. Craig J. Zucker (D-Montgomery), who has a son with autism, promised the crowd Monday to be an ally for the community in the State House as budget discussions continue.

“There are things that might get cut — these are tough budget times,” he said. “But we have to make sure that we’re continuing to look out for the most vulnerable in our community.”

Meeka Caldwell, a member of the Maryland Developmental Disabilities Council and mother of a son with Down syndrome, said the proposed cut will reduce access to resources that many Marylanders rely on.

“We cannot stand by and allow cuts to DDA services,” she told the crowd. “Cutting funds is not just a budget decision. It puts the well-being of people with disabilities and their families at risk … We cannot balance the budget on our most vulnerable. The demand for these services are growing, not shrinking. Instead of cuts, we need investments.”

The $200 million cut is a combination of several “cost containment” efforts. A large portion of the cut would reduce or eliminate certain wage increases for support staff, which advocates believe will cause professionals to leave the field in droves to find better-paying jobs.

Ande Kolp, executive director for The Arc Maryland, said that the proposed cuts would be heart-breaking.

“We cannot provide the same services, or more, with less funding per person,” Kolp said. “We cannot look to our hard-working direct support professionals, the backbone of our services in Maryland, and tell them that we appreciate them, but we need to cut their pay.”

Other cuts include financial programs that help families afford additional goods and services that could ease the lives of their loved ones with disabilities.

Tavon Jackson with the Arc of Baltimore is worried about how the proposed cuts will impact people with developmental disabilities.

“A change in DD (developmental disability) services will hurt people with disabilities,” he said. “Losing those services means other people won’t have the opportunity to be successful.

“I’m scared for the future, so I really hope they can help us,” he said.

by Danielle J. Brown, Maryland Matters
February 3, 2025

Maryland Matters is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Maryland Matters maintains editorial independence. Contact Editor Steve Crane for questions: [email protected].