Friday Five
March 20, 2026 | This week's latest on Maryland business and government
1 — Maryland badly needs fiscal restraint
Despite repeated claims of fiscal responsibility, Maryland leaders have continued raising taxes and fees while failing to address underlying spending growth, contributing to projected structural deficits nearing $3 billion by 2028 and $4 billion by 2030. Relying on new revenue instead of spending restraint is making the state less affordable, driving outmigration and weakening economic competitiveness. A shift toward controlling government spending rather than increasing costs on residents and businesses is needed now.
Second to last: According to recent data published by WalletHub, Maryland ranks 49th in starting a new business. Costs of doing business and regulatory burdens are largely to blame.
2 — Maryland Senate passes $70B budget on to the House
Senate President Bill Ferguson and colleagues quickly approved a $70 billion state budget and companion bill with mostly bipartisan support, touting a $250 million surplus, limited spending growth and no new taxes or fees. Republican lawmakers criticized the plan for relying on prior tax increases and failing to address looming structural deficits, arguing it postpones tougher fiscal decisions. The budget now moves to the House as concerns persist about long-term sustainability.
Republican attempts: Democrats batted down Republican amendments to shave 5 percent of each executive agency’s annual budgets, set up financial accountability systems for nonprofits that receive state funding, repeal the state’s Vehicle Emissions Inspection Program and axe the underperforming 3 percent tax on IT and tech services for businesses that was implemented last year.
3 — Maryland's IT tax misses forecasts, fueling conversations about future
Maryland’s 3 percent tax on IT and data services has generated significantly less revenue than expected, bringing in about $35 million in its first two quarters and prompting revised projections of roughly $110 million this year and $220 million next year. The shortfall has sparked debate among lawmakers, with some pushing for repeal and others defending the tax as part of a broader shift to capture revenue from a growing tech sector.
Warning sign: Critics and economists warn the underperformance in IT and data services tax revenues may signal challenges in Maryland’s business climate or potential impacts on the state’s competitiveness. Economist Anirban Basu indicated the tax may have pushed businesses out. "There's a cost when you increase taxes, particularly on mobile firms and technology, because they can choose to expand elsewhere, whether in Virginia or Florida," Basu said.
4 — Making Maryland more affordable starts with cost of business
Rising costs for housing, child care and everyday goods are closely tied to the increasing cost of doing business in Maryland, where employers face pressures from wages, taxes, insurance, energy and regulatory requirements. As those costs climb, businesses are often forced to raise prices, delay growth, or cut back, which ultimately impacts affordability for families. Solutions must address both the cost of living and the underlying cost of operating a business to improve Maryland’s overall economic competitiveness.
Quoted: Each policy may be well-intentioned, but together they accumulate. When business costs rise faster than companies can adapt, the consequences ripple through the economy.
5 — Broad energy bill passes House with bipartisan support
Maryland’s House of Delegates approved a sweeping, bipartisan energy package aimed at lowering utility costs and reforming energy policy as residents face rising bills. The legislation includes funding to reduce ratepayer charges, expand energy assistance programs and increase oversight of utilities, while also investing in grid improvements and new energy generation. While supporters say it could save households about $150 annually, debate continues over whether the bill goes far enough to address long-term energy costs and system challenges.
Our take: As this legislation moves forward, it will be important to ensure policies strike the right balance between affordability, reliability and long-term energy system needs.
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The Maryland Chamber of Commerce is the state’s leading business advocacy organization — committed to working with our alliance of partners on critical public policy issues. With a focus on economic development and grassroots advocacy, we impact policies that directly affect Maryland business.
