January 26, 2026
I hope the snowstorm has not created too much disruption for you and your businesses. It did lead to the cancellation of today’s in‑person session of the General Assembly, as well as the City Council meeting in Annapolis. That said, winter weather will not slow the legislative process.
Below is a brief overview of the three key issues included in this update, with additional details provided further down:
- FY 2027 Budget Proposal – Significant funding shifts and proposed program reductions
- $25 per Hour Minimum Wage Proposal
- Commercial and Industrial Real Estate Tax
The County is also actively developing its FY 2027 budget. If you would like a deeper understanding of the proposed budget or wish to share your perspectives and concerns, I encourage you to attend one of the remaining County budget town hall meetings. The dates and locations are listed below.
Finally, seats are filling quickly for the Chamber’s Breakfast with the Mayor on February 12. This event offers a valuable opportunity to hear directly from Mayor Littmann as he shares his vision for the City and discusses priorities impacting our business community. You won’t want to miss this important conversation. Additional event details and registration information are available below.
Thank you for staying engaged and involved. As always, the Chamber will continue to keep you informed and advocate on your behalf.
Moving Forward,
Mark Kleinschmidt
President/CEO
Seats are Still Available for Breakfast with the Mayor
We look forward to hosting the Mayor for a State of City Breakfast on February 12 at the Annapolis Waterfront Hotel. There have been a lot of changes in the City Administration and this is your chance to get a first hand update from the Mayor. If you have not registered yet, you can click HERE.
The Budget Plan
Moving Money & Cutting Programs
Governor Moore presented his FY2027 budget of $70.8 billion last week and his plan to cover the projected $1.4 billion deficit that the State is facing. Hearings about the budget will start in the Senate and the budget will cover the period of July 1, 2026 to June 30, 2027.
To keep his “no tax increase” pledge the Governor’s proposal is based on moving money from certain dedicated pots of money into the General Fund and by cutting a number of programs and projects. This is not the final budget and the members of the General Assembly will have a great deal to say to get the budget into final form. Check out how funds are being moved around and what is being cut.
Moving Money
- Capital Budget. $322 million is being transferred from the capital budget (which pays for building things) to the operating budget (which pays for salaries and programs).
- Strategic Energy Investment Fund. $292 million which pays for clean energy projects, is being moved into the general fund.
- Fiscal Responsibility Fund. $187 million from capital gains tax that exceed projections will be moved into the general fund
- Local Income Tax Reserve. Has excess funds and $150 million will be moved to the general fund. These funds are usually routed to local governments.
- Rainy Day Fund. Move $145 million into general fund but still keep the Rainy Day Fund at 8% of the total budget.
Program Cuts
- Developmental Disabilities Administration. Eliminate $150 million of funding.
- Miscellaneous Cuts. There a many smaller program and grant cuts contained throughout the budget proposal.
Minimum Wage Debate Is Back
The issue of affordability remains top of mind for many Marylanders and is expected to be a central theme in the November elections. As in prior sessions, the minimum wage is receiving renewed attention as policymakers weigh rising costs of living against the economic impact on employers. Currently, Maryland’s minimum wage is set at $15 per hour.
Several Delegates, working with the Maryland Living Wage for All Campaign, are advancing a proposal for a 2026 ballot measure that would increase the minimum wage to $25 per hour over several years and eliminate the tipped wage.
While higher wages can help address affordability challenges for workers, significant increases to the minimum wage also raise labor costs for businesses across all industries. For many employers—particularly small businesses and those operating on thin margins such as restaurants and hospitality—higher payroll expenses may limit their ability to hire new employees and reduce employee hours. These cost pressures can be especially challenging for businesses still recovering from inflation and workforce shortages.
The Chamber will continue to closely monitor this proposal and assess its potential economic impact on employers, job creation, and the overall business climate in Maryland.
Commercial and Industrial Real Estate Tax
The General Assembly is considering legislation (HB 90) that would authorize local governments to create new classifications of commercial and industrial real estate and apply separate, special property tax rates to those classifications. While the bill itself does not establish any new classifications or rates, it grants local jurisdictions the authority to do so.
The Chamber is concerned that this expanded taxing authority could lead to a patchwork of new property classifications and varying tax rates across the state. Such fragmentation would increase uncertainty for businesses, complicate long‑term planning decisions, and raise operating costs for commercial and industrial property owners. Higher and unpredictable tax burdens can reduce the capital available for investment, hiring, expansion, and infrastructure improvements.
Of particular concern is the potential use of this authority to impose higher tax rates on specific industries, such as data centers. Data centers make location decisions based largely on cost predictability, infrastructure reliability, energy availability, and tax stability. Creating targeted property tax classifications with higher rates would make Maryland less competitive compared to neighboring states and regions that offer stable and predictable tax environments.
The Chamber will continue to monitor HB 90 and evaluate its potential impact on business costs, investment decisions, and Maryland’s overall competitiveness
Two Town Halls Left
Over the last few weeks, the County has been holding Town Hall style meetings to outline the FY27 budget and get input about budget priorities from the attendees. The Town Halls are hosted by the County Executive and the local Councilmember. There are two left, so make some time in your schedule to attend. For more information, click HERE.
February 3 Severn Run H.S. District 2 Allison Pickard | February 4 Annapolis H.S. District 6 Lisa Rodvien |