Federal Cuts ‘Not As Horrible' As Feared For Now, But Still Painful, Worse In Long Run

By Danielle J. Brown, Maryland Matters

June 26, 2025

Coming federal budget cuts will likely have severe impacts on Maryland, but they could come later than expected and their impact will not be felt right away, lawmakers were told Wednesday.

But that little bit of breathing room will not change the fact that the state still needs to brace for potentially massive cuts to programs like food assistance and Medicaid, state analysts and officials said.

The comments came during the first meeting of the new Joint Federal Action Oversight Committee, created this session to track how policies from the Trump administration and the Republican-led Congress could affect Marylanders and the state.

“There are lots of enormous questions ahead for the state of Maryland,” Senate President Bill Ferguson (D-Baltimore City) said during the 90-minute virtual committee meeting. “We want to make sure that we are monitoring the impact as we move forward.”

While there may be a longer on-ramp to the anticipated federal cuts, the impact will still be “dire and concerning,” House Majority Whip. Jazz Lewis (D-Prince George’s) said during the meeting.

Lawmakers heard from analysts with the Department of Legislative Services and federal relations officials from the governor’s office to get a lay of the current budget talks.

They also got an update from Attorney General Anthony Brown on the many legal actions Maryland has joined to challenge Trump administration policies, changes, program cuts, and federal worker firings, among other efforts.

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David Romans with DLS said that the cuts for fiscal 2026 are “not as horrible as we had worried about” during the legislative session, but that cuts down the line will be “more significant.”

“We think the SNAP (Supplemental Nutrition Assistance Program) and Medicaid changes will likely increase state costs by somewhere in the neighborhood of $100 million in fiscal ’26,” Romans said. “Part of the reason for that … is that some of the provisions have delayed effective dates. So a lot of things that are going to cause problems for the states don’t go into effect immediately.

“The outyear impacts are much more significant in our view. And again, it depends on where the (U.S.) House and Senate end up,” Romans said.

Some of biggest concerns are cuts to SNAP, as both the U.S. House and Senate plan to shift more of the cost burden onto states and reduce federal spending for the program. Romans said that the risk for Maryland in out years is up to $450 million annually, according to DLS estimates.

He said the state may save some money from lower Medicaid enrollment, which could offset anticipated increases to administrative costs needed to conduct more frequent eligibility checks on recipients that will be required under the bill.

But lawmakers argued that those savings, if any, would be quickly consumed by the rise in “uncompensated care,” as more uninsured people would likely seek health care from emergency rooms. Estimates from national health advocacy groups say that about 130,000 Marylanders could be kicked off Medicaid due to work requirements that are part of budget proposals working their way through Congress now.

An additional challenge could be prohibitions on health care that goes toward undocumented immigrants.

Romans said that Maryland’s Healthy Babies Equity Act, which provides Medicaid coverage during pregnancy regardless of immigration status, might be at risk depending on how officials at the Centers for Medicare and Medicaid Services interpret the bill.

He said that the state currently receives $100 million in federal funding for the healthy babies program that would no longer be available under the current budget reconciliation language.

But in addition to federal funding cuts, Maryland could be on the hook for financial penalties if the state continues to provide health care coverage for pregnant undocumented immigrants, even if the state only uses state dollars.

Matthew Verghese, director and senior adviser for the Governor’s Federal Relations Office, said that there are still details being worked out in the budget reconciliation legislation, and it’s not clear how the House and Senate will work out differences between their versions of the bill.

“I would not total all these numbers up to figure out what the impact of the state will be. Some of it is double-counted, but clearly we’re looking at potentially hundreds of millions of dollars in lost federal funds, and more administrative costs, if these changes go forward,” he said of the various cuts to Medicaid.

Currently, the budget reconciliation bill in the hands of the U.S. Senate has bigger cuts than the House version of the legislation, but would grant states more time to adapt to some of those cuts.

Legislative leaders had considered calling a special session later this summer to rapidly adapt the state budget or other policies, if necessary, in reaction to federal decisions.

Ferguson said that the urgency for a special session this fall has dropped, though they are keeping the option “on the back burner.”

“The necessity for a special session is probably less than it was when we left in April. But there are still enormous questions out there that could shift things at any point,” Ferguson said to reporters after the briefing.

Senate President Bill Ferguson (D-Baltimore City) said the possibility of a special session later this year is less likely, but is “not off the table.” (Photo by Bryan P. Sears/Maryland Matters)

“It does look like … we will have time to deal with a lot of these issues in January,” when the 2026 General Assembly convenes, he said. “And that the administration will have enough flexibility in the meantime to deal with some of the more pressing pieces and components of the bill.”

Fiscal house ‘built on sand’

But state Republicans repeated their charge that many of the problems Maryland faces under the budget reconciliation act are self-inflicted.

“Our generous Medicaid expansions and extensive support for undocumented immigrants are not federal mandates — they’re policy choices made here in Annapolis,” Senate Minority Leader Stephen S. Hershey Jr. (R-Upper Shore) said in a written statement. “If we can’t afford them, we have the ability and responsibility to revise those policies.

“Instead, Maryland leaders double down, accepting limited federal funds to justify unsustainable programs that burden state taxpayers,” Hershey said. “It’s time to stop asking them to bankroll the liberal wish list.”

That was echoed by Sen. Justin Ready (R-Frederick and Carroll).

“Ironically, the same state government that’s crying about unfunded mandates from Washington is the first to force them onto our counties,” Ready said. “We need responsible budgeting, immigration enforcement, and less reliance on Washington—because right now, our fiscal house is built on sand.”

The briefing comes just one day after Gov. Wes Moore announced a state hiring freeze and worker buyouts to save $121 million to help offset the tight budget in fiscal 2026, which starts Tuesday. That plan would appear to block previous goals of the governor, to fill vacant state jobs and hire federal workers who lose their jobs as part of Trump administration cuts,

Ferguson said the state will try to backfill as much lost federal dollars as possible to keep Medicaid and SNAP afloat, but with the state’s tight margins, “it is likely that we will not be able to cover everywhere.”

“Given the scope of the challenges, it is unlikely that in the short term, that we will be able to provide at the same level that we have been able to,” Ferguson said after the meeting. “Given the destruction of the historic federal and state partnership that we have had for many of these safety net programs.”