The Maryland Department of Legislative Services briefed state officials about the nearly $1.4 billion budget deficit at Wednesday’s meeting.

The deficit is about five times larger than the predicted amount of $300 million in March, according to the spending affordability briefing.

The cost of Medicaid behavioral health, K-12 education and the impacts of the One Big Beautiful Bill Act, which was signed into law by U.S. President Donald Trump in July, were all significant contributors to the deficit, the briefing shows.

The bill tightens restrictions for Medicaid coverage, causing an estimated 175,000 Marylanders to lose coverage, according to a state health department briefing from July. Maryland could lose up to $2.7 billion in federal funding per year by fiscal year 2034, the department’s briefing reads.

[Gov. Wes Moore announces $62 million for SNAP benefits]

Nearly 49 percent of the shortfall relates to an existing deficit from years prior, operating budget manager Tonya Zimmerman said. The largest contributor was $190 million worth of provider reimbursements to the Maryland Department of Health.

The budget’s shortage creates an ongoing financial imbalance for the state. To make up for the shortfall, Maryland will have to rely on increasing revenues, cutting services and raising taxes, documents show.

State revenues are also $718 million lower than the estimate, according to the spending affordability briefing.

“At the midpoint of what has been the most tumultuous decade for revenues in a generation, Maryland faces several challenges to its revenue structure,” Maryland comptroller Brooke Lierman said in a September news release.

The changes in the federal government have contributed to the alterations in the state’s budget, Zimmerman said. The legislative services department assumes funds will be depleted due to the loan payments offered to federal employees during the 43 day long government shutdown.

“The main story, of course, for the Maryland economy here in 2025 relates to the federal government,”  said Theresa Tuszynski, a policy analyst in the legislative services department.

Maryland was home to more than 160,000 federal jobs last year, which accounted for about 11 percent of all wages in the state, Tuszynski said.

But since January, Maryland has lost about 15,000 federal jobs, she said. That makes up a roughly 9.3 percent decrease, the largest decrease of any U.S. state, Tuszynski said.

The One Big Beautiful Bill Act cut state revenue by $371 million, the spending affordability briefing shows.

[Trump administration demands state leaders undo full SNAP benefits]

The decline in federal jobs and contracts implies less overall income and wage-based taxes, which contributes to the state’s revenue deficit.

The state has also been affected by the tariffs imposed by the Trump administration this past spring, Tuszynski said. The sales tax in Maryland increased by 2.6 percent, exceeding the predicted $72 million two times faster than expected.

The rise in sales tax is being shifted into funding for the Blueprint for Maryland’s Future, increasing its distribution by 0.3 percent from fiscal year 2024 to fiscal year 2025, the affordability briefing shows.

The Blueprint program increases the amount of funding for statewide education by expanding early childhood programs, raising teacher salaries and providing college pathways, the program’s website says.

Future program funding is predicted to exceed $1.6 billion in ongoing revenue by fiscal year 2031, the spending affordability briefing reads.