Across the northeastern United States, the annual budget season has brought a wave of tough decisions, cautious optimism, and a few hard-won victories for state lawmakers and residents alike. As fiscal realities settle in, Maryland, New York, and Pennsylvania each face their own unique budget challenges and policy debates—though the stories unfolding in their statehouses reflect common themes of economic uncertainty, political calculation, and the ever-present struggle to fund vital public services.
In Maryland, the mood was somber as the state’s top budget analyst stepped before lawmakers on November 13, 2025, to deliver a stark warning: the state faces a nearly $1.5 billion deficit for fiscal year 2027, and relying on the $2.3 billion rainy day fund to plug the gap could be a risky move. According to Maryland Matters, the analyst cautioned that lawmakers might be tempted to pull $815 million from reserves, but doing so could jeopardize the state’s long-term fiscal health. “The outlook is a lot worse for fiscal [year] 27 than it was at the end of session,” said David Romans, the fiscal and policy analysis coordinator for the Department of Legislative Services, as reported by WBFF-TV News. “It’s about a billion and a half deficit versus a projected small surplus when we ended session.”
The source of Maryland’s budget woes is twofold: economic challenges and sweeping federal tax changes have cut into expected revenues, even as costs for Medicaid, child care, and other critical services continue to rise. The squeeze is made worse by the state’s heavy reliance on federal funding. Maryland boasts the third-most federal jobs and the fifth-most federal defense spending in the nation—a fact that left the state especially vulnerable during the recent 43-day federal government shutdown, which ended only a day before the budget analyst’s testimony. As The Baltimore Banner noted, the shutdown left scars across Maryland, from federal workers missing paychecks to increased demand at local food banks.
Though the House of Representatives voted 222-209 to approve a continuing resolution to fund the federal government through January 30, 2026, Maryland’s seven Democratic House members opposed the measure. Their concern: the bill failed to address looming increases in Obamacare costs. Governor Wes Moore was blunt in his criticism of the funding bill’s omission of healthcare subsidies, telling The Baltimore Sun, “This is exactly why people hate Washington.” Meanwhile, Representative Andy Harris, who voted in favor of the bill, pointed out that it would keep programs like SNAP and WIC funded—programs that are lifelines for many Marylanders.
Beyond the budget, Maryland lawmakers are also grappling with other pressing issues. State and federal officials are close to finalizing a new hospital payment system to replace the current model set to expire at the end of 2025, according to Maryland Matters. The proposed shift to the federal AHEAD model could reshape how hospitals across the state are reimbursed, with potential ripple effects for patients and providers alike. At the same time, Baltimore school leaders are proposing to close three schools—two traditional schools with declining enrollments and a charter school failing to meet academic standards—underscoring the difficult choices facing education leaders amid fiscal pressures.
Meanwhile, New York state finds itself in a somewhat more comfortable—if still precarious—position. At the annual budget Quick Start meeting on November 12, 2025, State Budget Director Blake Washington told officials that, despite a projected $26.8 billion budget gap by 2029, revenues are stronger than anticipated thanks to robust tax receipts from Wall Street. As reported by the state Division of Budget, this unexpected windfall means tax hikes on the wealthy are “the last thing on my mind,” Washington said, pushing back against progressive calls for new revenue streams to fund ambitious social programs.
Governor Kathy Hochul has repeatedly voiced her opposition to new income taxes, instead touting cuts to middle-class taxes and increased investment in child care. “I’m the one putting money back in people’s pockets and cutting middle-class taxes and finding ways to support child care,” Hochul told CNN, emphasizing her alignment with newly elected New York City Mayor Zohran Mamdani on expanding child care access. Yet, as Washington pointed out, universal child care would cost roughly $15 billion statewide—a sum equivalent to the entirety of the state’s reserves. “That’s something that cannot be solved overnight,” he said, suggesting that phased approaches or pilot programs may be the most realistic path forward, given the ongoing crisis in the state’s child care assistance program.
Other priorities, like proposals for free buses in New York City, are also under scrutiny. Washington noted that any such program would need to be considered statewide, with costs for New York City alone exceeding $1 billion. Still, the fiscal outlook is stable enough to allow investments in Medicaid and school aid without triggering immediate tax increases—a reality that sets the stage for a heated debate as the 2026 gubernatorial race between Hochul and Rep. Elise Stefanik begins to take shape. Stefanik, for her part, has predicted that Hochul will eventually “bend the knee and raise taxes,” a claim Hochul has so far dismissed.
Across the border in Pennsylvania, the budget saga has been marked by both relief and reckoning. On November 13, 2025, Governor Josh Shapiro signed a $50.1 billion budget that delivers over $900 million in new education funding—including $565 million distributed through an “adequacy” formula designed to narrow the funding gap between wealthy and struggling school districts. This move comes in response to a 2023 court ruling that found Pennsylvania’s school funding system unconstitutional due to its inequities, as reported by WHYY News.
Philadelphia’s public schools, in particular, felt the brunt of the protracted budget stalemate. In September, the city’s school board authorized borrowing up to $1.55 billion to keep schools running while they waited for state payments—a move that cost the district $30 million, according to Board of Education President Reginald Streater. “The Board of Education had to borrow $1.5 billion to keep the lights on, to continue making the payments we have to make under the law,” Streater explained.
The new budget also introduces long-debated reforms to cyber charter school funding, a change expected to save public schools $175 million statewide but likely to result in layoffs for about 2,000 cyber charter teachers and staff. While public school advocates like Arthur Steinberg, President of the Philadelphia Federation of Teachers, praised the reforms as essential for equity, leaders of cyber charter schools voiced concern about the impact on their students and staff. “We must work together to end the continued attacks on public education and on our most vulnerable children,” said Debra Heath-Thornton, CEO of PA Virtual Charter School.
Despite the turmoil, the Pennsylvania budget preserves the state’s entire Rainy Day Fund and leaves an $8 billion reserve, reflecting a commitment to fiscal prudence even as lawmakers invest in public education, mental health, and school safety. As Shapiro put it, the budget “builds on the progress we’ve made together to deliver better schools and more opportunity for our kids.”
As these three states navigate their budget dilemmas, the choices made in their capitols will shape the lives of millions—from families relying on Medicaid and child care, to students in underfunded schools, to workers whose livelihoods depend on stable government funding. The road ahead is anything but certain, but the debates and decisions now underway will echo for years to come.
