Maryland Gov. Wes Moore pledged Monday that the final state budget won’t include a “broad” tax on business-to-business services or a tax on sugary drinks.

But new or expanded taxes are still up for discussion between the governor and top lawmakers, according to senior Moore administration officials who spoke with reporters but provided few concrete details of the negotiations.

The officials said that the business services tax as introduced — a 2.5% tax on services that business entities sell to one another — is off the table. Other options, such shifting the tax to consumers and broadening the services that can be taxed, remain on the table.

The governor’s team and lawmakers are engaged in “productive conversations,” a senior administration official said. “They are moving quickly. Everyone wants to provide Maryland businesses and consumers with certainty.”

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Asked when the details of the budget, including any new or expanded taxes, would be worked out, another administration official said simply: “Soon.”

The Democratic governor spoke to reporters for six minutes and took no questions. He said that he wants Maryland to be “the best place in the country in order for businesses to grow” and that’s why he did not support the business tax as proposed.

He thanked Democratic leaders in the legislature for the “hard work” on the budget.

Republican senators in the Senate chamber of the State House. Back row: Sen. Johnny Mautz from the Eastern Shore and Sen. Paul Corderman from Western Maryland; second row: Sen. Jason Gallion, representing Harford and Cecil counties, Sen. Mike McKay from Western Maryland and Sen. Bill Folden from Frederick; third row: Sen. Chris West from Baltimore County and Sen. Mary Beth Carozza from the Eastern Shore; front row: Sen. Jack Bailey from Southern Maryland all sit inside of Senate Chamber in the Maryland State House, in Annapolis, Monday, March 17, 2025.
Republican senators in the Senate chamber of the State House. (Jessica Gallagher/The Baltimore Banner)

Del. Ben Barnes, chair of the House Appropriations Committee, confirmed his chamber has been working closely with the governor “and the budget the House committees will pass tomorrow will reflect that.”

Sen. Guy Guzzone, chair of the Senate Budget and Taxation Committee, would only say that the parties are close to reaching a budget solution. He declined to provide any specifics of any tax negotiations.

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The state entered negotiations for the budget year beginning July 1 with a $3 billion gap between money coming in and projected spending on programs.

Moore proposed a budget that closes the gap by a combination of tax increases and spending cuts. But the budget picture is getting worse with massive layoffs of federal workers under the Trump administration, which has lawmakers looking for more cuts and more ways to raise money.

The business-to-business tax was projected to raise nearly $1 billion in the first year.

Maryland Senate Minority Leader Stephen Hershey (left) and Minority Whip Justin Ready go over documents together during floor debate on crossover day at the Maryland State House in Annapolis, Md. on Monday, March 17, 2025. Any bill not passed by either the House or Senate by midnight on crossover day is likely defeated for the 2025 session.
Maryland Senate Minority Leader Steve Hershey, left, and Minority Whip Justin Ready review documents together during floor debate. (Ulysses Muñoz/The Baltimore Banner)

Sen. Steve Hershey, the Senate minority leader, stood by and listened to the governor speak. Hershey said it was important for Moore to share his position on the business tax, but to him, it didn’t sound like it wasn’t completely off the table.

”He said, ‘There will be no broad business-to-business service tax,’” said Hershey, an Eastern Shore Republican. “I think we have to find out what the definition of ‘broad’ is.”

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Hershey said he didn’t hear enough to be able to go to the business community and say: “Everything’s all taken care of, don’t worry about it.”

Republicans in the House said they “remain cautious.”

“The Governor chose his words very carefully,” said Del. Jason Buckel, House minority leader. “There is much he did not say, and he did not answer any questions. I would submit to you that neither Maryland’s businesses nor our taxpayers are entirely off the hook quite yet.”

People walk out of the Maryland State House during a break between sessions, in Annapolis, Monday, March 17, 2025.
People walk out of the Maryland State House during a break between sessions Monday. (Jessica Gallagher/The Baltimore Banner)

Some did celebrate the governor’s remarks.

The Maryland Chamber of Commerce opposed the business services tax on behalf of its more than 7,000 members and welcomed the shift.

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“Maryland doesn’t need new ways to tax businesses — it needs policies that make our state a destination for business investment and job creation,” said Mary Kane, the chamber’s president and CEO.

Mike O’Halloran, Maryland state director of the National Federation of Independent Business, said it was “good to hear” the governor’s position.

“But the work is not done,” he said in a statement. “Any tax that pushes Maryland further down the list of states to do business in shouldn’t be on the table in any form.”

Sen. Katie Fry Hester, a Democrat representing parts of Howard and Montgomery counties, speaks during floor debate on crossover day at the Maryland State House in Annapolis, Md. on Monday, March 17, 2025. Any bill not passed by either the House or Senate by midnight on crossover day is likely defeated for the 2025 session.
Sen. Katie Fry Hester, a Democrat representing parts of Howard and Montgomery counties, speaks during floor debate. (Ulysses Muñoz/The Baltimore Banner)

The seven-member Freedom Caucus in the House of Delegates issued a statement saying they’re “encouraged,” but they warned the budget still could include “massive tax hikes” that they oppose.

The tax talk from the governor came in the midst of the General Assembly’s “crossover day,” a procedural deadline for bills to pass one chamber in order to be guaranteed consideration in the other chamber.

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Delegates and senators were in and out of voting sessions for much of the day, advancing legislation ahead of the deadline. Lobbyists and advocates made their pitches for lawmakers to pass their bills. Members of the immigrants’ rights group CASA of Maryland lined Lawyers Mall in the morning to press for several bills, while students and education advocates were expected to gather in the evening to rally against any cuts to school funding.

Folks with CASA stand outside of Annapolis State House speaking about pro immigrant legislation in Annapolis, Monday, March 17, 2025.
A small group with CASA stand outside the Annapolis State House as delegates arrive for the day, holding signs related to pro-immigrant legislation. (Jessica Gallagher/The Baltimore Banner)

Madeleine O’Neill contributed to this story.