David Romans, right, a Department of Legislative Services analyst, warned lawmakers Monday that negotiations by the Attorney General’s office to resolve sex-abuse claims against the state could result in “hundreds of millions,” if not billions, in unbudgeted settlements. (Photo by Bryan P. Sears/Maryland Matters)
An effort by Gov. Wes Moore (D) to resolve a $3 billion budget deficit could be hampered by hundreds of millions — potentially billions — in settlements related to a 2023 law that eliminated statutory limits on lawsuits filed by survivors of child sexual abuse.
News of the potential liability under the Child Victims Act of 2023 came at the same meeting where members of the House Appropriations and Senate Budget and Taxation committees were told they will likely have to find another $181 million in cuts to Gov. Wes Moore’s proposed fiscal 2026 budget to meet recommendations set by a joint legislative committee in December.
“This is potentially an enormous liability to the state,” David Romans, a Department of Legislative Services budget analyst, told the committees. “The Attorney General’s office has employed outside counsel and they are negotiating with plaintiffs’ counsel.”
Romans did not provide a public estimate of the potential liability to the state, noting that many factors could affect the size of the settlement, which could include payments over an unknown period.
“There’s nothing in the budget to make any sort of settlement payments,” Romans said. “However, it’s very possible that there will be a settlement reached before the end of session, and you all may be asked to find the money to make the first settlement payment, which could very easily be in the hundreds of millions of dollars.
“We have no specific dollar amount. It’s something just to be aware of,” he said.
The Office of the Attorney General was closed Monday in observance of the Martin Luther King Jr. holiday. But when Maryland Matters reached out on this issue late last year, a spokeswoman said the office does not comment on ongoing negotiations and litigation.
Legislative analysts told the committees that the Attorney General’s Office has hired outside counsel to negotiate a settlement of as many as 3,500 cases involving allegations of sexual abuse against state agencies. Romans said the “claims against the state, almost all the people who were in juvenile facilities going back as far as the 1960s.”
Romans was unable to provide lawmakers with a potential range of damages.
Del. Malcolm P. Ruff (D-Baltimore City) expressed concern about the number of cases and potential liability to the state. He said “it looks like several zeros. If you look at the cap that could ultimately end up throwing up, like I said, a huge wrench in our plan here to balance this budget.”
The 2023 law lifted limitations on filing lawsuits against private entities, such as the Archdiocese of Baltimore, as well as state and local governments. It also capped liability for public entities at $890,000 per occurrence, and raised the liability limit in claims against private institutions for non-economic damages, such as pain and suffering, to $1.5 million. It also eliminated caps for economic damages for costs of services such as therapy or medical treatment.
Vagaries in the law make it difficult to accurately estimate the potential liability. The law and state courts have yet to define “occurrence.” A restrictive definition could mean multiple incidences of abuse occurring over years only count as one occurrence, but if each individual incident was an occurrence, it would vastly expand the potential monetary damages a victim could seek.
Even if each of the 3,500 cases was one occurrence, the state could face more than $3.1 billion in liabilities. That is not believed to be the total number of cases that could be filed against the state, and that amount does not take into account the potential liabilities of local governments who could face separate lawsuits.
Legislative analysts in December warned of long-term budget difficulties, starting with a nearly $3 billion projected shortfall for fiscal 2026.
Moore’s budget proposes filling the gap with cuts, efficiencies and tax reform. The $63.7 billion total proposed budget grows by 1% over the current year. The $27 billion general fund budget is 1% smaller.
Romans described Moore’s budget as a “multifaceted plan to resolve budget challenges.” And while Moore’s proposal not only appears to erase $3 billion in projected deficits and eat substantially into billions more projected through 2030, Romans said it falls short of wiping out the structural deficit for fiscal 2026.
He estimates that Moore’s plan falls short of the goal set by the Joint Spending Affordability Committee by nearly $181 million.
“The General Assembly has met its SAC (spending affordability committee) goals all but one of the last 40 plus years,” Romans said. “So, in order to do that, you’ll have to find additional long-term cuts and or additional revenues to make up for that $180.6 million.”
The briefing signals the start of a legislative review — and massaging — of the governor’s spending plan.
“It’s clear that they’ve gone department by department looking for opportunities, first to make savings — they’ve come up with those — and then looking for reasonable ways to deal with our tax issues again,” Sen. Guy Guzzone (D-Howard) told reporters last week. “Will we agree with all of them? I’m going to bet that at the end of the day you’re going to see a different solution…. But that’s OK. That’s the process.”
Budget review begins in the House this year. House Majority Leader Del. David Moon (D-Montgomery) said there was no expectation that everything in Moore’s proposal would have universal support. He said it will be on Moore “to sell each aspect of this plan” to the legislature.
“Our members are going to have to digest some of this. I think it’s going to be a rough conversation in the coming weeks,” Moon told reporters last week. “I hope that we’re going to be able to land the plane somewhere to get these fiscal realities taken care of today, responsibly.”