Arbitration Reform for State Employees Act of 2026
SB28, the Arbitration Reform for State Employees Act of 2026, changes Maryland’s collective bargaining framework for certain State employees and related public employers. The bill creates a new neutral-arbitrator process for negotiations that reach impasse, sets timelines for selecting an arbitrator, and establishes a structured arbitration procedure in which the arbitrator may mediate, hold hearings, review financial and labor-market factors, and ultimately issue a binding award. For most covered bargaining units, the arbitrator’s decision is final and binding, but any term requiring a change in law or an appropriation remains contingent on legislative action under the Maryland Constitution.
The bill also expands and clarifies what must be included in collective bargaining, including wages, hours, fringe benefits, and health benefits, and it requires the Governor’s annual budget bill to include the appropriations needed to fund all terms and conditions of employment in memoranda of understanding for the next fiscal year. In addition, it proposes a constitutional amendment to Article III, Section 52 so that the budget process expressly accounts for negotiated employee agreements, including those reached through arbitration. The constitutional change would be submitted to voters at the November 2026 general election and, if ratified, would make the budget-funding requirement operative.
SB28 would materially alter Maryland’s public-sector labor law by replacing or supplementing existing impasse procedures with a neutral-arbitration system for most State employee bargaining units, while carving out certain higher-education units and the BWI Airport Fire and Rescue Department from parts of the new process. It amends provisions governing collective bargaining, memoranda of understanding, and continuation of contract terms, and it authorizes court enforcement of status quo obligations. The bill also affects the State budget process by requiring the Governor to include appropriations needed to implement negotiated labor agreements, and it proposes a constitutional amendment to align Article III, Section 52 with that requirement. If adopted, the measure would affect the State, the Maryland Environmental Service, State institutions of higher education, and employee exclusive representatives engaged in collective bargaining.
The bill appears to have received substantial legislative support, as reflected by passage on third reading in both chambers with notable margins. The overall sentiment suggested by the voting history is favorable toward reforming the bargaining and budget-funding process for State employees. Because no committee transcripts were provided, there is no recorded discussion to indicate broader public or committee concerns, but the bill’s enactment and referral to the voters suggest it was treated as a significant structural reform rather than a routine labor-law update.
The main points of contention are likely to be the shift from traditional bargaining and fact-finding to a neutral-arbitration model, the extent to which arbitration outcomes should bind the State and the Governor, and the requirement that the budget bill fund negotiated terms. The bill preserves legislative control over matters requiring new law or appropriations, which may address separation-of-powers concerns, but it also explicitly ties the budget process to labor agreements, which could be controversial for fiscal and constitutional reasons. Additional tension may arise from the bill’s exclusions and special rules for higher education and the BWI fire employees, as well as from the arbitrator’s mandate to consider fiscal capacity without assuming new taxes or revenue sources.