State Comptroller Peter Franchot. (Photo: MarylandReporter.com)
ANNAPOLIS—The Maryland Board of Revenue Estimates on Wednesday decided to write down state revenue estimates for fiscal 2016 and 2017 by approximately $51 million from estimates made last December.
State Comptroller Peter Franchot said the new estimates reflected weak sales throughout Maryland during the recent holiday season. Economic growth has continued to be stagnant in the last few months.
"Middle class families continue to struggle," Franchot said. "This continues to be the slowest economic reality of our lifetimes. The fact we're using the term 'recovery' seven years after the Great Recession shows how tough times still are today."
Maryland's total general fund revenue in fiscal 2015 was approximately $15.9 billion. The December revenue estimate for the 2016 Fiscal Year was $16.435 billion, but the March revenue estimate increased that amount to $16.444 billion.
The December to March estimates indicate a net increase of $9.2 million in revenue. This bump, despite a $66 million drop in estimated sales tax revenues, was due to gains in corporate income taxes, estate and inheritance taxes and state lottery proceeds.
For fiscal 2017, the coming budget year which starts July 1, the board estimated a drop in sales taxes of approximately $60 million from December estimates. There was no change in estimates for other taxes and revenues.
The board does not produce estimates for gas taxes and other special funds.
Low wage growth affects sales
Franchot said that lackluster growth in both wages and high paying jobs affected Maryland's economy.
"It's no surprise that a lack of wages has led to weaknesses in retail sales …This means that consumers are continuing to rein in their discretionary spending," Franchot said.
State Treasurer Nancy Kopp, as usual, displayed a slightly more optimistic tone during the meeting and said that employment is increasing in Maryland and the state is in sound shape, even if the economy hasn't moved up as rapidly as some would like.
State Budget Secretary David Brinkley, the third member of the revenue board, agreed that the state is fiscally sound, but cautioned that growth has been slow.
"Our mandated spending still outpaces revenue growth and this is an issue the legislature needs to address," Brinkley said. "While we are optimistic about the state's possibilities, Maryland still needs to exercise caution. In the event of a slowdown or a recession, we want the state to still deliver services without interruption."
A spokesperson for the governor's office, Hannah Marr, said in a statement: "Today's revenue estimates are a sobering reminder of the precarious fiscal situation that Maryland was left in after eight years of financial mismanagement, and perfectly illustrates why we must use extreme caution moving forward when making decisions on our funding priorities."
The Board of Revenue Estimates, as usual, voted unanimously to approve the updated revenue estimates.
The revenue estimates are produced by a joint work group that includes staff of both the executive and legislative departments, along with outside economic consultants. The governor and legislature are both bound by these estimates in creating a balanced state budget.