Maryland officially closed out fiscal year 2011 with a $400 million surplus (fund balance), collecting $314 million more in the general fund than expected – but $92 million less than anticipated in corporate income and sales taxes, according to Comptroller Peter Franchot.
But the Baltimore Sun is quoting a memo to Gov. Martin O’Malley from his budget secretary that says Maryland finished the fiscal year with $990 million in unspent funds, showing an end-of-year surplus that was about 50% higher than expected.
According to the Sun, the memo it obtained said there were $344 million in additional revenues, and that was added to the expected $641 million fund balance (surplus) in this year’s budget. (The Department of Legislative Services 90-Day Report on the General Assembly session [page A-12] said the fund surplus was expected to be $647 million. That is in addition to rainy day fund of $623 million.)
Comptroller Peter Franchot said that while the numbers look good, he repeated his advice that the extra funds should be tucked into the state’s Rainy Day Fund to hedge against continuing economic uncertainty.
“While these numbers provide a measure of relief in the midst of challenging times, the events of recent months serve as a sobering reminder that we must maintain a cautious fiscal course, one that emphasizes savings and efficiencies rather than new spending,” Franchot said in a statement.
The comptroller estimated earlier in the week that the evacuation of Ocean City cost the state $2 million in revenues. But there have been no estimates on what impact the extended power outages due to Hurricane Irene would have on sales and income taxes from lost work and business. There could also be some increased revenues from repair work after the storm.
Franchot wrote that while Maryland exceeded expectations in FY 11, those expectations were extremely conservative.
The annual closeout is a mirror of where Franchot anticipated things would be as June’s figures were closed out five weeks ago.
Figures in the 2011 closeout report, written by Bureau of Revenue Estimates Director David Roose, include:
· $6.6 billion in individual income taxes, which is 7.5% higher than the year before. According to the report, this is because of higher collections and lower refunds – most likely because people paid lower estimated taxes than what they actually owed. More jobs also could contribute to the figure.
· $571 million in corporate income taxes, a decline of 17% from the prior fiscal year, and $40 million below forecasts. Roose writes that this is because in the prior fiscal year, the state received one-time “extraordinary” payments.
· About $3.7 billion in sales and use tax – growth of 3.8%, but $52.2 million below estimates. Roose writes that low consumer confidence, high fuel prices, and falling home prices outweighed growth in personal wealth and household finances.