By Len Lazarick
Comptroller Peter Franchot concluded “there is a sense of uneasiness about the economy” after three hours of testimony from Maryland business executives at a Board of Revenue Estimates meeting on Tuesday.
“You—the private sector – are going to lead us out of this,” Franchot told the business representatives. “I think it calls for a lot of caution.” In recent weeks, Franchot has repeatedly urged no new taxes or fees in the coming year.
State Treasurer Nancy Kopp, who prefers “to see things as half full,” said what she heard was that “we have bottomed out” in the economy, and there is “a very slow but ongoing recovery.”
Budget Secretary Eloise Foster, the other member of the Board of Revenue Estimates who heard the testimony, said in her typically taciturn way, “basically overall, to the business community, the recovery seems very slow.”
Professionals in industries including banking, financial services, real estate, retail, utilities and manufacturing presented a mixed picture of conditions in their fields. But they basically described an economy that is flat, with consumers and businesses holding off on spending.
The testimony confirmed the forecast of David Roose, executive secretary of the revenue board. Roose said that “several indicators show that the Maryland economy is not recovering as quickly as the nation as a whole.” He forecast an overall 1% growth in the Maryland economy with 3.5% revenue growth. This is slower than initially predicted, due to fears of what’s coming next.
There was considerable trepidation about the impact the decisions on federal budget cuts by the congressional Supercommittee could have on Maryland. At the very least, the prospects of large federal budget cuts has a demoralizing effect on Maryland’s large contingent of federal workers, and the people who provide them goods and services.
Jose Boluda of Northrup Grumman’s Electronic Systems Sector in Linthicum said that his company “has been working under a flat budget” for several years. He said that a defense industry group has estimated that proposed Defense Department cuts could cause the loss of 18,000 to 36,000 jobs at Maryland defense contractors, many of them in research and development.
“The biggest thing we need from the state right now is stability,” particularly in the area of taxation, Bolada said. He said the company was concerned by “any of these things that make us less competitive,” such as tax hikes.
Franchot said, “I was surprised at that the call for caution,” though that’s what he’s been preaching himself. He pointed to the new toll hikes for highway, bridges and tunnels, the proposed increases in the gas tax, and proposed increases in the flush tax for Chesapeake Bay restoration.
“You could reach the tipping point very quickly” for consumers who don’t have much money, Franchot said.
He hopes the testimony from the business sector will have some effect on deliberations of the General Assembly.
“I don’t see the light around the corner” for the economy, Franchot said.