March 07, 2012 at 4:22 pm
By Megan Poinski
Because of lower-than-expected income tax revenues, the Board of Revenue Estimates lowered Maryland’s projected revenues for the coming year by $80 million, and Comptroller Peter Franchot warned against any policies that would impact individual taxpayers.
“These consumers are really hurting, and the data is right there, yelling at us to be cautious,” Franchot, who is the board’s chairman, said after the meeting.
The three board members approved Wednesday an estimate that the state will collect a total of $13.975 billion throughout the fiscal year. The new estimate is down from the $14 billion projected in December.
For the current fiscal year, the estimate was lowered $101 million – about 7.5% — and for fiscal year 2013, the estimate was lowered nearly $108 million.
Bureau of Revenue Estimates Director David Roose said that the recent past has showed positive economic indicators. Jobs in the state have increased by 3%, and the state’s unemployment rate has likely fallen by a percentage point to 6.2%, he said. However, personal income has not been on the rise.
Franchot said the revenue drop is likely caused by people paying estimated income taxes thinking they would make more money than they actually did.
The comptroller said the figures were “scientific confirmation of the obvious.”
“Across this state, families and businesses know that the Maryland economy remains exceedingly fragile,” Franchot said. “They know that growth will remain modest at best for the foreseeable future and they know that for too many people, the promise of an ‘economic recovery’ is speculative if not far-fetched.”
According to the new projections, the state’s economy is growing, but extremely slowly. The projected growth rate between FY 2011 and the current fiscal year is 3.2%, and the projected growth for fiscal 2013 is 2.8%.
“There’s no indication that the board’s forecast for modest growth in the next years should change,” Roose said.
Roose also projected that corporate taxes would be on the upswing, but mostly due to a new provision where more corporate tax revenue goes into the General Fund. Additionally, modest growth in sales and use tax – about 2.7%, or almost $80 million – is being projected for FY 2013.
State Treasurer Nancy Kopp said that right now is a confusing economic time. She said that she’s hopeful that decreased revenues and governmental budget cuts caused by less economic activity don’t lead into a second recession caused by massive unemployment in the public sector.
“I wish that projections would always go up, but life isn’t always like that,” she said.
Budget Secretary T. Eloise Foster, the third board member, said that the increases in jobs and decreases in unemployment are encouraging. The economy is still growing, just slowly, she said.