MarylandReporter.com spoke with Comptroller Peter Franchot on Friday afternoon following a Board of Revenue Estimates meeting in which the board unanimously voted to slightly increase the state’s revenue projections for FY 2021 and FY 2022. The board previously met in September and is comprised of Franchot, Treasurer Nancy Kopp, and Budget Secretary David Brinkley.
The state is now expected to take in $18.8 billion in FY 2021 and $19.8 billion in FY 2022. The former figure marks a $64 million increase (0.3%) over what the board had projected in September. The latter figure marks a $143 million increase (0.7%) over what the board had projected at that time.
Throughout Friday’s meeting Franchot stressed that although the state’s fiscal situation appears to be better than it was at the start of the coronavirus pandemic in mid-March-Marylanders at the lower end of the wage scale are suffering at rates disproportionate to the general population.
MarylandReporter.com: So the state’s numbers appear to be looking up. Are you surprised?
Franchot: I’ve been surprised at how the $20 billion from the federal relief plan made its way to Maryland and proved to be such a strong buoy to stabilize the state’s economy and the state’s tax revenues. It turns out that most of the folks that are making more than $50,000 a year in Maryland are able to work remotely and are continuing to get paid. And a lot of that is federal relief to businesses in Maryland. They withheld the income tax owed us. So our tax revenues have been more or less in the ballpark. We are still $600 million or $700 million less than what we should have been pre-pandemic. But the fact that we are adding a little bit to the September estimate and the legislature and the governor have a somewhat close to normal figure to work with-that was a surprise. But it was completely attributable to this massive amount of money that went out in the national economy. And a big chunk of it went to Maryland.
MarylandReporter.com: We are about a month out from the start of the 2021 legislative session. What would your reaction be to lawmakers who might see the state’s slightly better economic forecast as justification to spend more money?
Franchot: Now is the time to spend money. I agree. Because I am advocating that we take $1.5 billion from the reserves and use it right now on the lower-wage earners that are suffering a lot right now because the burden is falling almost completely on them. So I would agree with legislators who would say: ‘We should spend some money.’ I think it should be one-time-only money. And I think it should be limited to bridging wherever we are now and whenever a federal stimulus comes along. I do not think the timing is good for ongoing budgetary additions-however well-intentioned they are-or specifically tax increases right now. I just think the timing is bad and they should probably think about waiting a year just to assess [the situation].
MarylandReporter.com: Right now it is uncertain whether Congress will agree on a second stimulus package. During Friday’s BOE meeting you discussed the idea of a Maryland stimulus plan. What would that entail?
Franchot: The beauty of Maryland stimulus is we know who the money is going to because we know these businesses and we know the individuals because they’ve been paying taxes to us. So it’s not a mystery. It could be done much more speedily (than Congress) and we could target the money very effectively. Some of the families that I am talking about have been quite careful in banking the extra relief they received during the summer from the first stimulus. The $600 direct payments to individuals. Some of that was banked by the people I am talking about. So it’s an uneven need out there but it’s definitely obvious that there is just some completely unacceptable suffering going on by people who did nothing wrong-who make between $20,000-$30,000 a year-and simply have no money to pay rent or medical bills or food bills.
MarylandReporter.com: How would Congress’ failure to ultimately pass another stimulus package affect Maryland’s economy?
Franchot: I can’t imagine that because even for the Congress that would be a very callous conclusion. Down the road, we are going to be ok. We are ok now. It’s just that part of our workforce is not ok.
MarylandReporter:com: The first batch of coronavirus vaccines are expected to be in Maryland any day now. But it is likely to be a while before most of the state’s population is vaccinated. How do you see the vaccine rollout timeline affecting the state’s economy?
Franchot: It’s unclear. But obviously, the vaccine is a tantalizing finish to a very nightmarish devastating virus. And our people are predicting that come June or July there will be enough success with the vaccine distribution that we will be able to begin to see a comeback. And since we have a consumer spending GDP — that’s what our economy is in Maryland — they are very confident that once people get a little more comfortable…they say the economy could really take off in the second half-probably more likely towards the end of the next calendar year than in the middle of the next calendar year. So I’m very optimistic about the future.