ANNAPOLIS, MD (March 10, 2006)-Citing higher than expected growth in personal, corporate and sales tax collections, State Comptroller William Donald Schaefer, Chairman of the Board of Revenue Estimates, today informed Governor Robert L. Ehrlich, Jr., that general fund revenue projections have been revised upward by $114.1 million for fiscal year 2006 and by $86.6 million for fiscal year 2007. The board's revision now forecasts total general fund revenue of $12.34 billion for FY 2006 and $12.93 billion for FY 2007, growth of 6.9 percent and 4.8 percent over FY 2005 and FY 2006, respectively.
Consisting of Comptroller Schaefer, State Treasurer Nancy K. Kopp and State Secretary of Budget and Management Cecilia Januszkiewicz, the board's revenue estimates help the governor and legislature develop the state's operating budget, ensuring it is balanced as required by the state constitution.
"I'm glad the numbers are good, but we have to consider some major threats to Maryland's economy, this year and down the road," said Comptroller Schaefer. "The housing market is slowing, and energy costs could rise 70 percent or more this year. That's going to hurt a lot of people, and cripple those who can't afford to pay their utility bills now."
The board has increased its estimate of personal income tax by $62.7 million for FY 2006 and by $30.6 for FY 2007. The stronger-than-expected growth in income tax withholding is partly attributable to Maryland's 3.6 percent unemployment rate. The state has not seen a level as low since early 2000.
"Naturally, I am pleased that our state's economy is strong and diverse, as illustrated not only by our increasing general fund revenue projections, but also by our recent sale of general obligation bonds at a most favorable rate," said Treasurer Kopp.
"Nonetheless," added the Treasurer, "we cannot ignore a housing market that is cooling and utility costs that will rise appreciably this summer. We must continue to be prudent in managing our state budget, taking care of people and their urgent needs while making tough decisions that will prove beneficial in the future."
The board also has revised corporate income taxes downward by $21.9 million for FY 2006, due to substantially greater refunds than expected and upward by $11.4 million for FY 2007, as strong corporate profit growth is forecast to continue. State corporate tax revenues continue to benefit from the Delaware holding company legislation enacted in 2004, which requires corporations to add back to their own income payments for intangible assets, including interest to their subsidiaries.
Due to continuing stronger than expected performance from several components of the state sales tax, the board has revised sales tax revenue upward by $19.7 million in FY 2006. Revenues from the volatile estate tax continue to come in stronger than expected. As a result, the board has increased the estimate by $35.7 million for FY 2006 and $24.7 million for FY 2007.
"These revisions attest to continued strong economic growth and sound budgeting resulting from the diligent efforts of Governor Ehrlich to enhance the business climate and responsibly manage the state's fiscal affairs," said Secretary Januszkiewicz. "These adjustments will permit Governor Ehrlich to assure additional savings for the state's needs in future years."
MEDIA CONTACTS:
Office of the Comptroller: Michael D. Golden, 410-260-7305
Kevin P. Kane, 410-260-7578
Treasurer's Office: Howard Freedlander, 410-260-7418
Department of Budget and Management: Jamie Smith, 410-260-6122
