ANNAPOLIS, MD (Dec. 13, 2006)-The Maryland Board of Revenue Estimates today informed Governor Robert L. Ehrlich, Jr. that the state can expect general fund revenues to top $13.45 billion in fiscal year 2008, an increase of 4.5 percent over the current fiscal year (expected to finish at $12.87 billion). Caution was the continued message from Comptroller William Donald Schaefer, however, who repeated his call for fiscal restraint by state officials.
"Maryland's economy continues to grow," said Comptroller Schaefer. "But that growth has slowed and there are reasons for some concern. Our elected officials will need to plan carefully for the future."
Possible risk factors for the state's fiscal wellness include: national downward economic trends in manufacturing and the housing market, decelerated employment growth and a potential slowdown in federal spending. The impact of BRAC (Base Realignment & Closure) may serve as a buffer between a nationwide recession, not considered likely by consensus expectations, and Maryland's economic future; but it is not likely that the state would escape unscathed.
Personal and corporate income taxes, sales and use taxes, as well as lottery revenues represent 87.5 percent of total Maryland general fund revenues. Combined, income tax revenues in FY 2008 are forecasted to increase by 6.48 percent over FY 2007, with personal income tax revenue increasing by 6.78 percent and corporate income tax revenue increasing by 3 percent. Sales and use tax revenue is projected to increase by 4.79 percent in FY 08. Lottery revenues are expected to increase by 4.58 percent.
"These are sound, prudent revenue estimates. They clearly alert us to carefully watch the sales and corporate tax revenue numbers over the coming months," said Treasurer Nancy K. Kopp. "As I noted in our prior report, I believe we must focus on the state's structural deficit and take steps not only to deal with the projected deficit in 2008, but also to strengthen our fiscal structure for future years. Maryland has a strong, diversified economy which is dependent on a well-trained labor pool and a sound infrastructure. We must have a revenue structure that promotes economic growth while sustaining an effective and efficient government. I feel sure the governor-elect and the General Assembly will work together to resolve the structural deficit and protect our economy."
Franchise, excise, licenses and other miscellaneous fees represent the remaining 12.5 percent of the general fund. These sources of state revenue are expected to decrease by 0.4 percent in fiscal year 2008, including revenue from death taxes, clerks of the court fees, as well as revenue generated from interest on investments.
"The Ehrlich Administration is pleased that the total general fund revenues estimated in December 2005 for FY 2007 and FY 2008 are virtually unchanged today," said Secretary of Budget and Management Cecilia Januszkiewicz. "This reflects the conservative manner in which revenues have been estimated during Governor Ehrlich's term. The stability of state general fund revenues, despite increased gas prices and the housing market downturn, reflects the strength of the Maryland economy."
Comprised of State Comptroller William Donald Schaefer as chairman, State Treasurer Nancy K. Kopp and State Budget Secretary Cecilia Januszkiewicz, the Board of Revenue Estimates serves to provide the governor and state legislature with timely and accurate revenue estimates in order to plan the state's operating budget.
CONTACT:
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
