Md. fiscal board says state will have more money in 2016, 2017
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Version 0 of 1. Maryland’s fiscal analysts said Tuesday that the state probably will have more revenue than expected for 2016 and 2017, in large part because of higher projections for capital gains and income taxes. The Maryland Board of Revenue Estimates predicted that the state would collect $16.44 billion in fiscal 2016 and $17.08 billion in fiscal 2017, raising its September projections for those periods by 0.2 percent and 0.4 percent, respectively. If those numbers prove correct, state revenue would increase 3.2 percent for fiscal 2016 and 3.9 percent for fiscal 2017 compared with the total from 2015. Despite the improved outlook, the panel cautioned state policymakers to continue their fiscal restraint in light of sluggish wage growth. They said the average pay increase in Maryland for this year probably would be 2.4 percent, well below the expansion levels of the 1990s and 2000s. Maryland Comptroller Peter V. Franchot (D) said the revenue estimates are “an opportunity for restrained optimism” as Gov. Larry Hogan (R) and the General Assembly prepare for the start of the legislative session in January. “Now is certainly not the time to take a victory lap over snippets of positive news with the state budget when there remains so many significant challenges facing Maryland families and small businesses,” Franchot said. “And it’s not a time to set unrealistic expectations based on top-line revenue figures without the context of the serious economic challenges that lie beneath the surface.” Hogan’s office said the governor was encouraged by the revenue estimates but concerned that Maryland’s structural deficit could jeopardize the state’s ability to fund top priorities. His staff recently projected a $1 billion shortfall over the next five years. “We must continue to hold the line on spending and push for more budget accountability,” Hogan spokeswoman Hannah Marr said. The revenue board said flatlined federal expenditures and political instability in Washington contributed to Maryland’s lackluster economic performance this year. Franchot warned state policymakers to avoid any “unsustainable” debt increases or proposals that would take more money out of the pockets of consumers. He also said the state needs a “predictable business climate” that would give consumers more income and employers more confidence about spending. The board revised its overall estimates upwards in part because of an expected increase in income-tax collections, which account for more than half of all general-fund revenue. It projected that the state would bring in $9.6 billion in fiscal 2016 and nearly $10.1 billion for fiscal 2017, roughly 0.4 percent and 1 percent, respectively, than the board had predicted in September. The panel also estimated that Maryland income from capital gains would remain flat for this year — an improvement compared with the 10 percent drop that was projected in September. However, the board lowered its estimate for sales-tax revenue to $4.5 billion for fiscal 2016 and $4.7 billion for fiscal 2017 — 0.6 percent and 1 percent lower than previously expected for those periods, respectively. Those collections account for about one-quarter of the state’s general fund. Franchot attributed the lower sales-tax projections to wealth inequality, saying that non-wage income earners — generally associated with the richest taxpayers — are doing better than wage earners. “The lack of wages has led to weaknesses in retail sales,” the comptroller said. Maryland Sen. Richard S. Madaleno Jr. (D-Montgomery), vice chairman of the budget and taxation committee, agreed. “We have to find a way to deal with the vast gap in wealth inequality,” he said, adding that the state should consider increasing earned-income tax credits for the working poor. |