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December 9, 2011

Revenues panel writes down MD budget estimates

After a series of cheerful announcements of better-than-expected state tax revenues, Maryland's Board of Revenue Estimates Friday reversed that trend and announced a $120 million write down mostly on weaker than expected sales taxes.

"It means [the General Assembly] needs to be very careful about their spending and borrowing," said Comptroller Peter Franchot, who chairs the revenue panel. "I've been very consistent to say we are in a very fragile, feeble recovery. We owe it to be very honest about jobs and the housing market and not be constantly cheer leading."

The panel now estimates that the tax revenues for the current fiscal year will be $50 million lower than expected. For next year (FY2013) revenues are now expected to be $71 million lower than predicted in September. The FY2013 budget will still grow by 3.3 percent over the current year's.

The biggest reduction in revenues comes from sales tax revenues, which are now expected to be  $216 million less than forecasters guessed in September.
Forecasters attributed the lower estimates on consumer spending to "Lingering unemployment, higher food and gas prices, and falling home values."

"Not to state the obvious, but a person who has lost their job, who has taken a hit in their paycheck and can’t make ends meet, or who can’t find work after hitting the pavement for months on end is just not going to go out and buy that new washing machine or a new car," Franchot said in a statement.

The panel blamed the new higher sales tax on alcohol for a dip in revenues from beer consumption. However, collections from spirits and wines increased by a few percentage points even though those products are also subject to the new higher tax rate. The General Assembly this year increased the sales tax on alcohol from 6 percent to 9 percent.
Posted by Annie Linskey at 3:28 PM | | Comments (0)
        

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Annie Linskey covers state politics and government for The Baltimore Sun. Previously, as a City Hall reporter, she wrote about the corruption trial of Mayor Sheila Dixon and kept a close eye on city spending. Originally from Connecticut, Annie has also lived in Phnom Penh, Cambodia, where she reported on war crimes tribunals and landmines. She lives in Canton.

John Fritze has covered politics and government at the local, state and federal levels for more than a decade and is now The Baltimore Sun’s Washington correspondent. He previously wrote about Congress for USA TODAY, where he led coverage of the health care overhaul debate and the 2010 election. A native of Albany, N.Y., he currently lives in Montgomery County.

Julie Scharper covers City Hall and Baltimore politics. A native of Baltimore County, she graduated from The Johns Hopkins University in 2001 and spent two years teaching in Honduras before joining The Baltimore Sun. She has followed the Amish community of Nickel Mines, Pa., in the year after a schoolhouse massacre, reported on courts and crime in Anne Arundel County, and chronicled the unique personalities and places of Baltimore City and its surrounding counties.
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