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.
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.