ANNAPOLIS -- Maryland revenues are increasing more than expected -- with a surplus instead of a budget gap predicted for next fiscal year -- largely due to retroactive income tax increases on residents earning more than $100,000.
While many state leaders were celebrating the increase of nearly $161 million for this fiscal year and next, Comptroller Peter Franchot warned that there is still a long road before the economy has fully recovered.
"There's a 9 percent increase in personal income revenue, but 6 percent of that 9 percent -- 6 out of the 9 -- comes from increased taxes," he said. "While the public budget is solvent -- that's what we're reporting today -- the private-sector economy is going around and around in a circle. We're not making economic progress."
Source: Maryland Board of Revenue Estimates and Department of Legislative Services
|A rosier picture for Maryland revenue|
|Fiscal 2013||Fiscal 2014|
|September estimate||December estimate||September estimate||December estimate|
|Personal income tax||$7.65b||$7.69b||$7.97b||$7.97b|
|Sales and use tax||$4.1b||$4.1b||$4.3b||$4.3b|
|Corporate income tax||$821.8m||$892.6m||$783.9m||$844.7m|
|Alcohol beverages tax||$31.6m||$31.1m||$32.2m||$31.7m|
|Motor vehicle fuel tax||$13m||$13m||$5m||$5m|
|Total ongoing revenues||$14.9b||$15b||$15.3b||$15.4b|
|Rainy Day Fund||$703m||$703m||$766m||$767|
Without the tax increases, the state's general fund would have been expected to grow just 2.9 percent this fiscal year, a rate that Franchot called "extremely anemic," compared with 5.5 percent once the income tax changes are factored in.
Revenues are expected to grow 5.2 percent, but they would need to grow 11.5 percent each year for the next three years for the return to where they were before the recession, Franchot said, urging state lawmakers to proceed with caution when they return to Annapolis full-time in January.
But other officials were more excited about the data.
"It's been a long time since we've had such good news," said T. Eloise Foster, state secretary of budget and management. She said the increase from September's estimates is one of the largest revenue increases she has seen during Gov. Martin O'Malley's administration.
The new revenue numbers also eliminated the $27 million gap that lawmakers expected to fill in the coming session, turning it into an $133 million surplus, after factoring in a balance of $609 million expected to be carried over from this fiscal year.
Without factoring in this year's surplus, the state faces a $383 million structural gap.
A panel of state lawmakers voted Thursday to cut that structural deficit nearly in half by capping it at $200 million. Though House Minority Leader Anthony O'Donnell, R-Calvert and St. Mary's counties, questioned why the panel wouldn't eliminate that deficit entirely, Del. John Bohanan, D-St. Mary's County and one of the panel's chairmen, warned that could cut much-needed education funding.
Democrats also emphasized that they have filled roughly $2 billion in budget holes over the last couple of years.