$238 Million Revenue Shortfall for 2014 and 2015
The Board of Revenue Estimates yesterday, wrote down revenue estimates for fiscal years 2014 and 2015 by $238 million. That’s $127 million less coming for this year and $111 million next year.
Comptroller Peter Franchot attributed the slow down to a sluggish holiday season leading to a $48 million write down in sales tax receipts and weak income tax receipts. “Today we are writing down our already cautious revenue projections by $238 million. These figures should provide emphatic confirmation of the obvious that this remains the slowest and most anemic economic recovery that most experts can remember,” Franchot said.
The drop in revenue will put even more budgetary pressure on the state’s already strained finances. Governor Martin O’Malley’s proposes to balance his $39 billion budget mainly through cutting the state’s payments to the state pension system by $100 million. The state currently faces a structural deficit of $584 million. Structural deficits have been a chronic problem for Maryland under O’Malley. Over the last several years Maryland has faced structural deficits ranging from $1 billion to $2 billion.
The source of these deficits can be traced to O’Malley’s prolific spending. Taking into account his current budget as proposed, spending will have increased by more than $10 billion, even though O’Malley has claimed he’s made historic cuts.
Normally O’Malley and the Democratic controlled legislature are unafraid to raise taxes. However, this is an election year, and they usually reserve tax hikes for the legislative session after the election.
House Republican Minority leader Nic Kipke said, “clearly, all is not well in Maryland’s fiscal house.” “It is time for their elected leaders to actually exhibit the fiscal restraint they give lip service to,” he said
Legislative budget writers, who can only cut from O’Malley’s budget proposal, will have their work cut out for them.