Maryland finished the 2021 fiscal year with a roughly $2.5 billion unassigned balance in its general fund thanks to federal stimulus funding and higher tax revenues than expected in 2020, according to a Wednesday release from Comptroller Peter V.R. Franchot (D).
That unassigned balance amounts to roughly 5% of the state’s $48 billion operating budget for the 2021 fiscal year, the comptroller’s office said. The general fund is up 11.3% compared with pre-pandemic fiscal year 2019. The fund balance was driven up by higher-than-expected revenue growth, which Franchot attributes to federal stimulus funding.
The state’s personal income tax collections grew by 7.3% during the 2020 tax year, according to the release, and wage growth led to more sales tax revenues than expected during the last six months of the 2021 fiscal year. The state’s corporate income tax was also higher than expected.
Franchot said that the unassigned balance is good news for the state, but warned that many Marylanders are still feeling the negative economic effects of the pandemic. He said the state should put most of the $2.5 billion unassigned balance into the rainy day fund, which, he argued should be used to deal with “urgent needs that our current systems are failing to do effectively.”
“We still have a tale of two Marylands,” Franchot said in a statement. “In one Maryland, there are hundreds of thousands of residents facing dire circumstances. Those without a job see their unemployment benefits expiring. Renters are facing homelessness since rental relief funds are not being disbursed quickly enough and the eviction moratorium has been lifted. Parents returning to work are struggling to find and afford daycare. Small businesses who couldn’t access federal relief funds are struggling to rebuild.”
He called the surplus a “once-in-a-generation opportunity to invest in programs that lift all Marylanders and help stabilize housing and other critical expenses for our lower- and middle-income families.”
The Maryland Center on Economic Policy, a progressive advocacy organization, likewise said the surplus funds should be used to bolster rent relief, supplement the wages of low-income workers and restore enhanced unemployment benefits.
“The American Rescue Plan’s strategy of supporting workers and families paid off, supporting strong consumer demand and ensuring the state had the resources to respond to the pandemic,” Maryland Center on Economic Policy President and CEO Benjamin Orr said in a statement. “But there are still thousands of Marylanders who can’t pay their rent or afford enough to eat. These funds should be used as soon as possible to address immediate needs and ensure that the state’s economic recovery does not come to a screeching halt.”
Gov. Lawrence J. Hogan Jr. (R) in a news release touted Maryland as having “one of the strongest health and economic recoveries in the nation,” and said the state should “practice fiscal discipline” moving forward.
The state Board of Revenue Estimates, consisting of Franchot, state Treasurer Nancy K. Kopp (D) and Budget Secretary David R. Brinkley is scheduled to meet virtually at 2 p.m. Thursday to consider updated projections for FY 2022 and to hear economic forecasts for the upcoming years.
Read the full closeout letter here.
Editor’s note: This article was updated with the correct time of Thursday’s Board of Revenue Estimates meeting.