Maryland fiscal leaders voted on Thursday to decrease revenue projections by $268.5 million for 2019 and 2020, a day before House appropriators are set to vote on a 2020 spending plan.
The decrease comes entirely from lower-than-anticipated income tax revenues, the result of economic uncertainty, changes in federal tax policy, and the state’s “familiar foe:” income volatility, especially among wealthiest taxpayers, Bureau of Revenue Estimates Director Andrew M. Schaufele said.
The state anticipates receiving about $138 million less in income tax revenue in the current fiscal year and about $130.5 million less in 2020, he said.
He stressed that the state’s economic outlook is good, as employment and wage growth numbers continue to go up.
“The current economic outlook is stable,” Schaufele said.
The $268.5 million write-down Thursday represents about 0.7 percent of total revenues, which is actually the average size of adjustments made each time the Board of Revenue Estimates convenes, Schaufele said.
Members of the House Appropriations Committee, which will move the state’s budget first this year, have been looking for cuts to the state budget to address a deficit and now the write-down. Final votes are scheduled in the committee for Friday.
Maryland Comptroller Peter V.R. Franchot (D) said lawmakers should consider stashing more money in savings.
“There is widespread consensus among experts, including our own Bureau of Revenue Estimates, that we can expect an economic downturn in the next several years,” Franchot said. “So the state of Maryland must continue to prepare for the inevitable, by putting as much money aside in our Rainy Day Fund to prevent the types of drastic budget cuts, furloughs and tax increases that we witnessed during the Great Recession.”
Budget Secretary David Brinkley echoed the call for restrained spending and urged lawmakers to cull back mandated spending into the future. He also said if lawmakers plan to continue with budget mandates, they must share with taxpayers how they plan to raise revenues.
Earlier this week, Appropriations Chairwoman Del. Maggie McIntosh (D-Baltimore City) said the committee would not take any action this year that would cause an increase in the state’s property tax rate, a suggested budget fix from analysts which Gov. Lawrence J. Hogan Jr. (R) vocally opposed on Facebook.
State Treasurer Nancy Kopp said she was pleased that lawmakers passed a bill last year to smooth out the state’s revenue volatility when it comes to capital gains, which will help with revenue changes in the future.
Overall, state revenues are still projected to grow 3.2 percent in 2019 and 3.1 percent in 2020, according to the updated figures.