State officials say there has been a troubling decline in corporate income tax receipts, while estimates of other revenues available for the 2008 budget that Gov.-elect Martin O?Malley is preparing have remained fairly stable over the last year.
Overall, revenues are supposed to go up 4.5 percent in the next fiscal year, with sales and personal income taxes going up more than 6 percent. But David Roose, director of revenue estimates, said “the corporate income tax has fallen quite a bit this year,” even though they have grown in Virginia and Pennsylvania.
“The business environment has been quite strong, and that?s what makes it so peculiar,” Roose said. Comptroller William Donald Schaefer pressed Roose repeatedly for an explanation, but he said the state would have to wait for estimated corporate income taxes to start coming in the next week. Taxes from corporations are estimated at $590 million next year.
Treasurer Nancy Kopp emphasized corporate payments are only a small portion of the expected $13.5 billion in general fund revenues, and “we?ll have to keep watching.”
“The corporate sector by every other measure is doing well,” Kopp said.
December revenue estimates are the basis for the balanced budget the governor must submit to the Legislature in January. Schaefer observed that “there is a big deficit that O?Malley is going to face.”
“I don?t think that?s true,” said Ehrlich Budget Secretary Cecilia Januskiewicz, who sits on the Board of Revenue Estimates with Kopp and Schaefer. “That?s certainly not a significant issue in 2008.”
“We?ve heard talk of structural deficits for a long time,” Januskiewicz told The Examiner. The way to handle them “is to manage expenditures.”
But Democratic Party Chairman Terry Lierman said outgoing Republican Gov. Robert Ehrlich was leaving behind one of the most severe budget disasters in Maryland history, a deficit Lierman estimated at nearly $6 billion.
“He?s getting out of town just in time to avoid dealing with the fiscal disaster he created,” Lierman said. “How he claims with a straight face to have been a fiscally competent governor just boggles the mind.”
Ehrlich called any talk of a “structural deficit” producing big budget shortfalls “silly” and code language for a tax increase. The governor, who prided himself on turning big deficits into surpluses, told reporters Wednesday that when Democrats talk of deficits for O?Malley “what they?re doing is setting up everyone for a large tax increase.”
“It appears that slots plus taxes will have pretty good chances” in the legislature under O?Malley, Ehrlich said.
