Comptroller Peter Franchot is ready to set the table for the business community.
The state?s top tax collector has called on politicians to join with those experts in the trenches to create a comprehensive, blue-ribbon panel to examine Maryland?s finances, find ways to save money and better leverage its strong economic underpinnings.
“Businesses have not had a place at the table lately, because everything is done in a politically charged environment and done so fast,” Franchot said. “One group says we should cut, another says we should raise taxes, no one?s saying, ?Let?s take a time-out.? ”
Such a panel might be one of the few ways the state can help its financial situation. Maryland?s ability to stave off or lessen the impact of a recession is severely hampered by its ongoing struggle with the bottom line of its budget, economists and other experts said.
While economic stimulus packages and interest rate cuts come down from the federal level, they said the state isin no position to spend money to strengthen its own economy.
Lawmakers met last fall in a special session to make up a $1.5 billion shortfall in the state?s operating budget, and bridged the gap with tax increases and a proposal to bring slot machines to the state. But the state Board of Revenue Estimates last month said Maryland will collect $333 million less in the next 18 months than it predicted in December.
“It?s what I call the cruel irony of public finance,” said Anirban Basu, president and chief executive officer of the Baltimore-based Sage Policy Group and one of the area?s leading economists. “The government is least able to help people when they need help. Tax collections are soft when the economy is soft, but that?s when help is most needed.”
Franchot, also the chairman of the Board of Revenue Estimates, said he believes a national recession is “probably immutable right now” but Maryland can still grow its economy in tough times. He advocated using the state?s $40 billion pension fund to invest in its burgeoning life sciences sector and using a top-flight AAA bond rating to get creative with capital project debt.
While Maryland?s budget crunch limits its options in a recession, the state rests on strong economic fundamentals including its proximity to Washington, said Richard Clinch, an economist with the University of Maryland?s Merrick School of Business.
“Maryland is looking at a very mild downturn compared to whatever happens nationally,” he said. “Maryland is in a lucky situation of not having to deal with some of the problems other states do. States have barely come back from the 2001 recession in the West, so we should count our blessings.”
Whether or not Franchot?s proposed board comes to be, Basu said the state likely will just sit tight through the coming storm.
“I think the most likely thing is that the state will wait it out and just get to [the military?s Base Realignment and Closure process],” he said.
