The Maryland state government is facing at least a $500 million budget gap next year, and perhaps as much as $1 billion, the legislature’s fiscal chief said.
“At this point, it sure looks like we are in for a bumpy ride,” Warren Deschenaux, director of the Office of Policy Analysis, told legislative leaders in an Aug. 27 letter.
Deschenaux’s forecast for the fiscal 2010 budget was reinforced by final figures for fiscal 2008 released by Comptroller Peter Franchot, showing that state revenues came in $73 million below estimates. This means the surplus to be carried over into this year’s budget was smaller than expected.
“It is safe to say that in the current economic climate we’re in for more bad news,” Franchot said. “Last year, we were told we had to pass the largest tax increase in state history to solve the deficit, yet here we are nearly one year later, and we still have a deficit.”
David Roose, director of revenue estimates, said that the slowing economy had lowered receipts from the income and sales taxes. If the sales tax hadn’t gone up from 5 percent to 6 percent, “receipts would have been essentially flat, the worst performance since 1991.”
In another sign of a business slowdown, revenues from rental vehicles were off 14 percent, the first decline this decade.
The revenue shortfall was not a total surprise. In June, when Gov. Martin O’Malley proposed $75 million in reductions to this year’s budget, as the legislature had required, he and his budget secretary both said additional cuts might be necessary because of the economic downturn.
Deschenaux and Franchot both said the governor needs to get cooking, since only he and the Board of Public Works, on which Franchot sits, can make further cuts in the budget until the legislature comes back into session.
“Time is of the essence in reducing a budget already in force as resources diminish daily,” Deschenaux said.
“We need to get serious about the financial mess we find ourselves in,” Franchot said. Official updates of revenue estimates for this year are due Sept. 9.
Franchot took yet another swipe at the proposed expansion of gambling on the November ballot. “Slots won’t solve our fiscal problems,” he said.
Even if voters approve the referendum, five slot machine locations are not supposed to generate significant revenues until two years from now.
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