Maryland collected $183.7 more than expected in revenue during fiscal 2010, but the state still suffered its third-worst revenue decline in more than 40 years, officials announced Wednesday.
“[The additional revenue] is a great sense of relief for us because the figures have been truly devastating,” Maryland Comptroller Peter Franchot told the Maryland Board of Public Works. “But we would have to grow at a rate of 14 percent for four straight years to get back to where we were before this recession. … We simply have to face reality.”
Baseline revenues fell 3.7 percent overall, bringing revenues to $1.1 billion below the fiscal 2008 peak.
The unexpected millions will bring the state’s fund balance to $344 million for fiscal 2010. The money will be put in the state’s rainy day fund, as required by state law.
But Gov. Martin O’Malley may use some of the cash to restore cuts to the current budget, O’Malley spokesman Shaun Adamec said.
“That is certainly one of the things that’s being looked at,” he said.
Adamec said local governments and state employees would be the first to receive assistance.
Maryland State Treasurer Nancy Kopp recommended the money remain in the rainy day fund.
“It’s not as though we now have an extra pot of a couple hundred million dollars to spend,” she said. “Rolling into next year, that diminishes the projected deficit.”
Marylanders face a projected budget gap of $1.5 billion in fiscal 2012, Adamec said.
But the state is facing an even more pressing deficit: roughly $117 million in Medicaid funding that O’Malley was expecting the federal government to cover. Congress voted to fund only 70 percent of what O’Malley was counting on for Medicaid, the government health insurance program for the poor and disabled.
If none of the federal money had materialized, O’Malley would be required — based on a temporary state law — to restore funding with roughly $200 million from the state’s local income tax reserves and plug the rest with rainy day funds.
O’Malley is now investigating whether he can pay off the $117 million with rainy day funds alone — instead of using local income tax reserves, which must be restored over time, Adamec said.
