Statement of Comptroller Peter Franchot Regarding Updated Revenue Estimates
ANNAPOLIS, Md. () - The Board of Revenue Estimates met today to write down revenue estimates for fiscal year 14 by $61.9 million and offer the first official estimates for fiscal year 2015. Comptroller Peter Franchot, as chairman of the Board, released the following statement.
“As always, I’d like to begin by thanking Andrew Schaufele for his outstanding work in preparing this report.
I’d also like to take a minute to thank the rest of our outstanding BRE staff, along with the Revenue Monitoring Committee for your tireless efforts that go into producing these estimates. Mr. Schaufele and his team’s fine work serves as empirical confirmation of the obvious – that we continue to grapple with the most anemic economic recovery in our lifetimes.
As we’ve seen over the past several years, it’s important to avoid the temptation to misinterpret snippets of positive news out of context, rather than to appreciate the broader economic picture.
Today’s adjustment is a write down of $61.9 million of our extremely modest revenue projections from March.
Each time we gather to revise the state’s revenue forecasts, we’re faced with what seems to be our new reality. These figures still carry considerable downside risk due to looming decisions in Washington or, perhaps more aptly, a lack thereof.
With total federal spending in the state equivalent to one-third of the Maryland economy, we are heavily reliant uponWashington’s direct, indirect and induced economic benefits.
With a battle looming over the nation’s debt limit and the threat of a federal government shutdown in the weeks ahead, what had once been among Maryland’s greatest assets for economic stability has become a severe liability.
Beyond the obvious threats from policymaking paralysis in Washington, the specifics within this report demonstrate a telling story. Far too many Marylanders are taking home less pay at a time when their living costs are rising and therefore have less income to spend in an
economy that’s primarily based on consumer spending.
It’s particularly troubling that withholding receipts, which represents the primary income stream for the vast majority of working Marylanders, fell short in fiscal year 2013 by $171.3 million and are being written down by $324.2 million in the current fiscal year.
In our consumer-powered economy, these weak wage growth numbers result in less disposable income, which in turn, has a negative effect on the entire Maryland economy.
So it’s no surprise that sales and use tax receipts are being written down by $31.1 million.
While the stock market has demonstrated significant gains and, despite risk associated with rising interest rates, the housing market has experienced a sustained run-up, unfortunately, the same can’t be said for ordinary workers and small businesses.
Our employment levels have yet to reach their pre-recession levels. In fact, at 96% of the national rate, Maryland’s relative unemployment is at its highest point since the late 1990s.
So we have far too many Marylanders without jobs, and still more who are struggling to put food on the table and keep a roof over their heads while bringing home less pay.
There’s just no way to gloss over how fragile the Maryland economy remains, particularly for working families and small businesses. We simply are not out of the woods from the lingering economic challenges and uncertainty following arecession whose magnitude and depth we haven’t experienced in our lifetimes.
Now, more than ever, we need to proceed with an exceedingly cautious mindset, and avoid policy decisions that would take money out of the pockets of consumers and make employers increasingly reluctant to invest capital in our state.
The bottom line is that we simply cannot afford to cause further uncertainty to a weakened Maryland economy.
In the long-term, I remain as optimistic as ever that Maryland’s economic bones are strong and resilient as evident by our world-class education and research to an underlying entrepreneurial spirit that’s constantly resetting the limits of innovation. But as is so evident in this report, Maryland’s economy is exceptionally fragile and we must remain exceedingly cautious.
I continue to be proud of our battle-tested leadership that has capably led this state through these years of economic and fiscal crisis.
I remain confident that Maryland’s story will have a happy ending. Until then, however, the difficult work endures and as Maryland’s chief fiscal stewards, we must continue to exercise tremendous caution and restraint.”