Urges Caution and Advises that Fund Balance be Saved and Not Spent
Annapolis, Md. (September 1, 2011) – Reiterating his call for fiscal restraint and caution during these turbulent economic times, Comptroller Peter Franchot today released the final closeout numbers for Fiscal Year 2011. General fund revenues totaled $13.5 billion in the fiscal year, which was $314 million above the official state forecast. However, reflecting the continuing fragility of the economy, corporate income and sales and use tax revenues fell short of estimates by more than $92 million.
After final transfers, reversions and revenues were counted, the state of Maryland closed the fiscal year with a fund balance of $400 million. Given the weakness of our nation’s economy and the continued financial storm our state faces, the Comptroller urged the Governor and Maryland General Assembly to commit the balance to the state’s Revenue Stabilization Account (Rainy Day Fund).
“While these numbers provide a measure of relief in the midst of challenging times, the events of recent months serve as a sobering reminder that we must maintain a cautious fiscal course, one that emphasizes savings and efficiencies rather than new spending,” said Comptroller Franchot. “Given the magnitude of the fiscal and economic challenges that lay ahead, both for our state and for the country, I firmly believe that this fund balance must be saved and not spent.
It is important to remember that the estimates we exceeded in Fiscal Year 2011 were conservative, and that these numbers do not reflect a series of troubling developments in our state and national economies over the past several weeks. Since the state closed the books on June 30, the credit rating of the United States was downgraded for the first time ever, and the state of Maryland’s own AAA bond rating – while confirmed – was nonetheless assigned a negative outlook due to our close economic relationship with the federal government. These developments have occurred even as national and state unemployment rates remain historically high, the housing market remains lethargic, consumer confidence has plummeted to its lowest level in over two years, and a growing number of credible economists are raising the possibility of a double-dip recession.
Given the extent of our ongoing fiscal challenges, as well as those that lie ahead, it is absolutely imperative that we proceed with great caution. This money should remain in the state’s coffers to help cushion Maryland from another economic downturn, and not be put back into the state’s spending pattern.
Instead, we must recommit to spending the tax dollars we collect in the most effective and efficient ways possible. We need to do all we can to ensure we get the best results with our strategic investments. Most importantly, at a time when families and businesses are still tightening their belts, cutting expenses and finding ways to do more with less, our state government must demonstrate that same commitment as we move forward.
The state of Maryland has a time-honored reputation for fiscal soundness, with extraordinary economic assets and a team of leaders who are known for working together with shared resolve through tough times. I am optimistic that we will, once again, rise to the occasion, make the right choices and do what is necessary to ensure Maryland’s long-term economic prosperity.”