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State revenue decline eases in Maryland

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By Aaron C. Davis
Washington Post Staff Writer
Thursday, December 17, 2009

With luck, Maryland will someday look back at Wednesday as The Bottom.

For the first time in more than two years, state budget officials reported that tax revenue had stopped falling significantly faster than expected and, in fact, would probably begin growing again by the end of the current budget year.

"I don't want to jinx us," said Comptroller Peter Franchot (D), "but I'm hoping the days of massive write-downs are behind us."

The state's latest forecast -- $77 million less in tax revenue than projected -- represents a loss about one-tenth the size of those in each of Maryland's previous four quarterly reports, and it amounts to a fraction of the $3.2 billion in combined revenue write-downs since last December.

It was good news, but it also laid bare the treacherous course that Maryland and other states have to climb to escape the effects of the recession.

After using furloughs instead of widespread layoffs and one-time cost cuts instead of the wholesale elimination of programs, Gov. Martin O'Malley and the state's Democratic-controlled General Assembly face a projected budget gap of nearly $2 billion in the coming fiscal year -- a shortfall as big as at any point since the recession began.

What's more, even though state property and sales taxes might begin to rebound by next summer, expanding costs for elementary and secondary education, Medicaid and other programs will leave projected spending billions of dollars above revenue through 2015 or longer, according to forecasts.

O'Malley focused Wednesday on next year's shortfall and said Maryland needs more federal aid to help fill the gap until state revenue rebounds.

"We really need additional help from Washington," O'Malley said, building on a message he began honing early this month. "Without additional help from Washington, our state and many other states will be in the position of adding to the unemployment woes rather than helping to battle joblessness."

He carried that message into a question-and-answer session on Maryland Public Television on Wednesday night. He said he had been on the phone with Maryland's congressional leaders in recent days, imploring them to insert additional aid for states into the year's federal spending bills.


© 2009 The Washington Post Company

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