A report released Friday by Comptroller Peter Franchot (D) predicted that when the final numbers are in, Maryland will have ended its fiscal year in June with tax revenue significantly ahead of forecasts, but new unemployment numbers showed that Maryland also lost jobs again last month.
The mixed reports and continued uncertainty surrounding federal spending prompted Franchot to propose saving the extra $300 million, storing it away in the state’s rainy-day reserve in case state tax revenues take a turn for the worse in coming months.
Maryland’s operating budget is roughly $14.6 billion and state lawmakers are expected to face a fifth consecutive shortfall in excess of $1 billion next year. If the higher revenue fully materializes, it would represent an 8.5 percent increase in revenue from a year ago, mostly from higher individual income tax withholdings, Franchot wrote in a letter to lawmakers.
“It is apparent that general fund revenues will be roughly three hundred million dollars above the forecast for fiscal year 2011,” Franchot wrote. “These aggregate numbers offer cause for relief and even guarded optimism that economic recovery is on the horizon.”
That was the good news, Franchot wrote. The bad news, he added:
“The lackluster pace of corporate income tax collections serve as a reminder that Maryland’s employers continue to struggle with the effects of the economic crisis. In that same vein, our sagging sales tax receipts are yet further confirmation that Marylanders have yet to regain their purchasing power and consumer confidence — both of which are crucial to our state’s long-term economic stability.”
Friday, federal unemployment figures showed that Maryland shed 300 jobs in June, a much smaller number than the nearly 10,000 lost in May, but enough to drive up the state’s unemployment rate two-tenths of a percent, to 7.0.