Maryland’s chief fiscal leaders cut the state’s economic outlook Wednesday, saying a stagnated national recovery would depress state tax collections and employment gains forecasted for next year and beyond.
Projections that growth would boost tax revenue by 4.7 percent over the coming fiscal year were overly optimistic. The growth will probably be closer to 2.8 percent, according to the Board of Revenue Estimates, which consists of the state comptroller, the state treasurer and the governor’s budget director.
In addition, “employment growth for the next three years is expected to hover around 1 percent as the national economic recovery is expected to drag on longer than previously anticipated,” the board wrote in a letter sent Wednesday to Gov. Martin O’Malley.
In short, the new estimate reflects “much slower growth than the prior forecast for 2012 and beyond,” said Comptroller Peter Franchot (D).
O’Malley (D) responded by saying that he may introduce job growth legislation when the General Assembly reconvenes Oct. 17 to redistrict Maryland’s congressional map.
“The governor has said before that we all need to be realistic, we all need to work together, and it’s not going to be easy,” said his spokeswoman, Raquel Guillory, who declined to provide details about the potential legislation.
The gloomier outlook, however, may give Maryland lawmakers little room to spend to help spur job growth. A bump in tax receipts last year will help the state cover the lower-than-anticipated growth next year. But according to an estimate in June, Maryland faces a projected shortfall of more than $1 billion next year.
Franchot said the state’s economic picture could worsen significantly if Congress does not extend unemployment insurance for at least six months — a move the board built into its lower forecast.
“In addition, the forecast may be affected by the actions, or lack thereof, of the Congressional Super Committee and Congress,” the board warned.