- The Washington Times - Wednesday, February 18, 2009

ANNAPOLIS | The recession’s chilling effect on state tax collections may force Maryland to make a substantial reduction in revenue estimates for the coming months, Comptroller Peter Franchot warned lawmakers Tuesday.

Mr. Franchot released January revenue figures as lawmakers prepare for more bad news next month, when the state’s Board of Revenue Estimates meets to announce revised income figures for fiscal year 2009, which ends June 30, and fiscal 2010. The estimate will play a role in the state’s budget process.

“Fourth-quarter estimated payments for the individual income tax were alarmingly weak, and even with the bar set very low, sales-tax performance continues to disappoint,” Mr. Franchot wrote in a letter to lawmakers.

Revenue collections for the state’s general fund in January were $1.2 billion, a decline of 8 percent over January 2008.

The baseline sales-tax receipts dropped about 8 percent in January, the fourth consecutive month of decline.

“As baseline revenues have declined roughly 6 percent for the year, and no turnaround in sight, sales-tax receipts will almost certainly be revised downward - yet again - next month,” Mr. Franchot wrote.

General-fund receipts are $6.6 billion so far in fiscal year 2009, representing growth of only 0.5 percent compared with the last fiscal year, less than the 0.9 percent the Board of Revenue Estimates projected at its last quarterly meeting in December.

Mr. Franchot wrote that January collections of estimated individual incom-tax payments and the sales tax indicate that further deterioration can be expected in those two revenues sources, which make up 80 percent of the state’s $14.4 billion general fund.

Maryland budget analysts have been bracing lawmakers for potential revenue reductions, urging legislators to include an extra cushion in the budget that they are working on for the next fiscal year.

Gov. Martin O’Malley, a Democrat, who submitted a budget to address a $2 billion budget deficit, left lawmakers little wiggle room with a fund balance of $46 million. Leaders in the Maryland House of Delegates are aiming to leave the state with a cushion that is five times that much.

A nonpartisan state budget expert has told legislators they should consider leaving at least 10 times what Mr. O’Malley proposed - or $460 million.

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