- Associated Press - Thursday, November 15, 2012

ANNAPOLIS — Uncertainty about the “fiscal cliff” in Washington could have a significant impact on consumer behavior over the holidays in a state such as Maryland that relies on the federal government for so many jobs, the head of the Maryland Retailers Association told a panel of state officials on Thursday.

The state’s Board of Revenue Estimates held a meeting to hear from business leaders from a cross-section of industries about how they view economic conditions in the state. They often referred to the Jan. 1 deadline in Washington, when tax breaks are set to expire and big automatic spending cuts are triggered.

“The fiscal-cliff impact as I look at it is not whether we go over it but how close we come to it, because the impact on jobs and money in Maryland is so dramatic it will have a dramatic effect on peoples’ behavior, if they think they’re going to lose their job or they think they’re going to lose contracts,” said Pat Donoho, president of the Maryland Retailers Association.

Mr. Donoho said that’s the part that worries his organization the most, because it will directly impact consumer spending.

Chuck Ferrar, who owns Bay Ridge Wine and Spirits in Annapolis and is president of American Beverage Licensees, said he was concerned about how the fiscal cliff could affect his business. Mr. Ferrar estimated that 60 percent of his customers are federal, state or county employees. Another significant portion of his customers live off of contracts with government agencies. He said he sensed his customers lost confidence during the recession and its aftermath, noting that many who once bought a $15 bottle of wine dropped down to a $10 bottle instead.

“It’s the unknown,” Mr. Ferrar said. “It’s the fear of what’s going to happen.”

The board heard from representatives from the banking and financial services, real estate, consumer services, utilities and manufacturing industries.

While Maryland’s budget outlook is better now than in recent years, the cliff is only about six weeks away.

“Maryland’s disproportionately high income levels and our symbiotic relationship with the District [of Columbia] puts us at a greater risk than almost all other states,” said Andrew Schaufele, assistant director of the Bureau of Revenue Estimates. “Nobody really knows what is going to happen at this stage. The only certainty with regard to the fiscal cliff is the tremendous amount of uncertainty.”

Mr. Schaufele noted one forecast estimated there could be more than 100,000 job losses in Maryland if Congress does not avoid the cliff. Revenue estimates made by the board in September assumed Congress would take action to avoid falling off the cliff. The board will be revising revenue estimates in December.

“We do presume the Congress will act to lessen the impact of sequestration and that some of the tax cuts that are set to sunset will be extended,” Mr. Schaufele said.

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