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State revenue plunges by $660 million

State revenues dropped by more than $660 million in fiscal 2009, the Maryland Comptroller’s office reported Tuesday, a 4.9 percent drop during the first full year of new tax laws enacted two years ago to boost the state’s coffers.

The drop included declines in essentially all of the state’s major revenue sources, including the sales tax and the personal income tax, according to David F. Roose, director of the state’s Bureau of Revenue Estimates. He called fiscal 2009, which ended June 30, “the worst year on record for the modern income tax.”

In a letter sent to state fiscal leaders, Roose wrote that revenues have only declined twice in the past four decades. However, in those years — 2002 and 2003 — the state did not have new revenue sources of the same magnitude.

“Considering law changes, the decline in fiscal year 2009 is several percentage points larger than that in 2002,” his letter reads. “This is just one of the many measures that indicate the severity of the current economic recession.”

In a 2007 special legislative session, the state increased sales, tobacco, and corporate income taxes, and restructured the personal income tax to increase revenue by boosting rates on higher brackets.

Personal income tax receipts contributed $6.5 billion to the state’s General Fund, a 7.1 percent decline from 2008. This year’s receipts included the proceeds from a new 6.25 percent tax bracket on income over $1 million. Roose wrote that a final analysis of how those tax returns fared would not be available until after an October filing extension.

Sales and use tax receipts fell 1.5 percent, to $3.6 billion.