ANNAPOLIS — The state’s fiscal health is slowly improving, according to revenue estimates released Wednesday, but Gov. Martin O’Malley still predicts a year that “will feel a lot more painful than the last two.”
The state Board of Revenue Estimates raised its expectations for fiscal 2011, predicting $13.16 billion in revenue. That represents a $57 million increase over the September estimate, driven mostly by higher than expected corporate tax returns.
The fiscal 2012 estimate remained nearly steady, dipping only $8 million to $13.6 billion.
Both figures were greeted as good news by state officials, who have been beset by two years of near constant write-downs.
Still, the Legislature’s budget analysts estimate the governor will have to bridge a $1.6 billion hole in his fiscal 2012 budget, which will be submitted to the General Assembly in January.
“I think this year is going to feel more painful than the last two when it comes to the state budget,” O’Malley said. “It’s a very, very hard exercise that we’re going through right now. There are no easy sources left to cut. It’s very hard to go through this budget and say ‘This is clearly something we can’t afford to do anymore.’”
One of the toughest challenges the governor and lawmakers will have to tackle is replacing federal stimulus dollars that have eased the fiscal pains in Maryland and other states in the last two years.
Budget Secretary T. Eloise Foster said the state has used about $1.4 billion to replace revenue losses in its general fund. She said the revenue estimates for 2011 and 2012 are “very positive.”
“It shows that our economy has really stabilized and we are on our way to recovery,” she said.
Comptroller Peter Franchot, who chairs the revenue estimates board, urged “extreme caution.”
“We have some positive uptick, but we need to keep our eye on the ball, and pay attention to the economy, because it’s going to be a slow recovery.”
The state predicts 3.3 percent growth in tax receipts in 2012, after an increase of less than 3 percent in 2011. In the decade leading up to the recession, the state averaged a 5.4 percent annual increase in tax revenue every year.
“Unfortunately, in terms of the state budget, there are at least two years, I think, 2012 and 2013, to go through before we see the end of this ordeal,” Maryland Treasurer Nancy K. Kopp said.
O’Malley has already unveiled one of his cost-cutting measures for next year, offering buyouts to state employees. He said only a handful of workers had applied since the buyouts were announced last week, but many more have inquired about the program.
The governor also said his budget might include transfers from special state accounts again next year, but said much of the gap would be closed by cuts.
“This is not doomsday, but these will certainly be tough days,” he said.