Maryland’s tax revenues are expected to exceed projections at the end of the fiscal year, but the figures heading into next year are not quite so rosy, according to state Comptroller Peter Franchot.
Through April, general fund revenues were $10.2 billion, up 7.6 percent over the $9.5 billion at the corresponding time last year.
“With the bulk of the income tax filing season in the books, it appears increasingly likely that the full-year general fund revenue forecast will be exceeded,” Franchot wrote to Gov. Martin O’Malley and legislative leaders on Wednesday.
Income tax receipts are already $50 million above their forecast, and the state’s top tax collector expects to bring in another $75 million to $100 million before the fiscal year ends June 30.
Corporate income tax revenues are up 1.1 percent on the year, and sales tax collections are up 3.7 percent.
But, there is some cause for concern in the figures. The strong performance has been driven by activity in 2010. David F. Roose, director of the comptroller’s Bureau of Revenue Estimates, said income tax withholdings — one of the best measures of current economic activity — have met growth projections, but not exceeded them.
And the state collected 2.2 percent less in sales tax in April 2011 than in April 2010 — $311 million compared to $318 million.
Franchot wrote that the sales tax has “been adversely affected by high gas prices,” with March the first month when gas prices were consistently above the $3 per gallon mark.
According to preliminary figures, tax receipts from consumer spending were down 1.4 percent.
“I don’t see as how you could take it as anything other than consumers are nervous, or don’t have money because of the high gas prices,” Roose said.
Weak sales tax receipts, which make up about 30 percent of the general fund, will likely cut into the 7.6 growth figure as the fiscal year draws to a close. The comptroller said he expects to collect “tens of millions” less than expected in that column, although a strong summer travel season and declining gas prices could reverse some of that slide.
O’Malley spokesman Shaun Adamec said the governor was encouraged by the revenue report. “We’re by no means out of the woods,” he said. “But we’re headed in the right direction.”
Adamec said a surplus would give the state “some extra breathing room,” but not necessarily lead to a rush to spend more during a special redistricting session this fall. Lawmakers are expected to face a $1 billion deficit when they return next year to craft a fiscal 2013 budget.
And as taxes and revenue promise to dominate that discussion, Franchot has floated the idea of a gas tax holiday during big travel weekends in a letter to legislative leaders and the governor.
“It’s certainly an idea that should be considered in the future,” said Joe Shapiro, Franchot’s spokesman.