ANNAPOLIS — Weak sales and use tax receipts have contributed heavily to a downward revision of Maryland’s revenue estimates for the remainder of this fiscal year and the next.
The Board of Revenue Estimates announced Wednesday that revenue totals were being revised down by $115.3 million for fiscal 2013 and 2014. State Comptroller Peter Franchot, who chairs the board, said the sales and use tax deficiency accounted for $85.5 million of the projected decline in revenue.
Franchot, in a statement, blamed much of the revision on spending habits negatively impacted by high gas prices and tax increases that went into effect on Jan. 1.
“For starters, the expiration of the payroll tax holiday has delivered quite a noticeable blow to workers’ paychecks,” Franchot said. “Coupled with escalating gas prices that have reached $4 a gallon in parts of our state, the working families and small businesses struggling most through these precarious economic times continue to be disproportionately affected.”
It could be worse, he said. The revised estimate assumes that Congress will act to undo the sequester — $85 billion in unintentional, across-the-board cuts in federal spending that went into effect last week. Maryland, with its high numbers of federal employees, contractors and defense installations, could be hit especially hard. Absent a replacement for those cuts, Franchot said, Maryland faces “economic disaster.”
Prior to the downward revision, the board had projected revenue of $15 billion for fiscal 2013 and $15.35 billion for fiscal 2014.
Of the $115.3 million no longer projected to reach the state coffers, about two-thirds of it, or $77 million, counts against the current fiscal year’s projections. Fiscal 2014 begins on July 1.
“Maryland’s economy is exceptionally fragile,” Franchot said. “We must remain exceedingly cautious.”