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State revenues expected to dip by $238 million

ANNAPOLIS — The state Board of Revenue Estimates voted Thursday afternoon to write down revenues by $238 million over the fiscal 2014 and 2015 budget years.

The board attributed the projected decrease to online sales, a sluggish economy and a colder, snowier than usual winter in Maryland.

The board’s updated projections include a $127 million decrease in expected revenues for the last quarter of the current budget year and another $111 million decrease projected for fiscal 2015 — declines that will likely affect legislative deliberations on Gov. Martin J. O’Malley’s proposed $39.3 billion budget.

“We’re going to take a really hard look at everything in the budget,” said Del. Norman Conway, chairman of the House Appropriations Committee.

The projected revenue decline, which comes from lower income, sales and withholding taxes, provides a snapshot of Maryland’s sluggish economy.

Conway said the writedown was expected but he was relieved it was not higher. Initial reports last week had placed the declining revenues at $300 million, he said.

The announcement comes one day before the Senate is scheduled to meet to make final decisions on the fiscal 2015 budget. In January, O’Malley said his proposed budget would have a $30 million surplus.

“Governor O’Malley and the leaders of the General Assembly have been making tough, fiscally responsible choices for seven years — we’ve made $9.1 billion worth of cuts over the past 7 years, and the executive branch is smaller on a per-capita basis than at any time since 1973,” Nina Smith, an O’Malley spokeswoman, saud in an email. “The governor and the leadership will enact a balanced budget this year that continues to invest in key priorities — like our No. 1 ranked public schools, holding down the cost of college, and job-creating innovation — and that does so without raising taxes.”

The House just completed departmental budget hearings. Conway said there will likely be “meaningful reductions and cuts to spending” based on recommendations from analysts.

Del Kathy Szeliga, R-Baltimore and Harford Counties and a member of the Appropriations Committee, said it’s unlikely that will be enough.

“You could take every cut recommended by (analysts) and it wouldn’t be enough,” she said.

“They had the information and they should have written a budget that took into account the bad economy,” Szeliga said. “It’s like the movie Groundhog Day. Every year I’ve been here, we’ve had a writedown.”

That plan included reneging on a deal with state employees and reducing a promised $300 million annual reinvestment into the state pension system to $200 million annually.

State budget officials said the $100 million was needed to balance the budget and prevent structural deficits.

Conway said his committee is reviewing the reduction and said the debate will likely center around making the cut temporary in order to help the state out in times of a tough economy rather than making it permanent, as O’Malley is proposing.

“The budget crisis facing Maryland today is self-inflicted by the General Assembly’s failure to constrain spending at the December meeting of the Spending Affordability Committee,” said Sen. David R. Brinkley, R-Frederick and Carrol and the Senate Minority Leader. “The consequences of this latest revenue writedown could have been easily avoided if the O’Malley-Brown Administration had shown fiscal discipline in preparing the FY15 budget instead of overspending hardworking Marylanders’ tax dollars.”