Maryland’s $555M surplus reflects waning impact of COVID relief funds

Maryland emerged from the last fiscal year with a $555 million surplus, a fraction of its multibillion-dollar surpluses from the previous two fiscal years, the state comptroller said Monday.

It’s an amount that resembles years when the state wasn’t awash with the COVID-19 relief funding that bolstered personal and business incomes and expanded consumer spending, inflating the state’s budget surpluses to $2 billion budget in fiscal year 2022 and $2.5 billion in fiscal year 2021.

The state’s surplus in fiscal year 2020 was $586 million, preceded by $351 million and $504 million, according to the comptroller’s office.

Comptroller Brooke Lierman, a Democrat, said in a statement that her office’s report resembled revenue forecasts from March, which signaled that “Maryland’s economy remains stable.”

But, she said, the economy is “experiencing some challenges, including the effects of national inflation, with a disproportionate impact being felt by our families making low- to moderate-incomes.”

Lawmakers in April passed a budget for fiscal fear 2024 — which began July 1 — that projected a $364 million surplus to be rolled over from the previous year.

The updated surplus amount reflects a “modest” additional $191 million cash surplus, Gov. Wes Moore spokesman Carter Elliott IV said in a statement.

Elliott said the comptroller’s report reinforced the need to continue “discipline” — the governor’s oft-stated guidance for state and local officials entering a budget cycle with a projected structural deficit at the state level.

The governor’s office noted that the state brought in less revenue — particularly less personal income tax revenue — than was predicted.

“The Moore-Miller administration is eager to see how these results will impact future forecasted revenues when the Board of Revenue Estimates meets next on Sept. 28th, which will give the state a better sense of the full impact on the near-term budget outlook,” Elliott said in a statement.

Responding to concerns of tax hikes, Moore has said he’s been “very clear” that his administration has shown it can carry out his plans to expand the state’s economy without raising taxes, as demonstrated in this year’s budget. Moore, though, entered last year’s budget cycle with projections of surplus revenue.

The governor has indicated that his administration isn’t ready to outline a specific approach for balancing the budget, saying the economy may shift in the coming months.

While inflation appears to be slowing, families and small business owners are still adjusting to the rising costs of rent or a mortgage, the price tags of new cars and other shifts in the post-COVID economy, according to the comptroller’s office.

Lierman said that in the next month her office will release a report on structural changes in the state’s economy and revenue base, and the “risks, challenges and opportunities” that the “shifting economic environment” will present to lawmakers and government officials.

The report will draw from a series of meetings with local business, industry and economic development leaders about how the state can help them in the post-pandemic economy.