Maryland’s economic outlook remained relatively unchanged over the last six months, but the state remains at an elevated risk of a recession, according to revenue projections released Thursday.
Comptroller Brooke Lierman, though, said during a Board of Revenue Estimates meeting that Maryland’s economy remains stable and that she’s “cautiously optimistic” the state will continue to see modest economic growth and avoid a recession.
The Board of Revenue Estimates forecasts revenues for Maryland’s general fund, comprising roughly 40% of the state’s total revenue.
Another 40% of revenues come from federal funds, and a combination of revenues from transportation, higher education and other special funds makes up the remaining 20%.
“Maryland has weathered several financial storms in the past few years. Now, with savvy investments, prudent financial planning, and a clearer picture of the challenges we face, Maryland is well-positioned to navigate the new post-pandemic economy,” Lierman said in a statement.
State officials are still trying to understand post-pandemic economic trends, including changes to the labor force, Board of Revenue Estimates members said.
Though the state’s economic growth slowed last fiscal year, it remained positive with the Federal Reserve raising interest rates to reduce inflation, according to the comptroller’s office.
But the looming government shutdown, depending on its severity and length, could seriously shift the state’s economic outlook.
Treasurer Dereck Davis said that, while Maryland’s economy is stable, it’s not “recession proof.”
“We must continue to proceed with a degree of caution,” he said.
The state’s total general fund revenues in Fiscal Year 2024, which began July 1, are projected to be about $24.6 billion, an increase of 3.8% over last fiscal year but a “minor downward adjustment” of $14.1 million from revenue estimates in March, said Robert Rehrmann, executive secretary of the Board of Revenue Estimates.
The board, which comprises the state’s comptroller, treasurer and budget secretary, also offered the first official estimate for Fiscal Year 2025, which begins July 1, 2024.
The state’s total general fund revenues are projected to be about $25.1 billion, a 2.1% increase over the current fiscal year.
Budget Secretary Helene Grady said the latest revenue projections make the state’s projected structural deficit for Fiscal Year 2025 “a little worse” than what the Department of Legislative Services previously predicted.
“These low growth rates do not keep pace with growth in expenditures, hence the structural deficit that we face,” Grady said.
The Department of Legislative Services previously projected that Maryland, which has a $63 billion budget this year, would have a $418 million deficit heading into Fiscal Year 2025.
The deficit is projected to reach $1.8 billion by 2027, in large part because of a lofty and expensive plan to transform public education systems.
But, Grady said, the revised forecast doesn’t change the state’s current budget planning.
“Since the beginning, the administration has been preparing for potential economic headwinds,” she said.
Democratic Gov. Wes Moore is expected to propose a budget in January and the state legislature has until April to vote to pass its own version.