MD sees modest $479M surplus in FY24, with higher revenue growth than expected

Maryland emerged from the last fiscal year with about $479 million in uncommitted surplus after benefiting from a record amount of interest income and stronger-than-expected revenue growth, the state comptroller said Friday.

The state ended the previous fiscal year with $555 million in uncommitted funds, which was a fraction of its multibillion-dollar surpluses from the prior two years.

The more recent amounts resemble 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 in fiscal year 2022 and $2.5 billion in fiscal year 2021.

“I’m pleased that state revenues remain on a positive trajectory as we confront some challenges in our state’s economic performance,” Comptroller Brooke Lierman said in a statement. “We hope this data is helpful for budget planning and for our policymakers.”

The state’s revenue total was less than 1% above what budget officials had anticipated.

Robert Rehrmann, director of the state Bureau of Revenue Estimates, said that total wage income growth has remained positive despite the recent slowdown in the economy. But, he added that consumers may be reducing their discretionary spending in response to inflation and uncertainty about where the economy is headed.

The comptroller’s closeout report for Fiscal Year 2024, which ended after June, showed a general fund balance of $1.06 billion, $581 million of which lawmakers assigned to this year’s budget, leaving the $479 million in unappropriated funding.

A spokesperson for Gov. Wes Moore couldn’t immediately be reached for comment.

Maryland has for years faced projections of budget deficits, largely driven by a lofty and expensive education plan, but infusions of federal COVID aid led to years with surpluses and delayed the need for spending cuts or tax increases.

Moore and top Democrats in the legislature last session avoided broad tax increases to boost revenue and forewent potentially drastic cuts to cover deficits to pay for transportation projects and services.

Supporters said the approach represented responsible budgeting while opponents saw it as using Band-Aids to provide temporary relief for growing problems.

When asked about the potential for raising taxes, the governor has repeatedly said he has a “high bar” for doing so.

It’s not yet clear what impact the modest surplus amount will have on the Moore administration’s plans for its roughly $63 billion budget proposal, which is expected to come out in January.

Officials will be waiting to see how this latest report will affect future revenue forecasts when the state Board of Revenue Estimates convenes on Sept. 26 to outline the state’s near-term budget outlook.