NEWS RELEASE: Statement of Comptroller Peter Franchot Regarding Updated Revenue Estimates
Statement of Comptroller Peter Franchot Regarding Updated Revenue Estimates
ANNAPOLIS, Md. (March 7, 2013) -- The Board of Revenue Estimates met today to write down revenue estimates for Fiscal Years 2013 and 2014 by $115.3 million. Comptroller Peter Franchot, as chairman of the Board, released the following statement.
“As always, I’d like to begin by thanking Andy Schaufele for his outstanding work in preparing this report, and for his seamless transition leading this effort.
I’d also like to take a minute to thank the rest of our outstanding Board of Revenue Estimates’ staff, along with the Revenue Monitoring Committee, for their tireless efforts that go into producing these estimates.
Mr. Schaufele and his team’s fine work is empirical confirmation of the reality that most Marylandfamilies and small businesses are experiencing. We continue to grapple with the most anemic economic recovery in generations and confusing singular snippets of positive news out of context fails to appreciate the larger economic picture.
For starters, the expiration of the payroll tax holiday has delivered quite a noticeable blow to workers' paychecks and 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.
This revenue write down of $115.3 million assumes that despite Congress’ inability to reach a deal by the March 1 deadline, the draconian cuts associated with sequestration will ultimately be averted and replaced by smaller, alternative cuts that will spare Maryland from the potential economic disaster that would otherwise ensue.
The assumption that Maryland will lose 12,600 jobs pales in comparison to the 65,000 jobs, on the low end, and as many as 120,000 jobs that experts project Maryland could lose if no compromise is reached.
With total federal spending in the state equivalent to one-third of the Maryland economy, we are heavily reliant upon Washington’s direct, indirect and induced economic benefits. Consequently, the Board of Revenue Estimates continues to closely monitoring what happens in Washington.
While the gross numbers are important, the specifics within this report demonstrate a far more telling story. Far too many Marylanders are taking home less pay at a time when their living costs are rising, meaning they have less discretionary income to spend in an economy that’s primarily based on consumer behavior.
It’s particularly troubling that $85.5 million of the projected decline, the vast majority of it in fact, comes from our broadest and most indicative economic indicator, sales and use tax. Additionally, and just as troubling, nearly $77 million of the $115.3 million write down is for Fiscal Year 2013.
So, far less important than having $115 million less revenue than we expected to spend on our priorities, this means that the economic pain and suffering in the Maryland economy is being felt immediately and virtually across the board.
There’s just no way to gloss over how fragile the Maryland economy remains.
Our employment levels have yet to reach their pre-recession levels. We are ranked forty-sixth in the country in year-over-year private sector wage growth. We simply are not out of the woods from the lingering economic challenges and uncertainty following a recession whose magnitude and depth we haven’t experienced in our lifetimes.
Now, more than ever, we need to proceed with an exceedingly cautious mindset, and avoid policy decisions that would take money out of the pockets of consumers and make employers increasingly reluctant to invest capital in our state.
The bottom line is that we simply cannot afford to cause further uncertainty to a weakenedMaryland economy.
In the long-term, I remain as optimistic as ever that Maryland’s economic bones are strong and resilient, from world-class education and research to an underlying entrepreneurial spirit that’s constantly resetting the limits of innovation.
But as is so evident in this report, Maryland’s economy is exceptionally fragile and we must remain exceedingly cautious.
While we share hope about our prospects for compromise in Washington that averts devastating consequences and for a lasting economic recovery that takes hold sooner rather than later, I remind my colleagues that hope is not an economic strategy.
I continue to be proud of our battle-tested leadership that has capably led this state through these years of economic and fiscal uncertainty.
I remain confident that Maryland’s story will have a happy ending. Until then, however, the difficult work endures and as Maryland’s chief fiscal stewards, we must continue to exercise tremendous caution and restraint.”