Revenues Miss the Mark, Adding to Future Budget Concerns

By Henry Bogdan, Public Policy Director, Maryland Nonprofits

State general fund revenues in

Fiscal
Year 2016 fell $250 million below March estimates, according to the end of year ‘close-out’ by the Bureau of Revenue Estimates. The difference is primarily in personal income tax, which saw a combination of less revenue from Tax Year 2015 filed returns (likely driven by one-time capital gains/losses), and significantly slower growth in withholding collected from wages in the first half of 2016 (particularly in the second quarter). This means that revenue growth projected for Fiscal Year 17 builds on a lower base, and growth estimates may be adjusted because of experience in the first half of this calendar year. 

 

At the end of this year’s legislative session, the Department of Legislative Services (DLS) projected that FY17 (the current budget year) would end with a structural balance of $139 million, with a similar figure for the next budget (for FY18). With a lower revenue base and less ongoing revenue than projected likely in FY17, maintaining structural balance would require less spending than originally budgeted for this year, and probably less than projected for the budget of FY18.   

 

The March DLS outlook also projected that by FY19, general fund cash balances in excess of the Rainy Day fund (that has never been used) will be exhausted and we would move back to


structural

deficit.