Md. tax revenue at risk Drop is foreseen from salary freeze

February 20, 1993|By Tom Bowman | Tom Bowman,Staff Writer

Maryland would lose $7 million in state income tax revenues by 1995 as a result of President Clinton's proposal to freeze federal workers' salaries and cut their cost-of-living increases, according to state officials.

William S. Ratchford II, director of the Department of Fiscal Services, said yesterday that state officials estimated the Clinton proposal would begin to be felt in the fiscal year that ends in June 1994.

"We think the cost impact over the next fiscal year will be $3 million," said Mr. Ratchford.

The loss of income tax revenues would rise to $7 million in 1995, he said.

Mr. Ratchford said those losses might seem meager considering that the state's total income tax receipts are $3 billion this year.

But the numbers are more meaningful, he said, when compared with the rise in state income tax receipts over the past year. That figure was $134 million.

Some 300,000 federal workers live in Maryland, according to state officials. Maryland and Pennsylvania are tied for sixth place among states with the highest number of federal workers.

The federal pay reductions are part of Mr. Clinton's broad economic plan of spending cuts and tax increases.

Under the president's proposal, which faces an uncertain future in Congress, next year's 2.2 percent raise in salary would be canceled. At the same time, Mr. Clinton has proposed limiting federal workers' pay increases over the next three years to the cost-of-living adjustment minus 1 percent.

Last month, government workers picked up a 3.7 percent raise.

Whether the state will lose those tax revenues is uncertain. Rep. Steny H. Hoyer, a Maryland Democrat who is fourth in line in the House hierarchy, has pledged to fight the proposal. His Southern Maryland district includes thousands of federal workers.

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