State ends fiscal year in black Surplus of $10 million expected

August 06, 1993|By John W. Frece | John W. Frece,Staff Writer

For the first time in three years, Maryland appears to have ended its budget year in the black without the need for new taxes or major program cuts.

Based on preliminary numbers, Comptroller Louis L. Goldstein said yesterday, the state should close the books on fiscal 1993, which ended June 30, with a surplus of about $10 million.

Not since 1990, when the state ended the year with a $4.5 million surplus, has Maryland government made it through a budget year with such a cushion. In the interim, state officials balanced budgets only after making repeated mid-year program cuts and raising taxes as Maryland struggled with recession.

The projected $10 million surplus would have been even higher if proceeds from the state's various lottery games had not been so disappointing. Even with the introduction of the controversial new keno game, total lottery revenues came in barely over $300 million -- or, almost $50 million below the amount predicted.

Despite the relatively good budgetary news, Mr. Goldstein noted that $10 million is about enough money to pay for the cost of government for about a third of a day. The surplus was left from a total state budget of more than $12 billion.

Still, Mr. Goldstein described the health of the state's economy as "fair" and said one reason the state ended the year in the black was that sales taxes from the important building and construction category began to show some improvement in the final two months of the fiscal year.

Overall, sales tax revenues were up 8.8 percent over the previous year, almost exactly the increase predicted. Revenues from food and beverage sales were up nearly 8 percent; department and discount store merchandise sales up 7.3 percent; furniture and appliance sales up almost 12 percent; and hardware, machinery and equipment sales up 5 percent.

Final figures are not yet in on the state's largest single source of revenue, the personal income tax, but the comptroller noted that it consistently ran ahead of projections during fiscal 1993.

Taxes on financial institutions, which are enjoying the benefits of low interest rates, will bring in about $194 million, or about $22 million more than expected, Mr. Goldstein said.

State lottery officials were not available late yesterday to explain how much of the $50 million lottery shortfall was attributable to keno, but the agency downgraded its estimates for keno revenues from $50 million to $32 million in March.

A spokesman for Mr. Goldstein said the electronic keno game apparently has siphoned away players -- and money -- from other lottery games.

Mr. Goldstein said many Marylanders are still uncertain about their ability to retain their jobs and said layoffs in defense-related industries because of cutbacks in Washington are still hurting the state's economy.

He also said a drought this summer that is hurting farmers on the Eastern Shore, in Southern Maryland and elsewhere in the state may translate into lost equipment sales during the coming year and, with that, a loss of tax revenues.

Last year, the state ended fiscal 1992 with a paltry $60,265 surplus, and that only after making budget cuts in the final month of the budget year.

The books were closed on fiscal 1991 showing a $55,350 surplus, but only after a series of deep budget cuts and tax increases eliminated a deficit that exceeded $500 million.

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