October 13, 1996
THOUGH A $10 MILLION surplus is chump change in a $13 billion state budget, any surplus ranks as a substantial accomplishment for Maryland officials. The state's economy in the fiscal year ending June 30 provided a better cushion than expected, especially given the seismic shocks that had hit Maryland -- two federal shutdowns, continuing federal downsizing and a severe winter blizzard that brought everything to a standstill.
Signs of a recovery began in the final three months of that fiscal year. Sales tax receipts, which had inched up a woeful 0.8 percent through the blizzard months, grew at 6 percent a month in the spring and early summer. The intake of withholding taxes nearly doubled in the final four months. Corporate gross receipts tax revenues jumped 31 percent. Apparel sales, which had been weak for several years, turned around in the spring.
These are positive signals. Maryland's economy continues to advance more slowly than the rest of the nation but there is a decided pickup.
The state is adding jobs at a slow, steady pace; unemployment remains fairly stable and below the national average. Welfare rolls continue to fall; help-wanted ads are climbing; home sales are increasing and tax receipts from Baltimore-area hotels rose 23 percent in FY96.
All this bodes well for Gov. Parris Glendening's next budget. While chances of an income-tax cut are slim, the governor has repeatedly stated such action would depend on a robust economic rebound. We haven't gotten there yet. Meanwhile, the encouraging numbers could make it easier for the governor to pump money into his priorities -- education, law enforcement and economic development.
Still, there is that chronic structural deficit caused by big annual increases in health, welfare and prison programs, the constant demand for more school money and a sluggish economy that has slowed revenue growth. More economic development will help "grow the economy," as Mr. Glendening puts it. But it is equally critical that the governor continue to bring down government costs.
That type of budget-cutting hasn't been pleasant in the past two years. But if the economic numbers this fall are as good as in the summer months, the governor's fiscal decisions could prove easier come Christmas time.
Pub Date: 10/13/96
