Revenue estimates grow by $31 million in updated figures

But state board warns that expected new money is from one-time sources

Budget being finalized

Officials are encouraged about other projections

March 11, 2004|By David Nitkin | David Nitkin,SUN STAFF

Maryland's recovering economy will generate $31 million more than expected for the state to spend, state fiscal monitors said yesterday in releasing updated revenue estimates.

The state Board of Revenue Estimates said that much of the new money comes from one-time sources, so policy-makers should be careful as they include it in the state's $23.8 billion budget for the fiscal year that begins July 1.

Maryland is getting more money than it expected from the sale of abandoned property, estimators said, and the comptroller's office has received nearly $14 million from court cases involving corporations that set up shell holding companies in Delaware but who now owe Maryland taxes -- money that will be available for spending next year.

However, the performance of the state's largest revenue sources is mixed, according to the projections that cover the remainder of the current budget year and next year.

Officials lowered their projections of what the state will collect in income taxes -- the largest source of revenue -- by $30.3 million for the 2005 budget year. Sales taxes, however, are expected to come in $10.3 million higher than expected in that period.

Overall, state budget Secretary James C. "Chip" DiPaula Jr. said, the new numbers show an improving economy.

"We are seeing strong signals for employment growth in Maryland," DiPaula said. "Although it's a modest increase for projected revenues, it is the first in many years."

In other budget developments yesterday, Gov. Robert L. Ehrlich Jr. released a supplemental spending bill that contains $31 million for a variety of programs. But just $1.5 million is new spending, DiPaula said, with the remainder made up of transfers, largely between social services accounts.

The supplemental bill provides a $1 million grant for Medbank, a not-for-profit organization that offers low-cost prescription drugs for chronically ill and low-income residents.

It also restores a $326,000 grant to a Chesapeake Bay Foundation education program.

"My supplemental budget fills certain gaps in Maryland's environmental, mental health and education improvement efforts," Ehrlich said in a statement.

Included in the plan is $2.6 million to renovate the Charles H. Hickey Jr. School, a center in Baltimore County for juvenile offenders, and $1 million to improve computer systems at the Office of Children, Youth and Families.

The state Senate Budget and Taxation Committee will consider the new bill, along with Ehrlich's previous budget proposals, as it finalizes work on a spending plan this week. The full Senate is expected to vote on a budget next week, passing the spending plan to the House.

The governor's budget closed an $800 million gap between revenues and expenditures largely through one-time devices and does not include money from slot-machine gambling.

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