State's revenues increase, exceed expectations

May 20, 2004|By Michael Dresser | Michael Dresser,SUN STAFF

State revenues appear to have emerged from a more than two-year slump, raising the prospect that legislators will return to Annapolis next year facing a much smaller shortfall than expected.

In a letter to General Assembly leaders, chief legislative analyst Warren G. Deschenaux said revenue trends indicate that the state may be facing a $252 million shortfall next year rather than the $800 million to $1 billion that had been expected.

Revenues for this budget year had been expected to rise 7 percent but were up 9.8 percent for the year to date at the end of April, Deschenaux said.

A smaller budget shortfall could lessen the urgency of legalizing slot machines or imposing new taxes. However, Deschenaux told legislators that the improved collections are unlikely to be sufficient to cure the state's long-term structural deficit. The Department of Legislative Services forecasts that, even with the improved revenues, the state could face a $965 million shortfall in the budget year beginning in July 2006 and $1.4 billion the year after that.

Gov. Robert L. Ehrlich Jr. said the numbers do not undercut the case for slots because he has always backed them as a way to shore up the racing industry.

House Speaker Michael E. Busch, who has blocked Ehrlich's slots proposals for two years, said the upturn is good news. "It takes the pressure off of having to raise revenue, whether it comes from slots or taxes," he said.

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