State revenues are expected to drop more than $330 million below previous estimates for the next 16 months, setting the stage for another round of difficult budget cuts in the General Assembly amid warning signs of a weakening economy, state officials said yesterday.
Lawmakers say they have no appetite for higher taxes in the wake of November's special legislative session, when they voted to raise them by $1.3 billion.
Instead, the legislature will have to cut hundreds of millions of dollars to balance Gov. Martin O'Malley's budget. Senators charged with managing the state's finances already gave preliminary approval to about $280 million in cuts this week.
The targets of the proposed spending reductions include the Inter-County Connector, stem cell research, Medicaid, higher education and economic development.
"The hard numbers that have been presented here today speak for themselves," state Comptroller Peter Franchot, who sits on the state's Board of Revenue Estimates, which reviews revenue forecasts, said yesterday.
"They merely confirm that the collapse of the U.S. subprime mortgage industry has taken a profound toll on consumer confidence and, for that matter, virtually every aspect of our nation's economy, and that the state of Maryland is not immune to these trends."
Franchot warned that the "storm clouds" were not receding: "The conditions are likely to get worse before they improve."
Leaders in the Senate and House of Delegates have said they hope to preserve new spending approved in November's session, including efforts to clean up the Chesapeake Bay and expand health care coverage.
But the numbers could topple opposition to the "tech tax." Lawmakers say they might have a hard time replacing that new levy on computer services, which is expected to raise $200 million.
Faltering state revenues are bound to figure into the debate over November's slot machine gambling referendum. Proponents have signaled that the benefits of slots to the state's bottom line will be their primary argument for expanded gambling.
The declines in expected revenues came almost entirely from flagging income and sales taxes. The revenue projection board expects to collect nearly $75 million less in the fiscal year that ends June 30 and $258 million less in the year that begins July 1.
The state's economy has continued to expand, albeit at a sluggish rate, the figures show, with the number of jobs increasing 1.2 percent in calendar year 2007 and only 1 percent in 2008.
