Warren G. Deschenaux, the legislature's chief fiscal analyst, said the governor may want to implement spending cuts even sooner by going through the Board of Public Works to roll back state agency budgets. That's because the state generally maintains a balance in the $15 billion general fund, and the $73.5 million shortfall from fiscal 2008 would cut into the current surplus of $237 million.
O'Malley spokesman Shaun Adamec said the governor has been willing to make spending reductions in the past and will work with the General Assembly if further cuts are needed.
In the meantime, he said, the worsening budget picture underscores the need for voters to approve the slots referendum.
"These numbers just illustrate the economic circumstances we're in and the importance of that new stream of revenue that the slots will offer," Adamec said.
Even if slots are approved, the state does not expect to see significant revenue from them for several years.
And while O'Malley and other state leaders have said that Maryland will weather the national slowdown better than most states, many state officials are girding for a worsening economy and continuing budget battles.
"It is safe to say that in the current economic climate, we're in for more bad news," Comptroller Peter Franchot said in a statement. He has been a frequent critic of the tax increases and the proposed slots plan. "We need to get serious about the financial mess we find ourselves in."
According to the final accounting of fiscal 2008, income and sales taxes - which make up roughly 80 percent of the state's revenue - fell about $130 million short of projections. Had the sales tax not been increased during the second half of the year as a result of the special session, the revenue take would have ranked as the worst performance since 1991. David F. Roose, director of the Bureau of Revenue Estimates, called the sales tax results "the real big unpleasant surprise."
Individual income taxes came in less than projected largely because of falling investment and real estate gains, as stock and housing markets stumbled. Similarly, court revenues came in $12 million under the forecast, partly because of fewer recordation fees collected by clerks of the court.
An unexpected result was a 10 percent increase in death taxes. Estate tax receipts reached a record $194.5 million. There were 55 payments in this category of more than $500,000 for a total of about $100 million. Also mitigating the state's bad fortunes was an unexpectedly strong performance by state investment funds.
