Income Tax Revenues

Howard County officials learned this week that the county may have a greater increase in income tax revenue this last fiscal year, which ended June 30, than any other jurisdiction in the state.Officials had hoped for even more.County Executive Charles I. Ecker's budget gurus had forecast income tax revenue of $90 million. The actual amount, they learned last week, was $89.2 million, up 9 percent or $7.4 million over fiscal 1992.Although "this is one of the strongest, if not the strongest, growth rate in the state of Maryland," Budget Director Raymond S. Wacks said last week, it is premature to assume the increase means a turnaround in the county's sluggish economy.

An larger-than-expected $6 million surplus from the fiscal year that ended June 30 has bolstered Baltimore County's year-old Rainy Day fund to $17.5 million, officials said yesterday.Budget Director Fred Homan said that $5 million of the unexpected money is from higher-than-expected income tax revenues, but he cautioned that it won't be clear until next month whether the $5 million represents a real increase in county income or is the result of an uneven distribution by state tax officials.

Maryland would lose $7 million in state income tax revenues by 1995 as a result of President Clinton's proposal to freeze federal workers' salaries and cut their cost-of-living increases, according to state officials.William S. Ratchford II, director of the Department of Fiscal Services, said yesterday that state officials estimated the Clinton proposal would begin to be felt in the fiscal year that ends in June 1994."We think the cost impact over the next fiscal year will be $3 million," said Mr. Ratchford.

Baltimore County's tax revenues are expected to be $27 million below what the county estimated this year, Executive Roger B. Hayden said yesterday.That's nearly twice as large a drop as budget officials had predicted just a few weeks ago, and Mr. Hayden says it will create a deficit of $14 million to $23 million -- unless there aremore county budget cuts.The size of the deficit will depend on which budget plan the General Assembly adopts.The deficit would be $14 million under the plan proposed by House Speaker R. Clayton Mitchell Jr. The Mitchell plan, which has the support of the governor and the Maryland Association of Counties, would cut $88.5 million more from state aid to local governments, instead of the $142.

Raising state taxes is the road to ruinI must take issue with Governor Schaefer and state Sen. Laurence Levitan on the issue of taxes. It is absolutely insane to raise taxes during a recession.If our governor is to be believed, Maryland's financial crisis stems from a slowdown in sales and income tax revenues. The two are closely related. A falloff in retail sales, particularly "big-ticket" items, results in decreased sales tax revenue and lost jobs. Lost jobs leads to a downturn in income tax collections and increased demand for social services.

Despite faint signs of an economic recovery, the state's 1991 budget woes continue with the latest bad news coming from a projected shortfall of more than $20 million in income tax revenues.Based on the latest review of income tax reports, Schaefer administration budget analysts now say the state may not get the full $2.97 billion they had counted on from taxes on wages and other earnings.While $20 million-plus in an overall $11.6 billion state budget would be less significant in healthier economic times, the unexpected shortfall could pose serious new threats to the fiscal 1991 spending plan, which Gov. William Donald Schaefer already has cut by about $554 million to keep the budget balanced.

Last year's un-merry Christmas for retailers and other economic troubles have left Maryland's tax receipts so far below estimates that officials may be forced into yet another round of painful budget cuts.Figures released yesterday by Maryland Comptroller Louis L. Goldstein for the current fiscal year show the state's two largest sources of revenue, sales and income taxes, running more than $26 million below the revised estimates made by budget planners in December.Fiscal 1991 is only eight months old and the state budget has had to be revised twice to make up for tax shortfalls.