State Revenues

The Monday morning quarterback never throws too long, flubs a hand-off or gets sacked behind the lines. Of course, he never has the ultimate responsibility for the team's success or failure, either.The same is true for the armchair revenue estimators, who can predict revenue growth perfectly -- after the revenues have been collected.As chairman of the Board of Revenue Estimates, I'm one of three Sunday afternoon quarterbacks -- along with State Treasurer Lucille Maurer and Budget Secretary Charles Benton -- who have had the real responsibility of estimating revenues during an extremely unusual recession and major shifts in our nation's economy.

Maryland's three casinos generated $43.1 million in November, about half of which went to the state's education trust fund. Maryland Live in Anne Arundel, owned by Baltimore developer David Cordish, continues to generate a majority of that revenue, as it has since opening in June. Its 4,750 slot machines brought in $34.4 million, or about $241.16 per machine each day. Hollywood Casino in Perryville brought in a total of $5.4 million from 1,500 machines ($120.48 per machine each day)

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.

Maryland's General Assembly faces another year of "difficult choices" as it takes up the governor's budget. So it's surprising to me that lawmakers don't turn more readily to what should be an easy choice: closing loopholes in the corporate income tax (CIT). Federal and state governments have faced declining corporate tax revenue for years, mainly thanks to increasingly aggressive use of legal tax avoidance techniques. At the state level, this generally means shifting income from higher- to lower-taxed jurisdictions.

The waiting lines for food and medical assistance, always long at state Department of Human Resources offices, have grown even longer during this economic downturn as a surge in applicants has stretched caseworkers to the limit and left many people without benefits, simply because there aren't enough staff workers to process their claims. Baltimore Sun reporter Julie Bykowicz's poignant story Tuesday about Miracyle Thompson, a pregnant mother who was forced to skip meals so that her children could eat, represents a dilemma faced by thousands of Maryland residents who have waited longer than the 30 days allowed by federal law for emergency assistance approval.

ANNAPOLIS -- Raise auto-registration fees. Put state troopers in smaller cars. Close a state hospital. Charge more to register a handgun."Business as usual won't work" with state revenues shrinking and needs rising, said J. Henry Butta, chairman of the governor's Commission on Efficiency and Economy in Government, as the panel released its first report yesterday.After three months' study, the commission said Maryland's government can run more efficiently if it changes how it serves the public and how it collects fees.

Maryland's fiscal picture remains remarkably rosy as state revenues continue to significantly outpace projections made only three months ago, officials said yesterday.During the fiscal year that ends June 30, the state has taken in almost $90 million more than had been projected as recently as March.In all, thanks to Maryland's robust economy, state revenues are expected to be about $450 million higher than projected a year ago for the current fiscal year.Much of the newest revenue surge is because of higher-than-expected income tax collections -- much of it on capital gains, said a spokesman for state Comptroller Louis L. Goldstein.

State bean-counters across America are brimming with confidence these days, as well they should. Their treasuries are chock full of tax revenue. Many of the spending cuts forced by the recession have been kept in place. A national survey shows that cash reserves, on average, are 64 percent higher than had been predicted a year ago.Still, many state officials are wary. The drive in Congress and the White House to finally get serious about the federal budget deficit could have a heavy -- and negative -- affect on the states.

In another burst of good economic news for Maryland, officials said yesterday the state closed out the fiscal year in June with an unexpectedly high budget surplus of more than $319 million.Coming on top of estimates in March that state revenues were $274 million higher than expected -- money that was appropriated in the state budget for the current year -- the new figures mean the state collected $593 million more than anticipated during the 12 months that ended June 30.The figures prompted renewed discussion of tax cuts yesterday and might hamper an expected move in the next legislative session to increase the gasoline tax to pay for road and other transportation projects.

FISCAL RESPONSIBILITY, Gov. Robert L. Ehrlich Jr. said in his State of the State speech last week, is the first pillar underpinning his governance of Maryland. That's as it should be, and so we urge state legislators to analyze his latest bill to legalize slot machines by the standards of fiduciary duty required of those heading publicly traded corporations. CEO Ehrlich offers slots primarily to raise state revenues. So, does his plan maximize gains for his shareholders, in this case the citizens of the state of Maryland?

After a series of cheerful announcements about better-than-expected tax revenues, Maryland's Board of Revenue Estimates reversed that Friday, projecting that the state would take in $120 million less, mostly blaming weaker-than-expected sales tax figures. "It means [the General Assembly] needs to be very careful about spending and borrowing," said Comptroller Peter Franchot, who chairs the revenue panel. "I've been very consistent to say we are in a very fragile, feeble recovery.

In 2007, Maryland's legislature significantly changed the tax code to increase revenue in order to close the state's deficit. It created an even more regressive tax code increasing the sales tax and hurting the poorest among us the most. To the surprise of a majority of legislators, the deficit only got worse. This is just further proof that Adam Smith's version of economics holds more validity than any Keynesian form of economics. Tax increases do not close deficits. They only make things worse for the overall economy.

Democratic Gov. Martin O'Malley cruised to a second term Tuesday - and with it, won the opportunity to guide the state in what he hopes will be an improving economy - while Republican former Gov. Robert L. Ehrlich Jr. suffered a second consecutive statewide defeat, leaving his political future in doubt. The much-anticipated rematch between the Maryland political heavyweights began as a dead heat, but polls in recent weeks had shown O'Malley pulling away from his longtime rival. Defying a national Republican surge, the Democrat appeared on track late Tuesday night to beat Ehrlich by a wider margin than during their initial race in 2006.

A panel of the state's fiscal leaders said Thursday that the government will have more money than legislators expected when they approved the state's spending plan, reversing a nearly three-year trend of downward revisions because of plummeting tax revenues. The projected $89 million increase is not enough to rescind hundreds of millions of dollars in cuts made to programs during the 2010 legislative session. But leaders said that when it is combined with the $180 million in extra revenue reported last month from the fiscal year that ended in June, it indicates that the economy is improving.

W hen the current fiscal year ends in June, Maryland's tax collections will likely have dropped 5.2 percent from the previous year, the worst showing on record. Personal income in 2009 is expected to show the lowest growth rate since 1954; unemployment is at its highest level since 1983 and is expected to get worse; and solid economic growth is not expected until 2012 at the least. Believe it or not, that counts as good news, at least in a relative sense. The figures released Wednesday by the Board of Revenue Estimates are about the same as they were in the group's last report, in December, and that one was largely unchanged from September.

Maryland's ability to provide education, health services, community safety and help for the most vulnerable is in danger. Recent economic statistics suggest the national recession is at an end. This is certainly good news. But when it comes to Maryland and other states meeting the growing demand for public services, it's not as good as you might think. In the last four recessions, it took three to six years for Maryland state revenues to return to their peak. And this recession has been worse than the average.

Keno might boost the state budget -- but not the image of state workers.For one short day, a keno terminal was attracting bettors in the lobby of the State Office Building on West Preston Street in Baltimore.Too many bettors, it turned out, to look very good.At lunchtime Wednesday, state Personnel Secretary Hilda E. Ford went downstairs to find a mob of gamblers, most of them state workers. "I asked someone what was going on, and he said, 'There's a keno machine here.' "Perhaps they were just having a little fun on their lunch hours.

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.

Maryland faces a projected budget shortfall of nearly $2 billion next year, far more than expected, the state Board of Revenue Estimates reported Thursday. The gap means that the cycle of wrenching cutbacks will continue. Budget Secretary T. Eloise Foster said the widening gap became clear when updated projections showed a $920 million drop from previous revenue estimates, on top of the expected shortfall of more than $1 billion. The numbers form the foundation of the spending plan that Gov. Martin O'Malley will release in January, which by law must be balanced.