Tax Revenues

State tax revenues are downright lethargic in every area of Maryland's economy, according to the latest forecast released by state officials."I've been around this government since 1938. For the first time, I have seen the numbers just drop off very quickly," said Comptroller Louis L. Goldstein, the senior financial official in state government and the man who outlined the grim economic news yesterday.Perhaps the worst story comes from the collections of the 5 percent sales tax -- the state's second-biggest revenue source -- which are now estimated to grow by only one-half of 1 percent this year.

Baltimore MayorStephanie Rawlings-Blakeis asking the City Council to grant generous property tax breaks for the developers of the long-stalled Superblock project on the west side of downtown, calling it a linchpin of her long-term strategy to grow the city's revenue base and increase its population by 10,000 families over the next decade. That may be overstating the impact of any one project, and it is bound to revive a long-simmering debate about the value and wisdom of the city's practice of providing tax incentives to big developers.

After four years of putting off buying that new sofa or replacing that vacuum cleaner, Marylanders are shopping again, sending state sales tax revenues to their biggest year-to-year increase since 1990.Sales of homebuilding materials and home-related goods propelled Maryland's sales and use tax revenue nearly 5.6 percent higher in the last fiscal year, the Maryland Comptroller's Office announced yesterday. And during the last month of the fiscal year, June, the revenue rose 7.2 percent over the same month last year, the largest rise of any month.

As competition heats up between Owings Mills developers, the company that plans to build an upscale shopping center featuring a Wegmans store touted the jobs and tax revenue it said its project at the former Solo Cup site would create. The Foundry Row development would support about 3,100 permanent jobs in Baltimore County and generate $4.8 million in annual local tax revenue, according to an economic impact study commissioned by developers Greenberg Gibbons Commercial. The study by economist Anirban Basu of Sage Policy Group is to be released today.

Tax revenues are coming in more slowly than expected, leaving Maryland about $132.5 million short of its projections for the current fiscal year, Comptroller Peter Franchot said in a letter yesterday. Based on data gathered since the fiscal year began in July, Franchot's office expects sales tax receipts to increase 2.5 percent this year, well short of the 4.8 percent estimate Gov. Martin O'Malley used when preparing his budget. That disparity amounts to $115.5 million, Franchot wrote.

State officials approved $82 million in cuts to Maryland's operating budget yesterday, bringing Gov. Martin O'Malley's midyear trims to more than $500 million as he struggles to keep spending in line with plummeting tax revenues, as the law requires. For the third time in the current fiscal year, the Board of Public Works voted to cut O'Malley's $14 billion budget, in part by abolishing hundreds of vacant positions and formally accounting for $34 million saved from a worker furlough plan.

Maryland should see slightly stronger growth in tax revenue next year, but not enough to change projections for budget shortfalls in the long term, the state's Board of Revenue Estimates concluded yesterday. The overall estimates, which form the basis of the budget lawmakers must craft during the coming General Assembly session, were roughly what state officials expected them to be at this time last year, meaning that the state's economy continues to grow. "There were no nasty surprises at all," said Treasurer Nancy K. Kopp, one of three board members.

WASHINGTON - For the first time since President Bush took office, an unpredicted leap in tax revenues is about to shrink the federal budget deficit this year by nearly $100 billion. White House officials plan to announce today that the deficit for fiscal 2005, which will end in September, will be far lower than the $427 billion they estimated in February. Bush plans to hail the improvement at a Cabinet meeting today and point to it as a validation for his argument that tax cuts have stimulated the economy and will help pay for themselves.

WHAT RECESSION? Maryland property values are soaring, according to the latest state assessments, with the sharpest jump in nearly a decade. Homeowners may cheer the presumable increase in their fortunes. But the taxman cometh. With an average increase of 5.3 percent in property assessments over each of the next three years, that should mean higher tax revenues for the state and counties. The most important implication is the resilience of the statewide economy and the continued strong demand for housing in most parts of the state.

Uncharacteristically, I want to begin this column with some good news on the economic front, though it will be brief: Across the country, state tax revenues are rising substantially, indicating there is a real recovery going on. For the spendthrift federal government, tax receipts rose by $110 billion, or 9.1 percent, in the first seven months of fiscal 2011. In telling us this, The Wall Street Journal says the bad news is that the federal deficit increased a record $871 billion, a $71 billion dollar bump, because spending went up $181 billion, or 6.4 percent.

Baltimore MayorStephanie Rawlings-Blake's preliminary budget proposal for the next fiscal year displays some encouraging signs that, after three rocky years, city finances are stabilizing. Income tax revenues are ticking slightly upward in conjunction with an improved jobs picture in the city, and some of the mayor's controversial pension reform efforts are beginning to hold down costs. The plan calls for an end to employee furloughs and will result in few layoffs, if any. It even includes a small reduction in homeowners' property taxes.

The Sun's editorial ("A costly breakthrough," March 13) appears right on when it stated: "We cannot escape the fear that senators are seeking to raise more money than is truly necessary to make their [tax] plan work. " One only needs to look at the headlines of The Sun three days later ("Senate votes for tax on rich," March 16) to realize how prophetic the editorial was. The comments of elected officials are focused more on defending taxing the more affluent than the need for the revenue.

The Sun's recent article about growlers exposed more of Maryland's regulatory absurdities ("A growing movement to widen growler sales," Feb. 5). "Statewide restrictions limit the sale of growlers to brewpubs ... excluding bars and most restaurants. " If there were no restrictions, wouldn't more good beer be sold and thus increase the tax revenues? Maybe it's time to rethink our prohibitionist system. James Bauernschmidt, Severna Park

Why does the government not understand it is running out of other people's money? Politicians think the answer is not to cut spending but to increase taxes. The state of Maryland subscribes to the same cure. It cranks up the tax on cigarettes saying the higher price will deter people from smoking, but if people actually did stop smoking the state would lose that income. Now the state Transportation Trust Fund needs bolstering, so the government is talking about a 15-cent-a-gallon increase in the gas tax. Of course the federal CAFE standards call for vehicles to continue to get better mileage, which means less gas will be consumed and tax revenues will continue to decline, prompting calls for even higher taxes.

A panel on growth and wastewater treatment recently recommended tripling the Bay Restoration Fee - known as the "flush tax" - between now and 2015. Good idea. It would raise more than $145 million a year for the Chesapeake Bay. And with a price tag of more than $10 billion on Maryland's Watershed Implementation Plan, we need it. But before we ask residents for another $5 a month, we need to be sure that the money we have now, and the additional money we will have in the future, will be well spent.

In Annapolis, decisions are rarely made by accident. For better or worse, those who labor in the Maryland General Assembly are creatures of politics, so their behavior is predictable: Legislators look out for their districts, leadership rewards those who fall in line, and dissenters are often left with table scraps. Recently, it has come to the public's attention that much of the $47.5 million made available this year for school construction projects by the recent alcohol tax increase is going to schools in districts where senators and delegates supported the tax increase.

As tax revenues slow and health costs soar, Harford County Executive James M. Harkins has taken a number of steps, including instituting a hiring freeze, to help balance a $306 million operating budget. "These are challenging fiscal times," Harkins told members of the Harford legislative delegation Friday. He said medical insurance costs "have risen dramatically," by about 30 percent, or $3.7 million, for the fiscal year starting in July. Property taxes are about $800,000 below projections, primarily because of a decrease in the property taxes received on public utilities.

Maryland's 7.2 percent unemployment rate is below the national average but still too high. Families need help. Aging roads, sewer systems and other infrastructure need repair. Revenue projections for 2012 and beyond will not cover these programs, along with education, health care and public employee pensions, the Maryland Budget and Tax Policy Institute cautions. Budget shortfalls next year could reach $700 million or more, the institute warns. Many of our cities and counties likewise face mounting debt.

Herman Cain is surging. Who is this guy, and how did he come out of virtually nowhere to suddenly lead the Republican presidential primary field? Perhaps Mr. Cain is just a passing fancy, the party's and the pundits' flavor of the month. Although several national polls show him now leading prohibitive favorite Mitt Romney, the conventional wisdom is that Mr. Cain doesn't have the resources, political chops or connections to the Republican establishment needed to capture the nomination.

Maryland's 7.2 percent unemployment rate is below the national average but still too high. Families need help. Aging roads, sewer systems and other infrastructure need repair. Revenue projections for 2012 and beyond will not cover these programs, along with education, health care and public employee pensions, the Maryland Budget and Tax Policy Institute cautions. Budget shortfalls next year could reach $700 million or more, the institute warns. Many of our cities and counties likewise face mounting debt.