The Board of Revenue Estimates voted to decrease the revenue projection for the State of Maryland for Fiscal Year 2019 by $138 million and to decrease the projection for Fiscal Year 2020 by $130.5 million.
The writedowns are largely the result of taxpayer uncertainty and changed spending habits in the wake of the Tax Cuts and Jobs Act, passed in December 2017, that significantly revised the federal and state tax codes
Below are Comptroller Franchot’s remarks from the BRE meeting, as prepared for delivery:
“As always, on behalf of my colleagues, Treasurer Kopp and Secretary Brinkley, I would like to start by thanking Andy Schaufele for his outstanding work in preparing this exceptional report, and I would also like to thank the entire BRE staff, along with the Revenue Monitoring Committee, for their thorough and tireless work in drawing up these estimates.
It is certainly not easy work, but your professionalism and expertise allow us to make responsible, tough decisions that strengthen our economy, ensure our long-term growth, and safeguard the people of Maryland, so I thank you for the incredible work that you do each and every day.
As Mr. Schaufele noted in his report, this Board is being asked to approve recommendations that would decrease our December 2018 revenue projections for Fiscal Year 2019 by 0.8%, or $138 million.
Additionally, we will be revising the December estimates for Fiscal Year 2020 to $18.5 billion, representing a 0.7%, or $130.5 million, decrease from our previous projections.
In total, the proposal before the Board is to decrease our December estimates by 0.7%, representing a total of $268.5 million.
As Andy intimated, these estimates – as we have underscored time and time again in past months – are marked by taxpayers’ continued uncertainty in the face of the Tax Cuts and Jobs Act.
For many working families and small businesses, the highly-confusing provisions instituted by the Tax Cuts and Jobs Act continue to impact their spending behavior.
Many Marylanders faced unprecedented uncertainty entering this tax season because of the comprehensive changes to federal tax law, which, among many factors, changed how they could claim deductions and capped state and local taxes for the first time.
The federal tax reforms resulted in 1 in 3 Marylanders seeing their state tax liabilities go up, and some Marylanders are seeing reduced refunds at the state level and, for many working families, that places a constraint on their finances since so many of them depend on that money every year to pay off important bills and reduce debt.
In addition, the decrease in non-wage income affected by the market crash in December among other factors, only highlights what we have been saying for months.
There is widespread consensus among experts, including our own Bureau of Revenue Estimates, that we can expect an economic downturn in the next several years.
So the State of Maryland must continue to prepare for the inevitable, by putting as much money aside in our Rainy Day Fund to prevent the types of drastic budget cuts, furloughs, and tax increases that we witnessed during the Great Recession.
As I have for the last twelve years, I once again urge my colleagues down the street to exercise caution with respect to spending and fiscal policy decisions.
Those of us entrusted with fiduciary responsibilities in state government must show our constituents that we learned our lesson from the events that transpired over a decade ago, and that we are better prepared to weather whatever comes our way in the future.
As Maryland faces continued uncertainty during this highly volatile economic and political climate, we must prioritize creating a stable, predictable fiscal climate for working families and small businesses.
And as Comptroller and chair of this Board, I look forward to continuing to be an active and vocal participant in those discussions.”
The full BRE data table can be viewed here.