Could the Pay Freeze for Federal Employees Affect Maryland Revenues?

Yesterday, President Barack Obama announced his plan to keep salaries of federal employees flat over the course of the next two years in an effort to decrease government spending. With the approval of Congress, the  plan is  projected to save $60 billion over the course of ten years.  With a number of federal employees residing in Maryland, many question what impact this will have on the state’s revenues. The Gazette reports:

The impact on Maryland revenues, which are in part supported by the income taxes of federal employees who live and work in the state, is unclear.

Comptroller Peter V.R. Franchot said the projections will be reviewed before revenue estimates are released in December.

“In determining our revenue estimates, we look at a wide range of economic factors, including employment levels, income tax revenue and consumer spending,” Franchot (D) said in a statement released by his office Monday.

“Since Maryland has such a large number of residents who are federal employees, any salary freeze or job reductions would have an impact on our revenue projections.”

The Baltimore Sun has provided additional coverage on this topic.

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