The estimates for the rest of fiscal year 2012 indicate that the state will take in $195 million more than initially anticipated, showing revenue growth of 4.2%. Comptroller Peter Franchot, chairman of the Board of Revenue Estimates, said Wednesday that this is a good thing because it means the state will not have to make painful cuts in the current year.
However, he continued, it is not an ideal situation. The revenue estimates increased because individual income tax collection was boosted 5.5%. These taxes are from the first part of 2010, Franchot said. Meanwhile, the estimates for corporate taxes and sales taxes were all revised downwards – about $34 million less than previously estimated for corporate tax, and $102 million less than anticipated in sales and use tax.
State Treasurer Nancy Kopp also expressed concerns.
Kopp said that much is riding on the actions of Congress and the “Super Committee,” which is working to come up with a plan to cut $1.5 trillion in federal spending. With partisanship ruling the day, and potential large cuts to federal transportation and medical funding, Kopp said that Congress’ actions will have a pronounced impact on the state’s budget.
With respect to FY 2013, the State’s economy is still expected to grow, but at a much slower rate of 2.8%.