State Shortfall Grows to $1.2 Billion As Revenue Projections Fall Short

The Board of Revenue Estimates announced yesterday that the State’s budget gap for fiscal years 2015 and 2016 has increased to $1.2 billion. As reported by the Washington Post,

The Board of Revenue Estimates projected the state will collect $123 million less in revenue than previously forecast during the remainder of this fiscal year, which ends in June, and $148 million less during the following year.

The write-downs widen what were already projected gaps of nearly $300 million this year and $600 million next year in Maryland’s roughly $16 billion general fund budget.

Federal cutbacks were attributed to the lower than anticipated revenue projections. Revenue generated through the personal income tax was reduced most significantly indicating slower than expected job growth. As reported by the Baltimore Sun,

Most of the budget woes announced by the Board of Revenue Estimates stem from Maryland’s job market’s improving more slowly than officials predicted when they put together projections a year ago. Although Maryland’s revenue continues to increase year over year, it is not growing fast enough to keep up with spending plans.

Officials blamed gridlock on Capitol Hill and the reverberating effects of last year’s sequester as the prime culprits suppressing Maryland’s recovery.

Comptroller Peter A. Franchot said it was time to end the state’s reliance on federal jobs — which employ about 300,000 people in Maryland — and federal contracts to buoy the state’s economy.

To control spending, the University System of Maryland has instituted a hiring freeze and state agencies have been asked to “trim expenses.” However, it’s unclear at this time how Governor O’Malley and Governor-Elect Hogan will address the budget shortfall.

A spokesman said that Democratic Gov. Martin O’Malley does not have plans to formally cut the state’s current budget during December, and that the governor is “still evaluating what additional action might make sense.”

Hogan, a Republican who takes office Jan. 21, said Monday’s new numbers were “no surprise.” He cautioned residents to prepare for what may be painful budget cuts next year.