The State modestly increased its official revenue estimates this week, recognizing continued modest growth in economic underliers. The adjustments recognize $31.4 million in FY 2016, and $60.1 million in FY 2017, each reflecting increases of only a fraction of one percent. Comptroller Peter Franchot, who chairs the Board of Revenue Estimates, urged stakeholders to avoid overreacting to the good news.
Increasing state revenue is generally associated with an improving economy driving up income tax and sales tax collections. It can also ease pressure on policymakers who must agree on a state budget in Maryland’s General Assembly session starting in January.
However, Franchot worried that Tuesday’s top-line revenue increases hide weaknesses in the overall state economy.
Income tax projections rose by $42.3 million, or 5.3 percent, to $9.6 billion for 2016. They rose by $97.5 million, or 5.6 percent, to $10.1 billion for 2017.
Yet income tax withholding receipts from those making money on wages were actually written down for the two years. They dropped by a collective $64 million, Franchot said.
“In essence, non-wage income earners — generally associated with wealthier taxpayers — are doing better than our very modest prior expectations,” he said in a statement. “But actual wage earners, primarily Maryland’s middle class, are faring worse.”