ANNAPOLIS, MD (September 21, 2016) – The following are remarks, as prepared for delivery, by Maryland Comptroller Peter Franchot today, September 21, 2016, at a meeting of the Board of Revenue Estimates in Annapolis.
“I’d like to begin by thanking Andy Schaufele for his outstanding work in preparing this report and to the entire Bureau of Revenue Estimates staff, along with the Revenue Monitoring Committee, for your tireless efforts in producing these estimates.
“As Comptroller and chairman of the Board of Revenue Estimates, I continue to advocate for fiscal restraint and prudent budgetary decisions as our State continues to experience slow economic growth and as our revenue intake continues to be below what used to be expected.
“During my travels across Maryland, I’ve met countless Marylanders, hardworking small business owners, investors, and entrepreneurs. For many of them, this economic recovery has not felt like a recovery at all.
“As Mr. Schaufele noted, today this Board will be voting to write down our previous revenue projections for Fiscal Year 2017 by $365.1 million and for Fiscal Year 2018 by $418 million.
“In total, we are reducing our revenue projections by $783.1 million for the current and next fiscal years. These are significant reductions in our estimates, and reflect the volatility that Maryland’s economy continues to experience.
“Today’s write-down reflects the stagnant growth in our economy, which is reflected by reduced revenue generated from individual income taxes, corporate income taxes and sales and use taxes.
“The numbers and figures in the report that were meticulously compiled by Mr. Schaufele’s team tell the story of what’s happening in communities and towns throughout our state, in the ‘Real Maryland Economy’ where families and business owners have to spend within their means and make tough financial decisions every day.
“The budgets, spending bills, and fiscal policies enacted in this town have a real impact on people’s financial well-being, which is why policymakers must continue to exercise vigilance and restraint and make certain that we don’t continue to impose greater financial burdens on Marylanders who are already struggling in this tepid economic recovery.
“While I am pleased that our State continues to reduce our unemployment rate and more Marylanders are securing jobs, the reality is that higher paid and higher skilled jobs from before the recession are being replaced with lower skilled and lower paid ones, so the unemployment numbers aren’t telling the full story.
“BRE’s estimates, for example, indicate that for this calendar year, the average wage in Maryland is projected to increase by only 2.1 percent.
“These revenue figures show many Maryland workers are bringing home the same or less pay as their living costs are rising, leaving them with less disposable income to spend in our economy. And that in turn means that far too many businesses – particularly small and locally-owned businesses that are the backbone of the Maryland economy – are struggling to survive at a time when consumers are reining in their discretionary spending, which is evident in the lethargic growth of sales tax highlighted in this estimate.
“Without a doubt, this continues to be the slowest economic recovery of our lifetimes, and it is unrealistic for us to expect a return to pre-recession levels of economic growth in the short term future.
“The mere fact that we are still using the term “recovery” more than seven years after the depths of the Great Recession demonstrates just how challenging and extraordinary these economic times remain.
“Given the continued uncertainty ahead, we need to avoid adding more debt to the taxpayers’ credit card with the hope of future revenue growth, and reject proposals that would take more money out of the pockets of consumers who are already reluctant to put money back into the Maryland economy. As state policymakers, we have to establish a stable and predictable business climate where consumers have disposable income and the confidence to spend it — and where employers are comfortable investing capital and creating high-paying jobs.
“If we heed this report within the proper context by maintaining a cautious mindset… we can focus on essential priorities without incurring unaffordable future obligations, and equally as important, we can continue to re-instill confidence back into the Maryland economy. It’s a tough scenario, for sure. But we can get past this, if we all work together in partnership.
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