Despite better than expected revenue projections for Maryland’s budget, Comptroller Peter Franchot said he is still very concerned about the state’s economic future and that federal assistance is needed.
“Right now it doesn’t mean anything. As far as policy all it means is if there’s a second federal stimulus we could be in a better position than we thought we were going to be in. If there isn’t a second federal stimulus we’re in a deep hole,” Franchot told MarylandReporter.com in a phone interview on Wednesday.
Franchot added: “Secondly, it also reinforces in my mind our ability to temporarily take some disposable money like the fund balance and spend it. Because the federal program that spent $2.3 trillion…it worked. If we hadn’t done it we would be looking at an economic catastrophe right now.”
On Tuesday, the Board of Revenue Estimates unanimously approved a $18.7 billion revenue projection for FY 2021 and a $19.7 billion revenue projection for FY 2022. The former marks a $1.4 billion increase over what the Board had projected in May. The latter marks a $2.1 billion increase over what the Board had then projected. The FY 2021 estimate is $672.6 million less than what the Board had projected in its previous voting meeting-which took place in March before the coronavirus pandemic struck. The Board members include Franchot, Treasurer Nancy Kopp, and Budget and Management Secretary David Brinkley.
During the meeting Franchot repeatedly stressed that the revenue projections are contingent upon Congress approving a second stimulus package as well as Maryland not having to undergo another economic shutdown as a consequence of a resurgence of the virus.
Months of negotiations between the White House and congressional leaders have yet to produce a comprehensive agreement on a second stimulus package. Treasury Secretary Steven Mnuchin said at an event sponsored by CNBC on Wednesday that he is “hopeful” an agreement might be reached by the end of this week. Congress passed the first stimulus package in March. It provided money for enhanced unemployment benefits, small business relief, testing supplies, and personal protective equipment.
Franchot reiterated that a second stimulus package is essential.
“I am relatively optimistic that we are going to get a second stimulus only because the situation is so bleak. We are talking about a very very cold winter coming up if one thing happens and one thing doesn’t happen. If the second stimulus doesn’t happen and if the virus coming back does happen-its going to be a long, brutal, cold winter and we’re not even going to have a jacket.”
Franchot cautioned members of the General Assembly not to view the state’s upbeat revenue forecast as a license for increased spending.
“That would be a mistake. I understand it would be a well-intentioned mistake. I understand where they are coming from. I’m also in support of the disadvantaged and the vulnerable that are being affected by this. And I have no problem down the road. But not right now.”
There are 124,725 confirmed cases of COVID-19 in Maryland as of Wednesday morning, according to the state’s Department of Health, and 3,805 people in Maryland have died from the virus. The state’s positivity rate is at 2.68%, which is better than that of most states in the country.