ANNAPOLIS, Md. (September 14, 2022) — Comptroller Peter Franchot today announced the State of Maryland had closed its books on the Fiscal Year 2022 with a revenue surplus of $2 billion in its general fund, the second straight year that the State’s coffers have seen a massive unanticipated influx of revenues in the year-end report.
Officially, the state closed Fiscal Year 2022 with a balance of $5.5 billion in the General Fund. Of this amount, the General Assembly allocated $3.5 billion for the fiscal year 2023 operations. As mandated by statute, $870 million of the $2 billion fund balance was transferred to the Rainy Day Fund and the Fiscal Responsibility Fund, leaving a final balance of $1.121 billion in unassigned revenues.
This is the first year that part of the unassigned balance is automatically transferred to the State’s reserve accounts. About $500 million will be redirected to the Rainy Day Fund, boosting its balance to $1.66 billion. In comparison, $370 million will go to the Fiscal Responsibility Fund, which supports capital investments in K-12 public schools, community colleges, and public higher education institutions, as well as pay increases for eligible state government employees represented by collective bargaining units.
Increased personal income tax receipts largely drove the revenue growth among the wealthiest taxpayers and the sustained impact of federal stimulus aid coursing through the state’s economy.
“Maryland remains fiscally strong and can afford to invest in priority areas like education, transportation, healthcare, and public safety,” said Comptroller Franchot. “However, we know these good times won’t last forever, so it’s important that we prepare now for the economic downturn that we’re starting to see signs of by bolstering our reserve accounts.”
“When our administration took office in 2015, we inherited a $5.1 billion structural budget deficit and an economy struggling under the weight of 43 consecutive tax hikes. Eight years later, as we leave office, the state will have a record $4.4 billion in total reserves. We achieved this incredible turnaround by putting the state on an unabashedly pro-growth path. Instead of raiding special funds and resorting to budgetary gimmicks, we made tough choices and added to our reserve funds year after year. Instead of more tax hikes, we have cut taxes, tolls, and fees by $4.7 billion while making historic investments in education, crime prevention, and the environment,” said Governor Larry Hogan.
“We weathered a global pandemic and led one of the strongest recoveries in America. Today, thanks to the hard work and resilience of Marylanders, the state’s fiscal health is stronger than it has ever been,” continued Hogan.
In remarks delivered at Wednesday’s Board of Public Works meeting, Comptroller Franchot emphasized that the positive closeout report is welcome news that should be taken with caution due to the volatile global economy.
“We continue to feel the ripple effects from the COVID-related fiscal policies, but it’s important to note that those ripples will grow smaller and less significant in the years ahead,” Franchot said. “In simpler terms, future governors and legislatures should not bank on billion-dollar surpluses to be the norm as we cannot, and never have, defying the laws of economic gravity.
“With the Federal Reserve tightening monetary policy, as well as inflation continuing to have a broad impact on the cost of living and the cost of doing business for Marylanders, it’s more likely than not that our state and our nation are headed for choppy economic and fiscal waters in the coming years,” Franchot added.
Due to that fiscal uncertainty, the Comptroller urged policymakers to deposit the full unassigned balance of $1.121 billion into the Rainy Day Fund to better prepare for an economic disaster.
“We must heed the lessons learned from the COVID-19 pandemic. Many residents and businesses who desperately needed help did not receive a dime of assistance from the state government, either because they weren’t eligible for the programs or because the money ran out,” Franchot said. “We can’t let that happen again, and until we know what our economic conditions will be like a year from now, it would be imprudent to spend this money.”
Maryland reported a $2.5 billion fund balance in the Fiscal Year 2021 closeout report, which was a direct reflection of federal stimulus funding that significantly increased personal and business income, and expanded consumer spending.
