Comptroller Brooke Lierman led her first meeting of the Board of Revenue Estimates, which voted to decrease Maryland’s revenue projection by 0.3% for Fiscal Year 2023 and 1.6% in Fiscal Year 2024. This translates to a combined reduction to the general fund of $478 million or roughly 1% of the total revenue projection.

The decrease in Maryland’s revenue forecast for the next two years is attributed to the state’s slow economic growth, the ongoing effects of national inflation, and the impact on families making low to moderate incomes. The Maryland economy seems to be underperforming compared to the national economy in terms of employment and consumer spending.

The proposed revision decreased the personal income tax and sales and use tax forecast but is offset at least partially by increases in corporate income taxes and interest income revenues. The Maryland economy appears to be experiencing a new baseline or walking speed. A more proactive approach is needed to understand the structural changes in the economy and revenue base.

According to the proposed March revision, the general fund revenues will decrease by 1.6%, total $23.66 billion in FY 2023, and increase by 4.3% and total $24.69 billion in FY 2024. Currently, general fund revenues are projected to increase by 2.1% in FY 2023 and 1.0% in FY 2024.

The forecast highlights a consistent non-wage income tax revenue risk, including capital gains and non-corporate business income. It also showed a decline in January, contributing to the decrease in the non-wage income revenue under the personal income tax.

The state’s revenue structure and economy face significant underlying challenges, including an aging population more extensive than the national average, ongoing competition for high-wage jobs with neighboring states, and dependence on non-wage income tax from the top 1% of tax filers.

It is unclear whether the slow economic growth in Maryland is a short-term deviation from expectations or a longer-term trend. Maryland is not alone in this trend, as Virginia and New Jersey also see greater-than-expected revenue slowdowns.

Maryland’s stakeholders, including business leaders, policymakers, economists, and taxpayers, must have access to the data required to make the best possible decisions in a shifting economic environment.

David M. Higgins II, Publisher/EditorEditor-in-Chief

David M. Higgins II is an award-winning journalist passionate about uncovering the truth and telling compelling stories. Born in Baltimore and raised in Southern Maryland, he has lived in several East...

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