ANNAPOLIS, Md. (AP) — Maryland’s projected revenues improved by $1.4 billion in the current fiscal year with huge help from the federal government in response to the coronavirus, but state officials warned Tuesday of continued financial uncertainty amid the pandemic and Washington’s response to it.
The state’s Board of Revenue Estimates raised revenue projections to $18.7 billion for the current fiscal year, which began in July.
“While some may view these higher-than-expected revenue projections as indicators that our economy is on the path of recovery, it’s critical that we’re clear-eyed about what factors contributed to these numbers, because we remain, frankly, in a period of economic and fiscal volatility as our state, nation and world continue to battle the COVID-19 pandemic,” said board member and Comptroller Peter Franchot, a Democrat, at a virtual meeting.
The board also estimated that revenue projections for the next fiscal year would be $2.1 billion higher than previously projected, when the shutdown of businesses and resulting unemployment presented a darker fiscal outlook. However, the revised estimate is based on assumptions that there is a second round of federal stimulus, though a smaller one. It also assumes there will not be a second wave of virus cases that would require closing businesses again.
“So, if any of these factors, assumptions, turn out not to be the case, then we are looking at a worse scenario than I am about to present,” said David Farkas, acting director of the board.
Treasurer Nancy Kopp, a Democrat, emphasized how the revenue picture in December will determine what the governor and the General Assembly will be working with as they craft a budget for the next fiscal year.
“These are difficult times, and it’s difficult to project, and I think that we are all very thankful that neither of the very dire projections of April — which you announced, comptroller — or the better but more difficult ones of May have not come true, and in fact we are very close to the estimates that the board had in March,” Kopp said.
David Brinkley, Gov. Larry Hogan’s budget secretary, underscored how conditions could change if the virus has a resurgence in the fall.
“We’ve seen how volatile the virus can be, which translates directly into how volatile our economy and subsequently our revenue picture will be for the next two or even three years,” Brinkley said.
Brinkley also noted the state’s Board of Public Works cut more than $400 million at the start of the fiscal year — and that the Republican governor reopened businesses as quickly as could be safely done. Still, the state is facing a budget hole.
“Combined, these actions have put the state on a footing to consider this billion-dollar deficit manageable, and that too may be a stretch,” Brinkley said.
The governor’s budget chief also warned that federal unemployment insurance payments are drying up.
“My concern is that these revenue projections may reflect — and these were the governor’s words when we had a conversation with him last Friday — a sugar high rather than anything economically sustainable in the near term,” Brinkley said.
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