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The Board of Revenue Estimates revised Maryland's revenue projections downward by $66 million for the current fiscal year on Wednesday, a drop largely attributed to less-than-expected revenue from the lottery and sales tax after big snow storms in the state.
Gov. Martin O'Malley said he's seeing signs of recovery in Maryland's latest revenue estimates because the revision isn't nearly as steep as past ones. He also saw positive news in the fact that revenue projections were not reduced for the next fiscal year, and he held out hope the state could see an upward revenue revision next year.
"I would like to be here long enough to see an upward revision of revenues," O'Malley said. "That's never happened in my time here."
But Comptroller Peter Franchot, who is a member of the board, said he didn't believe state leaders should confuse short-term revenue stability at a low level with economic recovery.
"It's become fashionable among many pundits to declare the worst is behind us and while we actually have seen glimmers of encouraging data in recent weeks, I believe there's still warning signs within this economy that point to ongoing volatility in the coming year," Franchot said.
The comptroller cited a fragile jobs market, a soft housing market and a commercial real estate market "poised for a severe correction," as reasons for caution.
David Roose, the board's executive secretary, said a return to normal will likely take longer than usual after a recession, with robust growth not expected until 2011 at the earliest.
"With unemployment remaining high over the near term, wage growth is expected to remain very weak over the course of 2010, even as employment recovers," Roose said.
T. Eloise Foster, O'Malley's budget secretary, said the drop in revenues can be made up from $274 million in fund balance worked into the state's budget. She said the projections released Wednesday represented the first time in three years that March revenue estimates will not be significantly revised because of deteriorating economic conditions.
Foster, who readily admits she tends to view the numbers with a sense of optimism, said the projections generally reflected the same economic conditions the board had reported in December. She said the downward revisions resulted largely from huge snow storms that affected consumer spending.
"I think it's good news, because it is a first sign that our revenue situation is beginning to stabilize, and I think it's a first sign that we are poised to recovery," Foster said.