Franchot Releases FY 12 Closeout Numbers

Annapolis, Md. (August 30, 2012) – Reiterating his call for fiscal restraint and caution in the midst of a fragile Maryland economy, Comptroller Peter Franchot today released the final closeout numbers for Fiscal Year 2012. General Fund revenues totaled $14.3 billion in the fiscal year, 1.6 percent or $229.7 million above the official state forecast. However, the revenue data reflected ongoing weakness in the state’s job market, including the fact that wage growth in Maryland is barely keeping pace with the rate of inflation. After adjusting for changes in state tax rates and revenue distributions, sales tax receipts grew by only 2.7 percent, and withholding receipts grew by just 3.6 percent.

Given the state’s questionable near-term economic outlook, and the continued presence of a structural budget deficit and other unfunded obligations, the Comptroller urged the Governor and Maryland General Assembly to commit the fund balance to the state’s Revenue Stabilization Account (Rainy Day Fund).

“I am satisfied and relieved that the state of Maryland exceeded our modest revenue projections. However, these revenue figures serve as a snapshot of an economy that remains exceedingly fragile, and they remind us that we must proceed on a prudent financial course in the months ahead. Given the challenges business and families face in the midst of a state economy that appears to have lost momentum in recent months, I believe this money should remain in the state’s coffers to help cushion Maryland from another economic downturn, and not be put back into the state’s spending pattern,” Comptroller Franchot said.

“To assure Maryland’s taxpayers that their government understands the uncertain fiscal and economic climate we still face, I firmly believe that this fund balance must be saved and not spent,” he added.

Comptroller Franchot noted that in the early months of the state’s new fiscal year, Maryland’s unemployment rate has crept back up to 7 percent and that the state has remained among the nation's worst for job creation in 2012. He also noted that Maryland’s rate of private sector job growth lags considerably behind neighboring states. According to the U.S. Bureau of Labor Statistics, Maryland ranks second and 17th, respectively, in year-over-year and year-to-date federal government job creation. However, the state ranks 31st and 42nd, respectively, in year-over-year and year-to-date private sector job growth.

“Perhaps more disconcerting is the fact that Maryland ranks 47th in average weekly earnings growth and 43rd in average hourly earnings growth, and has actually experienced declines in both categories this year,” Comptroller Franchot said. “As a state that is exceedingly dependent on federal spending for economic stability, we must be deeply concerned over the growing likelihood of significant federal cutbacks and the effect on Maryland’s economy, as well as the fact that Marylanders who work in the private sector are bringing home smaller paychecks and continue to struggle to make ends meet.

“Given the challenges that lie ahead, we must recommit to spending the tax dollars we collect in the most effective and efficient ways possible. We need to do all we can to ensure we get the best results with our strategic investments. Most importantly, at a time when families and businesses are still tightening their belts, cutting expenses and finding ways to do more with less, our state government must demonstrate that same commitment as we move forward.

“The state of Maryland has long being recognized as state with extraordinary economic assets with a team of leaders who are known for working together with shared resolve through tough times. I am optimistic that we will, once again, rise to the occasion, make the right choices and do what is necessary to ensure Maryland’s long-term economic prosperity.”

Contact: Joe Shapiro, 410-260-7305, office
443-871-2244, cell