Listen to Franchot

Speaking Jan. 18, Maryland Comptroller Peter Franchot offered a bleak assessment of Maryland's economic outlook. He urged fiscal restraint and called for the repeal of the recently enacted sales tax on computer services.

His audience was Maryland business, civic and political leaders in downtown Bethesda. They heard Franchot warn of the negative impact Gov. Martin O'Malley's recently enacted tax package and a shaky economy could have on Maryland's families.

Franchot said it is no secret the U.S. and Maryland economies enter the New Year on shaky ground. "Economists are increasingly worried about the prospects of a national recession, and so am I," he said.

The comptroller noted that the collapse of the subprime mortgage industry has ended the most sustained housing boom of this generation, destabilized the Dow Jones and other U.S. financial markets, and has driven the U.S. economy into a period of profound uncertainty. In addition, U.S. and Maryland foreclosure proceedings recently rose to an all-time high. It has also been reported that housing construction fell in November by nearly 4 percent, with single-family home construction falling to its lowest levels in more than 16 years.

The comptroller also spoke out against the recently passed computer sales tax as an attack on the state's knowledge-based economy and called for its repeal before damage is permanently done to Maryland's information technology community, some of which is based here on the Mid-Shore and more of which it is hoped will be located here.

"This technology tax, if allowed to stand, will erode Maryland's competitive advantage in the knowledge-based economy. The computer services tax will take a disproportionate toll on those small and independently owned businesses that are the backbone of strong communities," said Franchot.

Franchot reviewed new initiatives undertaken by the Comptroller's Office, highlighting some of its successes of 2007. "During this past year, we have worked aggressively to reward those of you who faithfully pay your taxes by finding and collecting from those who do not.

"For example, last June, we launched a unique partnership with the U.S. Treasury Department that allows us to intercept federal vendor payments to satisfy state income tax liabilities ... and vice-versa. This new 'federal vendor offset' program the very first of its kind in the nation will bring in more than $20 million in the first year alone, and will ultimately allow us to recover millions in unpaid taxes owed to the State of Maryland, and level the playing field for those vendors who are currently playing by the rules."

Franchot said he has fought to expand opportunity for minority and women-owned businesses through the state's Minority Business Enterprise (MBE) program.
His office has worked with the Maryland Department of Agriculture in a year-long study to verify that gas is being stored at proper temperatures, as required by law. These quality controls will ensure that consumers will get a true gallon of gasoline for the dollar.

It has collected more than $1.4 million in delinquent sales and use taxes and streamlined the tax payment process through new online customer service innovations, such as Bill Pay.

Franchot has established an Economic Advisory Panel, consisting of business leaders across the state, to advise the Board of Revenue Estimates on economic conditions that will affect revenue performance in the near-term future, and has spearheaded a successful effort to diversify the State Retirement Agency's investment portfolio to maximize investment returns and reduce risk exposure.

Comptroller Franchot urged the state to focus its economic growth strategies on high-paying, high-quality industries such as the life sciences.
"A state that was once defined by its billowing smokestacks and industrial assembly lines is powered today by the microscope and the microchip, and we are the better for it," said Franchot.

"The work that is being done today in research and testing laboratories across this state is redefining the limits of human understanding, and will ultimately save and improve countless lives. It has helped make Maryland the wealthiest state in the union without further degrading our open spaces or polluting the Bay."

As he has before, Franchot cautioned against relying on future funding from unreliable and corrosive sources such as slot machines and expanded gambling.
"It is hard to believe that the great State of Maryland stands one step away from opening its door to the national gambling industry, and setting us on an economic course that is neither sound nor fiscally prudent," said Comptroller Franchot. "It has been proven, in state after state after state, that slot machines offer nothing more than false hope to desperate communities. They have destroyed families through addiction, bankruptcies and crime, and have left governments scrambling to cover their enormous social costs by any means necessary."

Peter Franchot has brought new energy and good sense to the Comptroller's Office. His message is an important one we hope that Maryland's other leaders will heed.