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A Miner Detail: The 2019 Annapolis Session Winners and Losers [EXCERPT]
April 12, 2019
Baltimore Business Journal: Board of Revenue Estimates expects Maryland to gain $434 million as a result of tax reform
March 7, 2018
Maryland Comptroller Peter Franchot is optimistic after the Board of Revenue Estimates increased its revenue projection for fiscal 2019 by $433.6 million, but warns the state is still struggling to recover from the recession.
The 2.5 percent increase means Maryland now estimates revenue to be $18.1 billion at the end of the next fiscal year. The revenue projection for the current year, was reduced by $39.4 million, or less than 1 percent, to $17.01 billion as a result of less income tax and sales tax revenue. The 2018 fiscal year ends on June 30.
The revision for 2019 is largely a result of the federal tax reform passed by Republicans in December. While the changes imposed by the law result in federal tax cuts for most Marylanders, many people will end up paying more state taxes.
A state report released January found that Marylanders will likely see a $2.8 billion tax cut for 2018, but their state and local taxes could rise by $397.6 million.
Franchot said in a statement he is "optimistic" about having more money in the state's coffers, but worries that the projected increase in revenue will mask Maryland's "continued sluggish economic recovery and an uncertain fiscal future."
The state's revenue estimating team reported 34 percent growth in tax payments in the fourth quarter, which Franchot called "highly unusual." In some counties in Maryland, people pre-paid their property in an effort to take advantage of bigger deductions that were eliminated on Jan. 1 under the new tax law.
"This is three times what we would normally witness," Franchot said. "Attempting to determine if this was an intentional taxpayer strategy to pay tax bills in full in an effort to receive a vast federal refund before that option is gone — or something else entirely — remains to be seen."
Franchot also said he is worried that Maryland residents will have "sticker shock" next year. While they may get a bigger federal refund, many people who are used to getting a state refund may end up owing taxes under the new law. "For those living paycheck to paycheck, this could be devastating," Franchot said.
Finally, Franchot said Maryland continues to feel the effects of the Great Recession. He said the revenue windfall masks a $30 million reduction to withholdings and a $15 million estimate decrease in sales tax revenue.
"The bottom line is we continue to tread uncertain fiscal waters," Franchot said. "Businesses both large and small still need to determine how best to navigate these new tax laws that appear on the whole mostly beneficial."