Budget Deja Vu: Another Growing Gap, More Cuts Likely, O'Malley Says
Another revenue estimate, another write-down, more budget cuts. That's what Gov. Martin O'Malley (D) says Marylanders should brace for tomorrow when state leaders receive their latest tax revenue estimates.
Last week, O'Malley predicted the new figures would show tax revenue slipping $100 million to $200 million below expenses approved for the remainder of the state's fiscal year, which ends next June.
On Tuesday, O'Malley said he'd received initial indications the gap would be larger than what he suggested last week -- as much as $300 million, or more than 2 percent of the state's $13.4 billion budget.
The governor said that while Maryland's 7.2 percent unemployment rate is better than most other states', the loss of wages is predicted to cascade through Maryland tax rolls in coming months and open up yet another budget gap that could necessitate more painful cuts.
The gap would be deja vu to last year.
It also would be the second hole Maryland would have to plug in just the first three months of the state's current budget year, and could lead to what would be the ninth round of budget cuts since the recession began in 2007.
In July, a $700 million hole emerged less than two weeks into the budget year when updated tax collection figures from April showed Maryland revenue dropping about 5 percent below costs.
To close that gap, the state's Board of Public Works approved O'Malley's plan to shut down a state-run psychiatric hospital, nearly eliminate money for county road projects, slash funding for cancer research, reduce reimbursements for health-care workers and facilities caring for Medicaid patients, and close a minimum-security prison.
O'Malley, however, said he hoped recent signs of life in the state's housing market and mixed results in job reports from the past four months indicated the state's economy might be leveling out.
Still, rebounds in state tax revenue typically lag broader economic recoveries by a year or more.
Aaron C. Davis
September 16, 2009; 3:05 PM ET
Categories: Aaron C. Davis , Governor , Maryland State Budget
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