State ups revenue estimates for FY ’13 and ’14

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The Board of Revenue Estimates expects the state will generate a combined $161 million more than anticipated in fiscal years 2013 and 2014, a sign that the Maryland economy is growing.

But state Comptroller Peter Franchot cautioned Thursday that the economy is growing only “very modestly” and that tax revenue could be drastically different depending on what action Congress takes to avoid the “fiscal cliff.”

In a statement, Franchot noted that employment is increasing but that wage growth continues to be stagnant and compares poorly with other states.

“Marylanders are taking home less pay at a time when their living costs are rising, meaning they have less discretionary money to spend on themselves and their kids in an economy that’s primarily based on consumer spending,” Franchot said. “There’s just no way to gloss over the fact that — despite positive news in recent weeks — we still have a steep hill to climb.”

Much of the anticipated increase is due to an expected 38.1 percent increase in corporate tax collections in fiscal 2013, when overall revenue is expected to increase 5.5 percent. Some of that can also be attributed to income tax hikes approved by the General Assembly this year.

Tax revenue is expected to grow 2.1 percent over fiscal 2012 in fiscal 2014, according to the board’s projections.

The state closed fiscal 2012 with an extra $229.7 million, besting revenue estimates by 1.6 percent. In August, Franchot urged Gov. Martin O’Malley and legislature to squirrel that money away in the state’s rainy day fund.