Improved revenue projections provide ‘small gift’ to Md.

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ANNAPOLIS — Maryland’s overall revenue picture is improving in the short term, but some state fiscal leaders urged spending restraint and cautioned against taking a victory lap in what is an otherwise slow economic recovery.

The state’s Board of Revenue Estimates Tuesday announced an upward revision of revenue projections for the current budget year and the fiscal 2017 year. But the same report approved by the panel also suggests that economic recovery in Maryland since the recession seven years ago has been shallower and has not shown signs of returning the state to traditionally expected growth levels.

Comptroller Peter Franchot, a member of the Board of Revenue Estimates, said the upward revisions were “an opportunity for restrained optimism” leading into the coming legislative session.

“Christmas is coming, and this is a very small gift,” Franchot said. “This is a situation where, yes, we’ve got some good news but we need to keep it in perspective.”

Franchot cautioned against “simply taking this money and spending it as though we were back in a recovery.”

State revenue is now projected to grow by more than $31.1 million over the September estimate and nearly $500 million compared to the end of the fiscal 2015 year.

The improved estimates carry over into fiscal 2017, where the panel projects revenues in excess of $60.1 million compared to the board’s September report.

Overall economic growth remains at 3.4 percent for the current year and 4.2 percent for fiscal 2017. Prior to the recession, the state economy was growing at a rate of about 5 percent. Currently, the state’s economy is only 9 percent better than at its peak prior to the recession.

The new estimates will be used Wednesday when the legislative Spending Affordability Committee meets to make budget growth recommendations for the coming year. Gov. Larry Hogan will deliver his second budget in January soon after the legislature reconvenes.

But all the news is not good. At the same time revenue projections are going up, withholding tax projections for the same period were lowered by $64 million for the same two-year period.

Analysts said that while the employment picture is improving it is not growing even at the initial rates provided by the federal government and that the jobs that are coming back are paying wages below the state average.

Franchot called the modest improvements “the slowest and most anemic economic recovery of our lifetimes.”

Wage earners are seeing their pay grow by 2.4 percent — far below previous historical growth rates in the state. Wage stagnation and increased living costs are reducing the amount of disposable income for most families, according to the report.

Sales and use-tax projections are also being written down by $75 million for fiscal 2016 and 2017, a sign that Maryland residents and small businesses are not part of an economic recovery.

“The hollowing out of the middle class is real,” said Andrew M. Schaufele, director of the Board of Revenue Estimates.

State Budget Director David Brinkley, who is also a member of the board, said the numbers are reason for “restrained optimism to the extent that we look forward with it we hope it continues but we have to exercise caution.”