Saturday, September 15, 2007

Bad News for O'Governor

From the Examiner

State revenues this year are projected to fall $132 million behind official estimates, worsening a budget picture in which a $1.5 billion deficit was already predicted for the following year.

In a letter to Gov. Martin O’Malley and legislative leaders, Comptroller Peter Franchot said the primary reason for lowered estimates is that projections for the sales tax are down $115 million, growing only by 2.5 percent, not the 4.8 percent originally estimated.

Revenues are also projected to decline from death taxes ($20.7 million), tobacco levies ($11.4 million) and lottery sales ($16.7 million). Only individual income taxes have risen slightly, by $38 million.
This means that the O'Malley plan of raising sales tax one cent will not only not raise in excess of $700 million it won't be a bandaid on this sucking chest wound.

A $1/pack tax to fund extended medicaid? With tobacco taxes down by $11.4 million it would seem that, at best, the increased taxes will support the same level of service. This, btw, highlights the point conservatives have long made about funding a program from the revenue derived from an activity the state is trying to suppress.

Of course, this is bad news for us, too. Because even though cuts will have to assume more importance we can be sure that tax increases will be much higher than we had thought.

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