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Sluggish Md. tax revenues predicted


State tax revenues are downright lethargic in every area of Maryland's economy, according to the latest forecast released by state officials.

"I've been around this government since 1938. For the first time, I have seen the numbers just drop off very quickly," said Comptroller Louis L. Goldstein, the senior financial official in state government and the man who outlined the grim economic news yesterday.

Perhaps the worst story comes from the collections of the 5 percent sales tax -- the state's second-biggest revenue source -- which are now estimated to grow by only one-half of 1 percent this year.

"People not working are not spending," Goldstein summarized. "It has a heck of an impact on our state."

State analysts blamed the slowdown in consumer spending on rising unemployment and on consumer worries about the economy, including interest rates and inflation.

Goldstein said it is the first time since 1947 that the state has seen this type of drop in sales tax revenue.

"Go to the department stores," he said. "Who ever has seen so many sales this time of year?"

Sales tax collections decreased in January and October of this year, compared with the same months in 1989, and officials expect to post a decrease for November as well. Sales tax receipts began to fall behind projections in May, and the decline accellerated in October, figures released yesterday show.

Unemployment rose during the same period, from 83,000 workers in May to 114,000 in September, the report said.

The state income tax is also expected to lag far behind predictions made a year ago. The state now expects to bring in about $3.15 billion, down by $162 million from earlier projections. Officials blamed the slowdown in individual income tax collections on higher unemployment, slumping growth in personal income and a drop in stock and real estate sales, which will affect capital gains tax collections.

Property transfer taxes, which reflect the health of the real estate and construction businesses, are expected to actually decrease for the fourth consecutive year. Just a year ago, forecasters thought the total collection would grow by about $12 million this year. Instead, the revised forecast is for it to drop by $6 million.

Building permits are down around the state and "construction activity in downtown Baltimore has practically ground to a halt," notes a report filed by the Board of Revenue Estimates.

Revenue from the gasoline tax is also expected to decline, bringing in an estimated $445 million compared with $453 million last year. Soaring gas prices have crimped consumption, state analysts said. The state titling tax, which reflects car sales, will also slump this year, according to projections, falling from $324 million to $320 million.

"It's been a toboggan slide" and it may continue if war breaks out in the Persian Gulf, said state Treasurer Lucille Maurer. "Who knows what will happen in the desert or elsewhere?"

The only major revenue source that is running ahead of projections is the state lottery, which is expected to climb from $311 million last year to $333 million this year -- a jump of $8 million above earlier projections.

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