Maryland closed the books on fiscal year 1995 this summer showing a modest $26.5 million surplus, state tax collector Louis L. Goldstein announced yesterday.
By law, the money -- not even enough to run state government for a day -- automatically will revert to a $190 million fund the General Assembly set aside last winter as a hedge against expected reductions in federal aid or for use to help finance a proposed reduction in state income taxes.
Gov. Parris N. Glendening called the announcement "a good news day for Marylanders" and said the surplus will help Maryland retain its AAA bond rating "and our reputation for good fiscal management."
Tuesday night, at a dinner meeting with legislative leaders at the governor's mansion, Mr. Glendening said he is considering a state personal income tax cut in the 5 to 10 percent range, lawmakers attending the event said afterward and the governor's press office confirmed. A 10 percent reduction could mean a loss in revenue to the state of as much as $400 million a year in the first year.
Business groups, Republicans and conservative Democrats have been clamoring for some reduction in personal income taxes to stimulate the economy and improve Maryland's business climate. But such a reduction is being contemplated just as the federal government is expected to reduce sharply the amount of money it sends to Maryland and other states.
Comptroller Goldstein said the end-of-the-budget-year surplus was the result of slightly higher lottery and sales tax revenues. Overall sales tax receipts were up 7.5 percent, the fastest growth in sale tax revenue since 1988 (except for in 1993, when the sales tax was expanded to cover a new array of services). Lottery revenues exceeded estimates by $13.1 million, largely because of strong sales of the electronic numbers game, Keno, and because there were lower-than-normal payouts for the Pick 4 game.
Revenue from state investments also rose slightly, reflecting higher interest rates.
Personal income tax revenues, the state's largest single source of money, grew by 5.4 percent over the comparable 1994 figures, almost exactly the growth that had been predicted.