Thanks to an increase in revenue from Maryland’s state income taxes and the ongoing impact of federal stimulus aid, the state finished the 2022 fiscal year with a $2 billion revenue surplus.
Of that total, $370 million will be transferred to a Fiscal Responsibility Fund used for public school, community college and higher education construction. It includes $60 million for pay increases for some state employees. The state’s Rainy Day Fund will automatically receive another $500 million of the total for emergencies, Democratic State Comptroller Peter Franchot said.
That leaves $1.1 billion to be used however the next gubernatorial administration chooses, Franchot said Wednesday in announcing the surplus for the year ended June 30 at a meeting of the state Board of Public Works in Annapolis. Republican Gov. Larry Hogan will leave office in January because of term limits.
“Today’s report underscores the fact that Maryland’s economic bones — despite the volatility currently experienced in our global economy — remains strong,” Franchot said. “We continue to feel the ripple effects from the COVID-related fiscal and monetary policies, but it’s important to note that these ripples will grow smaller and less significant in the years ahead.”
Personal income tax revenues rose 15.7%, while sales tax revenue was up 19.6%. Corporate income tax revenue increased 16.3%. Those increases came over the prior fiscal year that ended June 30, 2021, early in the coronavirus pandemic.
Franchot applauded the “prudent” actions taken by Hogan, the General Assembly and his staff to expand a safety net to prepare for whatever pain the next few years might bring with inflation being felt across the globe. The addition to the Rainy Day Fund brings it to $1.66 billion.
Franchot urged the state’s policymakers to put the remaining $1.1 billion surplus in the Rainy Day Fund.
“We must base and heed the lessons learned from the COVID-19 pandemic with so many residents and businesses who desperately needed help,” he said. “Unfortunately, tens of thousands of them did not receive a dime of assistance from state government, either because they weren’t eligible for the programs or the money ran out. We can’t let that happen again and we know what our economic conditions will be a year from now, it would be imprudent to spend this money.”
Maryland Policy & Politics
Lt. Gov. Boyd Rutherford, who led Wednesday’s board meeting with Hogan on a trade trip in Asia, said that it’s “very good information that we will all leave surpluses for the next administration” because some experts are projecting rough tides ahead economically in the next few years.
“And you’re absolutely right ... that they should not go hog-wild on the spending ... because we don’t know what’s going to happen,” Rutherford said of future state leaders. “Hope for the best, prepare for the worst.”
In a statement, Patrick Moran, the president of the American Federation of State, County and Municipal Employees Council 3, said the raises coming to eligible workers are “essential for state employees.”
“Especially during the COVID-19 pandemic, many members served on the front lines, risking their lives with little recognition for their sacrifices,” Moran said. “This additional money will put the state closer to paying all state employees a sustainable and living wage that honors the essential work they do and helps them put food on the table, pay outstanding bills, and live in the communities they serve.”
Franchot is retiring from the comptroller’s post; he ran unsuccessfully in July for the Democratic nomination for governor. The Democratic nominee seeking to replace him as comptroller, Del. Brooke Lierman of Baltimore, promised “added transparency” to how surplus funds are used.
“I will hold agencies accountable to make sure these funds reach the families and communities they are meant to support,” Lierman said in a statement. “While investing in public schools, transit, and state workers, we will also maintain a healthy rainy day fund and our AAA bond rating.”
This is the second consecutive year the state has had multibillion-dollar influx of revenues in its year-end report.