"It means [the General Assembly] needs to be very careful about spending and borrowing," said Comptroller Peter Franchot, who chairs the revenue panel. "I've been very consistent to say we are in a very fragile, feeble recovery. We owe it to be very honest about jobs and the housing market and not be constantly cheerleading."
The panel now estimates that tax revenue for the current fiscal year will be $50 million lower than expected. For next year (fiscal 2013), revenue is expected to be $71 million below September projections.
The budget for the next fiscal year will still grow by 3.3 percent over the current year's, the report projected. Maryland's general fund revenue for next year is expected to be $14.4 billion. Spending is expected to total about $15.6 billion, leaving a gap that will have to be addressed in the legislative session that begins in January.
The biggest change since September's estimate is in sales tax revenue, now expected to be $216 million lower. Forecasters attributed the lower estimates on consumer spending to "lingering unemployment, higher food and gas prices, and falling home values."
"Not to state the obvious, but a person who has lost a job, who has taken a hit in the paycheck and can't make ends meet, or who can't find work after hitting the pavement for months on end is just not going to go out and buy that new washing machine or a new car," Franchot said in a statement.
Politicians around the state have made boosting employment a key talking point, and Gov. Martin O'Malley has suggested a major public works program that could jump-start employment in the construction industry. The program could be funded by higher taxes on gasoline.
Last session, the General Assembly raised the sales tax on alcohol from 6 percent to 9 percent. On Friday, the revenue panel blamed the higher tax rate for a dip in revenue from beer sales.
However, tax collections from wine and spirits increased by a few percentage points even though those products are also subject to the higher tax rate.