In a virtual meeting the Board of Revenue Estimates provided an updated projection of the State fiscal picture amidst the COVID-19 pandemic. They used modeling from the fiscal services firm Moody’s, which includes two major assumptions of a widely distributed vaccine by fall of 2021 and no additional stay-at-home orders. These new estimates project a slightly better picture than those released last month which had a worse case scenario of a $2.8 billion reduction in the final quarter of FY 20.
In terms of the State general fund, the new projections are as follows:
- For the final quarter of FY 20, there is an estimated loss to the State general fund of $925 million to $1.1 billion, which represents a 5-6% reduction.
- For FY 21, an estimated loss of $2 to $2.6 billion, which represents a 10-13% loss.
The main factor in the lower budget shortfall in this revised estimate is due to stronger employer income tax withholdings than anticipated. This is despite staggering unemployment numbers in the State, which show that in one quarter twice the number of Marylanders will lose their jobs than over the worst two years of the Great Recession.
According to the Board members, tools that will likely be used to address these budget shortfalls include budget cuts by the Board of Public Works, accessing the State’s rainy day fund, and a budget reconciliation and financing act bill in upcoming General Assembly sessions.