WASHINGTON – Maryland tax revenues are expected to miss previous projections by $783.1 million over the next two fiscal years, the state's Board of Revenue Estimates said last week.

The board's revised estimate of general fund revenues for fiscal 2017 of $17.022 billion was $365.1 million lower than previously estimated, while its fiscal 2018 estimate was roughly $418 million lower.

Coupled with a more than $250 million shortfall in general funding revenue for the fiscal year 2016 ending June 30, the gap between estimates and revisions adds up to roughly $1.1 billion in cash over the three-year period. The board's revised estimate of general fund revenues for fiscal 2016 was $16.40 billion.

Maryland State Comptroller Peter Franchot, a Democrat who chairs the Board of Revenue Estimates, told The Bond Buyer that he has advised both State General Assembly members and Maryland Gov. Larry Hogan to refrain from significantly raising or cutting taxes to make up for the declining revenues.

Hogan, a Republican, has argued for lowering taxes, while the state legislature's Democratic members have mostly argued for raising taxes.

"I have argued for some time that what the private sector needs is stability in the tax environment," Franchot said. "The only tax adjustments that should be made should be symbolic ones that do not have a big price tag."

"They're in a stalemate," he said of the governor's office and the state's Democrats. "There is a lot of partisan back and forth and blaming one another for the sluggish economy. Acrimony from that will result in nothing happening."

Franchot attributed the declining revenue estimates to a sluggish economy that he said has been offset by "pretty good" employment numbers in Maryland. Although many of the jobs lost in the 2009 recession have been replaced, they have been at lower wages, he said. Consumer spending, which Franchot said makes up a majority of the state's $325 billion gross domestic product, has also slowed as a result of the lowered wages.

Capital gains revenue is a particular point of concern, as there is no growth predicted for that source in fiscal 2017 and 2018. Sales tax and income withholding taxes are also growing at a slower rate than anticipated, he added.

Franchot said he has become accustomed to the volatility of Maryland's economy since the great recession, comparing it to a dolphin in the water.

"From the beach you see the dolphin going under water then comes up and then goes back down then comes back up," he said. "That's what we are now accustomed to."

Both the Board of Revenue Estimates and its Revenue Monitoring Committee will continue to meet and analyze revenue and economic trends ahead of a December estimate. The most recent estimates were presented Wednesday at the Louis L. Goldstein Treasury Building in Annapolis.

Maryland's Board of Revenue Estimates, which includes the state comptroller, the state treasurer, and the secretary of budget and management, reviews the findings and recommendations of the state Revenue Monitoring Consensus Group before it releases its own estimates.

Maryland's 2016 general obligation bonds received Triple-A ratings from Fitch Ratings and Standard and Poor's Ratings Services as well as a "Aaa" rating from Moody's Investors Service.

The most recent figures from the state treasurer's office showed $9.48 billion of Maryland general obligation bonds outstanding as of June 30 of this year.

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