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Coronavirus Means Grim Outlook For Maryland Budget

Rachel Baye

Analysts are warning that the COVID-19 epidemic will be disastrous for the state’s budget and for all the services state and local governments provide.

The budget Maryland lawmakers passed last month estimates that about 85% of state revenues will come from sales and income taxes, Warren Deschenaux, the former longtime chief fiscal analyst for the state, said Monday during a Zoom call hosted by the Maryland Center on Economic Policy.

Now many businesses are closed, and more than 130,000 residents submitted unemployment claims in March.

“The revenue loss is going to be quick, and it’s going to be enormous,” Deschenaux said.

Some programs and services will be harder hit than others. For example, online sales tax revenues may not diminish to the same extent as the rest of the sales tax revenues. Those funds are dedicated to education.

However, about 6% of state school spending comes from casinos, which are currently closed. In fiscal year 2021, Deschenaux said, that amounts to about $450 million.

“I wouldn't be surprised if we see some kind of pressure for internet gaming to be authorized either in the special session or soon,” he said.

He said the state’s Rainy Day Fund could cover about a month of government operating costs. After that, the state needs to find new revenue sources and cut services — unless the federal government steps in with something like the stimulus package President Barack Obama signed in 2009.

“As a state and as a nation, the most critical thing we can do is deal with the health emergency and get people healthy and back to their normal jobs as best they can and as quickly as we can,” Deschenaux said. “The fiscal outlook isn't gonna get better until we can do that.”

Rachel Baye is a senior reporter and editor in WYPR's newsroom.
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