Low-income workers hit hardest in virus recession

But experts say Md. finances beating expectations

As 2020 draws to a close, Maryland’s state government finances have weathered the pandemic-induced recession far better than officials expected, state economic forecasters said Friday, but the lowest-income residents have borne the brunt of the downturn.

Although a second wave of the coronavirus has taken a firm hold and several of Maryland’s largest municipalities have begun instituting restrictions not seen since the first weeks of the pandemic, forecasters Friday projected a partial rebounding of revenue for the state in fiscal year 2022 during a meeting of the Board of Revenue Estimates,

Republican Gov. Larry Hogan will present his proposed fiscal year 2022 budget early next year. State lawmakers will review the administration’s proposal during the General Assembly session that starts in January.

After the world spent the majority of 2020 in the grips of the COVID-19 pandemic, economic forecasters have their clearest picture yet of the economic impact of the virus, both under tight and more lax restrictions, said Andy Schaufele, director of the Bureau of Revenue Estimates.

Maryland sales tax revenue has increased over projections for fiscal year 2021, which ends in June, Schaufele reported. That’s due to consumers transferring spending from services, which are generally not taxable and less available during the pandemic, to goods, which are taxable. Lottery revenues were up as well, he said, as was income tax revenue, driven by capital gains.

Other revenues have suffered during the pandemic, however. Courts have been closed for much of the year, providing little money to the state from fees and fines. District court revenue, typically driven by people paying traffic citations, remains down, as well.

While the outlook has improved since September, when the board last met, revenue is still expected to be down by $609 million for the state in fiscal year 2021, Schaufele said. Maryland is now projected to take a $312 million hit in revenue for fiscal year 2022, he said.