The State House is closed for renovation, most lawmakers have gone back to their districts and their day jobs, and I’ve headed back to Baltimore.

This was my first session covering the General Assembly for The Daily Record, and I enjoyed it quite a bit. I was glad there was so much levity in the legislature to pass on to you, and I hope the tidbits of information in my blog helped you get a better grasp on what went on during those 90 action-packed days. Now that the session is over, we’re going to suspend Eye on Annapolis until we begin the preparations for next year’s session.

It’s sure to be a good one in 2009, and in the meantime we’ll have to keep our eyes on this slot machine referendum coming in November. Check out my story from Friday, because if you think the budget trouble is over, wait until you see what happens if the state doesn’t get the gambling revenue it’s counting on.

The Maryland government doesn’t stop just because the session does, and I’ll still be covering the policy decisions that affect your business. I’ll be blogging about it for On the Record. You know it and love it.

So just look for my smiling face to return to this space as 2008 draws to a close. We’ll be back. Thanks for reading!

Maybe Maryland should join a support group. We’re certainly not alone when it comes to our tight financial situation, but one major financial player doesn’t think it will be as bad as it might look

In a report issued Tuesday, Standard & Poor’s says government budgets for fiscal 2008 and the upcoming fiscal 2009 are struggling along with the housing and credit markets.

Some findings, courtesy of the report:

• “Broad-based taxes are unlikely; gaming revenues remain popular” (don’t forget to vote in November, people)

• “Spending reductions are substantial across many areas” (cut, cut, cut)

• “Tax relief remains a major theme” (computer services, anyone?)

Still, S&P wrote that it expects most states to have sufficient reserves to get through the tough times. S&P’s bond rating unit showed some confidence in Maryland when it maintained the state’s treasured AAA bond rating last month.

So what do you think Maryland has in common with the rest of the struggling states? What are we doing better or worse?

Another key business group says it will bite the bullet for a computer services tax repeal.

The Greater Baltimore Committee will support a bill to raise the income tax for people making more than $750,000, but only if lawmakers get rid of the computer tax.

It seems this is a bitter pill for many business groups to swallow.

“In light of a downturn in the national economy and the Board of Revenue Estimates’ recent report stating that Maryland’s economic performance appears likely to be weaker than previously predicted, Maryland cannot afford to burden businesses with a broad new tax or higher earners with the second highest individual income tax in the country,” GBC CEO Don Fry wrote in testimony on the tax bills.

So what’s worse, income tax or computer services?

I’m bracing for a Wednesday full of computer services tax protests, expecting a mob of IT folks and programmers to take over Annapolis for a day of hearings on whether to repeal a pending 6 percent sales tax on their businesses.

But that isn’t the only industry that’s trying to fight off a tax increase tomorrow. A bill in the House would place a tax on tanning salons and deposit the more than $500,000 it would raise into a health care fund.

The Indoor Tanning Association has not taken a shine to this idea (get it?), and is imploring its members to let their lawmakers hear it tomorrow. The association is also sounding alarms about another bill that would require minors who want an indoor tan to have a prescription or be accompanied by a parent or guardian. That bill got a favorable report from the House Economic Matters Committee on Monday.

So what does Maryland’s increasingly bleak revenue picture say about the economy? According to the state’s Board of Revenue Estimates, nothing good.

Since December, when the board last estimated state government revenue, the picture has gotten worse. The board predicted Thursday that the state would get $74.7 million less than it expected during fiscal 2008, which ends in July, and $258.2 million less than it hoped in fiscal 2009.

Here’s a clip from the board’s letter to Gov. Martin O’Malley. Excuse the length, but I think it’s telling.

“The national economy has slowed faster than expected at the time of our December forecast. At that time, consensus opinion was that the United States would skirt a recession. Now, with real GDP growth slowing to 0.6% in the fourth quarter of 2007 and 17,000 jobs lost in January, many respected economists believe we are in the midst of a recession, though likely a shallow and short one. As you are aware, trouble in the housing market has spread to credit markets, and both consumer and business confidence have suffered.”

Two of the revenue sources that have suffered most are personal income tax and sales tax. Those are the state’s two largest cash cows, and the board writes that they are also sensitive to economic changes.

So what does this tell you? How telling of a barometer do you feel that the state’s balance sheet is for the wider economy?

The “R” word is being thrown around a lot, and we may not know we’re in a recession until it’s been going on for awhile. I have to wonder whether the definition really matters at this point.

Apparently people don’t want to pay more for computer services.

At least that’s the finding of a new poll conducted for The Tech Council of Maryland, which reports that 58 percent of the Marylanders surveyed want the state to repeal a new sales tax on things like programming, information technology and system design.

The tax is scheduled to become law in July. Though many lawmakers want to get rid of it, so far nobody has gotten anywhere with a plan to replace the $200 million it is expected to bring in.

The Tech Council says the survey is remarkable because of the wide range of the opposition.

Here’s a clip from the news release announcing the results:

“The poll … found majority opposition to the levy cuts across party lines: 54% of Democrats, 64% of Republicans and 62% of Independents.”

The survey was conducted by Gonzales Research & Marketing Strategies, and polled 807 registered voters across the state during the last week in February.

I have to wonder how much support any tax would get in a poll like this. The state can’t run a deficit, so Maryland will have to find an alternative source of revenue or cut the budget if the tax is repealed. Though the poll shows opposition to the tax increasing if it causes job losses, the survey did not ask how voters would feel about other options.

The Maryland Energy Administration could lose five of seven new positions proposed in the fiscal 2009 budget by Gov. Martin O’Malley. A Senate budget subcommittee voted Monday to eliminate the five jobs at the state’s energy policy arm.

The new workers, projected to cost around $250,000 next year, would manage energy contracts, alternative fuels, and “green collar” jobs, oversee greenhouse gas limits and prepare a plan to safeguard the state’s energy supply and infrastructure. The subcommittee also voted to maintain $290,500 in solar energy grants, despite analysts’ recommendation to cut them.

Check out my story on the proposed cuts from a few weeks ago (subscriber-only link).

Administration officials say they need the new employees to help the state cut power use, but lawmakers have so far been wary of new spending. Still, this is far from a done deal. It still has to go to the full Senate Budget & Taxation Committee, then to the full Senate along with the rest of the budget. The House will also do its own budget work before the two chambers work out their differences. So stay tuned.

Here’s one example of state service contracts going up as a result of the living wage law passed last year. An analysis (PDF) of the Comptroller’s budget highlights a significant increase in the cost of bringing in temporary employees during tax season.

The cost of that contract will increase by $760,000 because of the living wage, according to the nonpartisan Department of Legislative Services. The living wage requires contractors working on many state contracts to pay their employees $11.30 an hour for contracts performed in Baltimore City and Montgomery, Prince George’s, Howard, Anne Arundel and Baltimore counties. The rate is $8.50 in all other counties.

The bill was not expected to have a substantial effect on contract costs, as Dori Berman reported for The Daily Record last year.

This one budget increase doesn’t say much, but it will be worth watching other budgets to see if there are any more living wage-linked cost increases.

Gov. O’Malley wants to spend $11 million to improve Broening Highway, an important access road for the Port of Baltimore.

He announced Tuesday morning that he had added the project to the state’s transportation plan that runs from July through 2013. The project is intended to ease truck transportation to and from the port, and improve the connection with Interstate 95, O’Malley said.

No word on plans for the port’s highest-profile project, a deepening of the berth at Seagirt Marine Terminal. That project will take awhile to get moving because it’s expected to cost up to $130 million. Port officials are looking for a public-private partnership to get that one off the ground. (subscriber-only link)

Gov. Martin O’Malley’s proposed budget might have an easy passage through the General Assembly this year, according to Senate Budget and Taxation Chairman Ulysses Currie. He said at a legislative function Monday that he won’t have to cut O’Malley’s budget because it is below spending limits set by lawmakers earlier this month.

What O’Malley needs now is support from the public and from lawmakers, Currie said.

An interesting story written Monday by Tom LoBianco of The Washington Times examines how O’Malley sold his proposed solution for a $1.5 billion budget deficit to the public. He compares it to former Virginia Gov. Mark Warner’s quest to fix his state’s finances in 2004.

Here’s an excerpt from what Tom wrote.

Mr. Warner was hailed in national Democratic circles for doing the near-impossible: increasing taxes and improving his approval rating.

But after Maryland’s special session closed in November, Mr. O’Malley’s public-approval rating dropped — not the outcome called for in the Warner playbook.

An analysis by The Washington Times and interviews with key Virginia leaders shows Mr. O’Malley, a Democrat, followed a more abbreviated version of the Warner plan, and suffered politically as a result.