Maryland Braces for Holiday Sales Slump, Tax Revenue Dip

“By Eli Segall
Capital News Service

For years, holiday shopping sprees have pumped ample cash into Maryland’s coffers, helping fund a range of government services. But this year, with the economy slumping, state officials are bracing for a dip in revenue, as consumers plan to buy cheaper gifts and spend less on holiday meals.

One such person is Pam Robey.

The Salisbury resident normally cooks two Thanksgiving dinners for her family and nearby
relatives – one on Thursday, the other on Friday. But she ditched the second dinner this year, saving $300.

“”My finances are getting tight,”” she said.

Robey is not the only one watching her wallet. According to the Maryland Retailers Association, a trade group, holiday spending totals will be flat compared to last year, the first time since 1985 that sales haven’t jumped.

This spending is crucial to the state, as Maryland uses sales tax revenue to help bankroll education, health care and salaries for state workers, among other things.

Last month, in response to the worsening economy, the Board of Public Works cut nearly $350 million from hospitals, jails and a slew of other state programs – even school chess.
“”These are certain services for the public that simply cannot be continued because we don’t have the resources for it,”” Treasurer Nancy Kopp, a member of the board, said Oct. 15, when the cuts were approved.

David Roose, director of the state’s Bureau of Revenue Estimates, said December sales tax revenues are “”without exception”” the biggest of the year, helped in large part by holiday spending. However, this December’s totals will likely be lower than last year.

December 2007 sales tax revenue totaled $358 million. So far this year, Roose said, nine different months have had a dip in sales tax receipts compared to the same period in 2007.
“”That [trend] doesn’t show any signs of turning around in the near future,”” Roose said.

Retail stores are trying to stanch the decline.

Denee Davis, a manager at a GAP clothing store in Bowie, said a host of nearby stores posted Black Friday “”SALE”” signs more than a week before Thanksgiving. Normally, she said, the signs go up either the day before the holiday or the day after, when the sale is held.
On Black Friday, the unofficial start of the holiday shopping season, stores offer massive discounts, and some open their doors by 4 a.m. Last year, 147 million shoppers spent an average of nearly $350 each that weekend, according to the National Retail Federation.
Tom Saquella, president of the state’s retail association, said holiday shoppers this year will be “”practical, budget conscious and looking for sales.””

“”The bottom line is Maryland shoppers this season have far less disposable income than in previous years, and retailers recognize this reality,”” he said, in a statement.

But not everyone plans to cut back. Scott Murdoch, a mid-50s Gaithersburg resident, said his spending habits will probably not change, despite losing, in recent months, more than 30 percent of the value of his investment portfolio.

Those losses, he said, have delayed his retirement by a decade.

“”If everybody holds back [spending], that just makes the situation worse, in my opinion,”” he said.”