Discussion And Analysis Of The
Combined Summary Of Revenues, Expenditures,

Other Sources And Uses Of Financial
Resources And Changes In fund Balances

In the years ended June 30, 1980 and 1979, governmental financial activities were recorded in the General,
Special Revenue, Debt Service and Capital Projects Funds ("CAAP Funds") in conformity with generally
accepted accounting principles. In prior years, governmental financial activities were recorded in the Budgetary
General, Special, Federal, Annuity Bond and Loan Funds ("Budgetary Funds") in conformity with accounting
practices followed for budgeting purposes. The Combined Summary of Revenues, Expenditures, Other Sources
and Uses of Financial Resources and Changes in Fund Balances was prepared from the financial statements of the
GAAP Funds for the years ended June 30, 1980 and 1979; and from the financial statements of the Budgetary
Funds for the years ended June 30, 1976 through 1978.

The financial activities recorded in the Budgetary Funds for the years ended June 30, 1976 through 1978 are
generally comparable to the financial activities recorded in the GAAP Funds after adjustments to the Budgetary
Funds to remove transactions related to activities recorded in proprietary GAAP funds.

Certain adjustments were made to fund balances as of July 1,1978 to present the fi nancial statements for the
year ended June 30, 1979 in conformity with generally accepted accounting principles. These adjustments
principally consist of adjustments to revenues and expenditures of prior years reported in Budgetary Funds. It is
not practicable to adjust the financial statements of prior years to reflect these adjustments. However, the Office
of the Comptroller believes the effect of such adjustments would not be material to the Combined Summary of
Revenues, Expenditures, Other Sources and Uses of Financial Resources and Changes in Fund Balances for the
years ended June 30, 1976 through 1978.

The following legislative changes and other matters affect the year to year comparability of the Combined
Summary of Revenues, Expenditures, Other Sources and Uses of Financial Resources and Changes in Fund
Balances:

Revenues

Motor vehicle taxes and fees declined in 1980 principally because of a reduction in motor vehicle fuel
consumption and a reduction in the number of vehicle registrations.

For the 1979 year, the property tax was reduced from 23c to 20c per $100 of assessed value, resulting in a
reduction of $10,900,000 over the revenues that would have been reported as other taxes had the rate remained
at 23c.

The sales and use tax was increased on June 1,1977 from 4% to 5%. This had the effect of increasing revenues
from those taxes in 1978 by $122,979,000 over the revenues that would have been realized at the former rate. The
motor vehicle titling tax was also increased from 4% to 5% on June 1, 1977, resulting in $24,936,000 more in
revenues in 1978 than would have been realized if the rate had remained at 4%.

Revenues for the year 1977 reflect increases in the property tax, the sales and use tax and the motor vehicle
titling tax. In the 1977 year, the State property tax was increased from 21s to 23« per $100 of assessed value,
resulting in additional revenues of $6,040,000 over the revenues that would have been realized had the rate
remained at 210. As discussed above, the sales and use taxes and the motor vehicle titling tax were increased
from 4% to 5% on June 1, 1977. Accordingly, year 1977 contains one month of revenues at the higher rate,
resulting in an additional $9,890,000 in the sales and use tax and $2,624,000 in the motor vehicle titling tax over the
revenues that would have been otherwise realized.

Expenditures and Operating Transfers:

In 1980 general government expenditures include approximately $31 million of payments to political
subdivisions for unclaimed local income tax withholdings applicable to tax years prior to 1977 (see Note 13 to the
combined financial statements included in the Annual Report), and approximately $28 million in special grants to
political subdivisions.

For the years ended June 30,1980 and 1979 material employee benefit costs applicable to proprietary funds
were transferred to proprietary funds. Accordingly, operating transfers out include employee benefit costs in
the approximate amounts of $50 million and S46 million, respectively, transferred to proprietary funds.

Operating transfers in principally reflect theamounts received by the General Fund from the Maryland State
Lottery Agency. Annual increases in the amounts reflect the increasing volume of Lottery ticket sales.