To The Honorable Members Of The General Assembly
And The Governor

December 31, 1980
Ladies and Gentlemen:

It gives me great pleasure to furnish you with this financial report of the
State of Maryland for the fiscal year ended June 30,1980. The Annual Report of
the Comptroller was prepared in compliance with Article 19, Section 9, of the
Annotated Code of Maryland and shows the financial position of all funds and
account groups of the State and the results of operations for the year. The
financial data is prepared in conformity with generally accepted accounting
principles (GAAP) and to satisfy the budgetary and other reporting require-
ments of the State. A reconciliation is presented in the Annual Report to
provide the linkage between the GAAP and budgetary financial data.

As in the prior year, an independent outside auditor's report adds credi-
bility to the financial information contained in the Annual Report.

FINANCIAL HIGHLIGHTS

While a softening of the economy in the latter part of Fiscal Year 1980 was
reflected in lower than expected tax revenues for the fourth quarter, revenues
for the year as a whole exceeded those of the prior year, Maryland ended the
year in strong financial condition,

Revenues and Fund Balances

Maryland maintained its objective of providing dividends to its taxpayers in
the form of tax relief rather than committing revenues to marginal programs. Tax
relief measures implemented in the fiscal year provided direct savings in excess
of $110 million for the taxpayers of Maryland.

Notwithstanding the softness of the economy and planned tax relief, Mary-
land's revenues exceeded those of the prior year as demonstrated in the fol-
lowing comparison of major revenues for Fiscal Years 1979 and 1980:

_____________Millions________________

1980 1979 Improvement

Income Taxes $1,219.4 $1,107,5 $111.9

Sales Taxes 712.8 699.2 13.6

Other Taxes 438.6 395.5 43.1

Federal Revenues 996.1 882.0 114.1

Ending fund balances for all governmental fund types totaled $693,781,000
at June 30, 1980, as compared to $742,106,000 at June 30, 1979, a decrease of
$48,325,000. This decrease is primarily attributable to diminished resources for
capital projects during the fiscal year. A subsequent bond sale replenished these
resources. The general fund balances remained relatively stable during the year
and amounted to $288,492,000 at June 30, 1980.

Expenditures

In addition to direct tax relief, Maryland moved further to alleviate the
taxpayer's burden in a time of national economic uncertainty by drawing upon
fund balances from the prior year to assist in the funding of essential programs.
This source, together with current revenues, allowed Maryland to continue
needed services to its citizens while preserving a strong financial position. A
comparison of major expenditure categories for Fiscal Years 1979 and 1980
follows:

______Millions_________

1980 1979

Current $3,779.1 $3,378.0

Debt Service 293.9 269.8

Capital Outlay 219.2 207.8

Total $4,292.2 $3,855.6