To The Honorable Members Of The General Assembly
And The Governor ,

December 1, 1981
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 30,1981. 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
requirements of the State. A reconciliation is presented in the Annual Report to provide the
linkage between the GAAP and budgetary financial data.

An independent outside auditor's report adds credibility to the financial information
contained in the Annual Report.

CERTIFICATE OF CONFORMANCE

The State of Maryland received the Certificate of Conformance in Financial Reporting
for the fiscal year 1980 Annual Report of the Comptroller of the State of Maryland. This
highly treasured award is given to those governments whose financial reporting meets the
standards of excellence established by the Municipal Finance Officers Association of the
United States and Canada.

FINANCIAL HIGHLIGHTS

Maryland's revenues for the year exceeded those of the prior year, and Maryland ended
the year in strong financial condition.

Despite sluggish growth in the economy and expiration of the Federal Revenue

Sharing Program to states, which reduced Maryland's revenue from this particular |

program by approximately $34.700,000, Maryland's revenues exceeded those of the

prior year. The continued strength of revenues allowed the Maryland General

Assembly to enact tax relief measures which provided direct savings of almost

$20,000,000 to State taxpayers during the year. The following tabulation comparesI

major revenues for fiscal years 1981 and 1980

Ending fund balances for all governmental fund types totaled $803,584.000 at
June 30.1981, as compared with $693,781,000 at June 30,1980, an increase of
$109,803,000. This increase was attributable to an increase in general obligation
bond proceeds to finance needed capital projects of the State and its political sub-
divisions. The general fund balances declined as planned to $197,203,000 at June 30,
1981, as compared with $288,492,000 at June 30,1980.

Maryland continued to exercise restraint-on expenditures in a period of I
inflation, economic uncertainty, and cutbacks in certain federal revenues without
sacrificing essential services. A comparison of major expenditure categories for fiscal
years 1981 and 1980 follows: