Louis L. Goldstein

Comptroller of the Treasury

Louis L. Goldstein Treasury Building, P. 0. Box 466
Annapolis, Maryland 21404-0466

Honorable Members of the General

Assembly and the Governor,
State of Maryland:

November 7, 1997

INTRODUCTION

The Comprehensive Annual Financial Report of the State of Maryland, for the fiscal year ended June 30, 1997,
submitted herewith, includes financial statements of the State of Maryland as well as information required by Title
2, Section 102 of the State Finance and Procurement Article of the Annotated Code of Maryland. Responsibility for
both the accuracy of the presented data and the completeness and fairness of the presentation, including all
disclosures, rests with the Office of the Comptroller. I believe that the data, as presented, are accurate in all
material respects; that they are presented in a manner designed to fairly set forth the financial position and results
of operations of the State as measured by the financial activity of its various funds; and that all disclosures
necessary to enable the reader to gain the maximum understanding of the State's financial affairs have been
included.

This Report is presented in three sections; introductory, financial, and statistical. The introductory section
includes this transmittal letter, the State's organizational chart, and a list of principal officials. The financial section
includes the general purpose financial statements and the combining and individual fund and account group
financial statements and schedules, as well as the report of independent public accountants on the financial
statements and schedules. The statistical section includes selected financial and demographic information,
generally presented on a multiyear basis.

The accompanying financial statements include all funds and account groups of the State of Maryland (primary
government), as well as all of its component units. Component units are legally separate entities for which the
primary government is financially accountable.

Discretely presented component units are reported in a separate column in the combined financial statements
to emphasize that they are legally separate from the primary government and to differentiate their financial
position, results of operations and cash flows from those of the primary government Accordingly, the various
colleges and universities, the Maryland Industrial Development Financing Authority, the Maryland Stadium
Authority, the Maryland Food Center Authority and Maryland Environmental Service are reported as discretely
presented component units.

ECONOMIC CONDITION AND OUTLOOK

Maryland's economy has been expanding at a solid pace. Employment increased 1.1% in calendar year 1996,
and since late 1992, more than 160,000 new jobs have been created. As has been the case for the past several years,
the weakest employment areas were banking, federal government and manufacturing. Growth has been heavily
concentrated in business and health services, transportation, construction and trade.

The service sector accounts for 32% of total employment in the state, yet provided more than 62% of the new
jobs during the recovery. Business services has been by far the strongest performer over the past four years.
Employment in the computer and data processing industry, one of the largest components of the business services

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