ANNAPOLIS, Md. (AP) — Maryland’s revenue forecast has been revised downward by about $255 million in two fiscal years, state officials said Thursday, citing slowing growth while also noting that the state was not experiencing a recession.

The state’s Board of Revenue Estimates revised the state’s general fund down by $120.3 million to $24.5 billion for the current fiscal year. Revenue projections for the next fiscal year, which begins July 1, were reduced by nearly $135 million to about $24.8 billion.

“This is not what any of us wanted to hear, yet here we are,” said Treasurer Dereck Davis, a board member. “Today’s presentation represents a bit of a shift since our last meeting. There is a reduction in our growth rate, and there is a discrepancy between our tax data and our economic data. The good news is, as of right now, our economy is stable. We’re not in a recession, however, the future remains uncertain.”

Fiscal analysts noted a sharp decrease in withholding income tax revenues, from 7.2% during the 2022 calendar year to 2.9% in 2023. They pointed to a drop in sales and tax revenues in fiscal year 2024.

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Comptroller Brooke Lierman also noted a divergence between economic data and tax data. She said the state’s economic data continues to show job growth and low unemployment, but tax and revenue data shows significant slowdown in withholding tax.

While that would imply job growth is stagnated or wages have slowed or declined, the economic data doesn’t point to a cause, Lierman, who also is a board member, said.

It appears to be combination of factors, including federal budget volatility, monetary policy and post-pandemic shocks related to a lack of recovery in the workforce and population decline, she said.

“While Maryland has the lowest unemployment rate in the country, we do have a labor shortage,” Lierman said. “We don’t have enough workers in our labor force to fill job openings, which if filled would result in a higher growth of revenues.”

The drop in estimated revenues comes as lawmakers have been working on Gov. Wes Moore’s proposed budget for the next fiscal year.

Sen. Guy Guzzone, who chairs the Senate’s budget committee, told senators Thursday that his committee has been planning for the reduction in revenue estimates.

Guzzone said the budget will be balanced and in good shape. Still, he warned lawmakers that the budget won’t be what they have been accustomed to in recent years, when states received enormous federal aid because of the pandemic.

“It is not what it has been, and it couldn’t possibly be because, as we know, we don’t have those same resources that we had from the federal government over the last couple of years. But I’m very proud of what we’ve been able to accomplish and look forward to sharing that with you tomorrow,” Guzzone, a Democrat, said at the end of Thursday’s Senate session.