November 19, 2010

Maryland very different politically and much better off economically than the rest of the nation

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By Len Lazarick
Len@MarlandReporter.com

PHOENIX – I did not need to fly 2,000 miles to arid Arizona to confirm that Maryland is very different politically — and much better off economically — than most other states, as Gov. Martin O’Malley has been telling us for a year and a half.

But being among scores of statehouse reporters from states across the nation for the annual meeting of Capitolbeat, the national association of State House reporters, reinforced those facts.

In many states, voters formed a Republican tidal wave to flip the party makeup of legislatures and the governorships on Nov. 2. But the wave skipped Maryland as if we had a massive seawall.

Maryland was one of only seven states where Democrats picked up seats in either chamber of the state legislature. Maryland Democrats gained two state senators, while in the rest of the country, out of 6,125 state legislative seats up for grabs Nov. 2, the party had a net gain of just seven other seats — in California, Delaware, Hawaii, Massachusetts, Missouri and West Virginia.

I was asked several times how this happened. The simplest explanation is the historical Democratic dominance in a state that since the end of the Civil War has elected just six Republican governors — serving a meager 26 years — compared to 22 Democratic governors — serving a total of 119 years. 

Maryland also has the highest percentage of African-American voters outside the Deep South, and an immigrant population of Hispanics, Indians and other Asians who have aligned themselves with the dominant party.

There is also increasing dominance of federal employment and contracting in defense, intelligence and health care, not to mention Social Security. That dominance helps explain how the Maryland economy has fared better than much of the rest of the nation — with lower unemployment and smaller state deficits.

Much different in Michigan

Things are much different everywhere else. Take Michigan, for instance. Where Maryland has the federal government, Michigan has the auto industry – bailed out by taxpayers – and its legislators have some of the shortest term limits in the nation: two four-year terms for senators, and three two-year terms in the state House of Representatives.

Michigan’s Senate was already Republican, but two weeks ago, its governor’s mansion turned from blue to red. Its House, where a third of the incumbents could not run again because of term limits, flipped dramatically to the GOP. Before the election, Democrats held 65 of 110 House seats; after the election, the GOP holds 63 seats.

Now, the reporter from the Detroit Free Press told me, 95 House members have two years tenure or less – including the new speaker. What do they know? I ask. Not much about state government, I’m told.

Budget main issue in most states

While the political tsunami skirted Maryland and the economic hurricane has been less severe, it and most of the other states – except those with rich mineral resources in the west, particularly North Dakota – are still facing a rough two years ahead.

“The boost from the fiscal stimulus is fading,” said Chris Lafakis, an economist with Moody’s Analytics who tracks state economies. He saw four reasons for optimism: the Federal Reserve will remain aggressive pumping money into the economy; business profits are surging and job growth should follow; household debt has fallen as people pay off credit cards and mortgages; and this leads to pent-up demand for buying big ticket items such as cars.

But Lafakis said, “The next 6 to 12 months are the period we’re most worried about.”

Outgoing New Mexico Gov. Bill Richardson told us that he sees “the political momentum moving toward the states” as federal funds decline. “In almost every state, the main issue is going to be the budget,” Richardson said. 

For the states, “the landscape has fundamentally changed,” said Bob Ward, who follows state finances for the Rockefeller Institute of Government.  Experts have long known that “state tax revenues tend to lag the economy,” Ward said, and “tend to be bouncier than the overall economy.”  But the current slow recovery means “the next several decades are going to be a long hard slog in many ways.”

States throughout the country have consistently been spending more than they bring in, said Arturo Perez, who covers state taxing and spending for the National Conference of State Legislatures

“There’s a whole new political landscape out there” that may force states to restructure their policies on taxes and spending, Perez said.

Overall, the states face “a hugely challenging stew of fiscal constraints” and “a perfect storm of lousy conditions,” said Lori Grange, deputy director of the Pew Center for the States, based in Washington, D.C.

Over the summer the Pew Center surveyed 5,000 residents in Arizona, California, Florida, Illinois and New York – states with some of the most stressed budgets and a third of the U.S. population. Pew found residents “want their states to stop borrowing,” and focus on spending cuts and making government more efficient, Grange said.

But the surveys also found that if new taxes were needed, “they would prefer to tax the other guy – such as the wealthy, corporations, and smokers, drinkers and gamblers – but they are willing to increase their own taxes to pay for things they consider most important, particularly K-12 education and health and human services.”

The Pew Center did not poll Maryland voters, but given O’Malley’s tax hikes and the themes he was pushing in the campaign about better schools and greater access to health care, those opinions were probably true in Maryland as well.