By Len Lazarick
[email protected]
For the third year in a row, the U.S. Chamber of Commerce has rated Maryland among the top five states in the country for economic growth, job creation and innovation.
In its annual report on “Enterprising States”, the national chamber gives the O’Malley administration high marks for policies and conditions that help grow jobs, issues on which members of the state business community often find fault.
This year the chamber also classified Maryland as one of “the next boom states,” the states “best positioned to grow, create jobs, and prosper in the coming five to 10 years.”
Lower rankings on taxes and regulatory climate
In the array of rankings, Maryland continues to do poorly when it comes to taxes and regulatory climate – the area where critics typically pound O’Malley. But even there, Maryland ranked 8th in the nation for “tax climate for mature firms.”
“Benefitting from the recent economic stability provided by the nation’s capital, Maryland is one of the nation’s high tech centers,” the report says. “Its most productive sector over the past decade has been professional, business and technical service, particularly computer-systems designs.”
While Maryland does better than most of the 50 states, it still ranks slightly below its nearest fierce competitor, Virginia, as the southern neighbor moved up in the rankings from sixth to third, while Maryland stayed at fifth place. The report even refers to Virginia as “the emerging East Coast economic superstar.”
“Virginia’s low tax and regulatory environment, coupled with its proximity to the nation’s capital have made the state one of the most attractive locations for both domestic and international firms.”
Reliance on federal spending
Reacting to the report, Larry Hogan of the pro-business Change Maryland group said: “As the report notes, Maryland benefits from its proximity to the nation’s capital. With record federal debt, last summer’s credit downgrade and the automatic sequestration process now part of the congressional budgeting process, the warning signs are clearly there for anyone interested in Maryland’s job growth in the months and years ahead.”
The three New York bond rating firms have expressed similar concerns about impact of federal budget cuts on Maryland’s economy.
In establishing its ranking, the chamber uses some of the same measures O’Malley persistently touts when he talks about Maryland: educational attainment, high school advanced placement tests, affordable college tuition, family income and the high percentage of science, technology, engineering and mathematic jobs in the work force. The chamber even specifically praises O’Malley’s InvestMaryland initiative to put $84 million in venture capital funding to high tech start ups. The money was raised by the auction of state tax credits to insurance companies.
The chamber also gives O’Malley credit for his efforts at regulatory reform, citing the 131 regulations that were repealed or revised this year after an intensive review. The Maryland Chamber of Commerce said the regulations did little to help local business.
In the 06/14 edition of the Washington Examiner, Maryland lost 7,500 jobs in May…This was the third consecutive month of job loss and the state’s unemployment rate went up to 6.8%…
I don’t see how the US Chamber of Commerce could have issued this report…
I see small businesses closing up,,, And ask the unemployed ( counted & uncounted ) about how well the state economy is doing…
Are they now as delusional as Obama, O’Malley. etc. ?
It’s actually the 06/15 edition of the Washington Examiner, under the heading of ” Local Maryland “.
Why don’t you name those small businesses instead of stating a general appoint. I think your just a troll trying to stir up trouble.
Len’s piece cites O’Malley’s InvestMaryland initiative, which enabled the state to collect $84 million earlier this year in exchange for approximately $100 million of taxes to be forgiven in 2015-19. SInce the InvestMaryland initiative is new, it has no bearing on the US Chamber of Commerce’s favorable ranking.
By backing this initiative O’Malley has told taxpayers that the State of Maryland can pick winners that private-sector VC thinks are too risky: A highly dubious proposition, notwithstanding that VC money is tight in the current economy.
The law (HB 173 and SB 180) does not specify any cost-benefit analyses going forward. It is deficient in that regard. The law should have provided for a private-sector-type cost-benefit analysis to annually convey accurate subsidy-cost calculations to the General Assembly. Without this feedback, neither taxpayers nor Maryland politicians know if the program is worth keeping.
This initiative is also highly vulnerable to the pernicious effects of crony capitalism most recently manifest in the Department of Energy’s clean energy investment programs (Solyndra, et. al.) The Maryland law provides no safeguards, controls, or penalties; another deficiency.
These types of programs (where governments think they are Venture Capitalists) are highly expensive to run and their costs usually are not fully captured in subsidy calculations. For instance, SBA’s SBIC program frequently is touted as costing taxpayers nothing. Yet, the SBIC program’s annual subsidy rate computed pursuant to the Federal Credit Reform Act omits virtually all administrative costs. It is a big loser year in and year out.
The good news is that a small percentage of the start-ups funded under this program ultimately will become successful. The bad news is that the owners will be first in line (well ahead of taxpayers) to reap the benefits via executive compensation. And again, the law provides no controls in this area.
On balance, O’Malley’s InvestMaryland initiative has not been established with proper control and oversight. Its outcomes can’t be measured. Its’ very risky for MD taxpayers.
Great post, Hungrypirana !