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May 4, 2011

Maryland falls again in state business rankings

Maryland fell again in Chief Executive magazine's annual ranking of "best states for business." The state ranked 37th -- pretty poorly. That looks like it's down from 34th last year, although the magazine's chart seems to have some typos.

But Maryland's rank wasn't as bad as those of Illinois, New York and California, which scored 48th, 49th and 50th. Illinois and Maryland are distinguished by their inclusion in the "5-Year Biggest Losers" category for states with falling rankings. Illinois plunged 40 places, from 8th to 48th over that period, while Maryland fell 16 spots, from 21st. Of course that period coincides with the departure of Gov. Robert L. Ehrlich Jr., Maryland's first Republican governor in decades, and the inauguration of Democratic Gov. Martin O'Malley, who substantially raised taxes.

California and Illinois probably got negative marks partly for the miserable state of their budgets, which has earned them tons of bad publicity. If O'Malley hadn't raised taxes, Maryland's budget situation might have been as bad as theirs. The "winners" on the list are the usual suspects: southern states with cheap labor and low taxes. Texas, North Carolina and Florida were 1 through 3.

If the business climate in Florida is so great, why is the unemployment rate 11 percent? (Maryland unemployment is 6.9 percent.)



Posted by Jay Hancock at 5:36 PM | | Comments (15)
Categories: Corporate welfare
        

Comments

to answer your question, Federal Government

MD unemployment rate is artificially low, because of the preponderance of government employment within the state. Not because of any type ofeconomic climate conducive to growing small businesses.

RE: "If the business climate in Florida is so great, why is the unemployment rate 11 percent? (Maryland unemployment is 6.9 percent.)"...

Oh c'mon Jay, you full well know the answer to that question!

#1: Federal Jobs
#2: BRAC
#3: Private sector job growth related to #1 & #2 offsetting continual and significant private sector job losses.

The business leaders aren't politicians, they have a bottom line.
They see through the smoke and mirrors that Maryland's Governor Martin O'Malley and other Maryland politicians brag about practically daily.

Actions speak louder than words and guess what?

THEY'RE LEAVING MARYLAND!

WELCOME TO THE PEOPLES REPUBLIC OF MARYLAND!

Gee Jay do you think our budget problems would be a little better if this State didn't spend like a buch of crazy fools? We're 37th and dropping and I don't see anything good on the horizon. When the idiot legislature goes into special session we'll probably see a gas hike. How good will that be for business development and how will it be for the average citizen of the state. Just another kick in the slats.

Very profound information delivered from your parents basement comicshero.

"If O'Malley hadn't raised taxes, Maryland's budget situation might have been as bad as theirs." If the legislature had acted in the interest of the people and exercised some fiscal restraint over the last few decades there would have been no need for the O'Malley tax increase and maybe Maryland would not be 37th.
Nice snarky reference to "the usual suspects" For shame that they have cheap labor and low taxes. Someone should force them to raise taxes and increase labor costs so states like Maryland would score better.

Oh "bearded liberal" Jay! Elitist and tacky, tacky report...

These kinds of rankings are very suspect, often to the point of being meaningless. This one does not favor Maryland, while others such as Forbes rank Maryland much higher (14th in the nation -- see http://www.forbes.com/2010/10/13/best-states-for-business-business-beltway-best-states-table.html). It's like the state tax rankings -- some say Maryland is a tax hell, while the Council on State Taxation ranks Maryland as having the most business-friendly tax climate in the country (http://cost.org/WorkArea/DownloadAsset.aspx?id=76116). Some of the commenters here say Maryland is a big-spending state, but TaxAdmin.org says we are one of the lowest-revenue, smallest-government states in the nation, ranked 49th according to http://www.taxadmin.org/fta/rate/08stl_pi.html.

Florida's 11 percent unemployment rate is probably taken by Chief Executive is a plus--keeps labor costs low. As a former Florida resident I can report also that fraud is effectively legal there (and has been at least since the first "land boom" days early last century).

The game is simple: scam a bunch of people, buy a giant house with the money, then declare bankruptcy when your victims sue for breach of contract. You get to keep the house no matter what.

Makes for an excellent business climate--for the right kind of business person.

Others have answered your unemployment rate question but the state's ranking so poorly is a result of a state goverernment who can't get our of it's own way to issue any permits of any kind for any type of business endevor!

MDOT takes over a year to issue an "entrance" permit for any new business building along a highway. MDE takes 5 years to issue a "stream" crossing permit. MD's Planning Dept. thinks it can run a state based "zoning" system better than each county.

The urban vs. rural divide continues to expand with each session of the General Assembly. The concept of "One Maryland" has become twisted to mean only in Baltimore City & County along with Montgomery, Prince Georges and Ann Arundel.

Need I say more?

Maryland is in deep do-do. They have an artificial economy, due to Mr. and Mrs. Taxpayer. Subcontractors and thousands of other employees would not exist if it were not for the theft of money through federal taxes.
***http://laurel.patch.com/articles/federal-government-marylands-largest-employer-holds-workers-residents-in-limbo-6
Secondly property taxes in Charles County are through the roof. This is far from being business friendly.
Thirdly, didn't P.G. County have 19 murders the first 19 days of the calendar year?
***http://gorypg.blogspot.com/

I think if you cut out the Fed employees, subcontractors and consider the incredible over-regulation in Maryland, you will find that Maryland is an extremely "unfriendly to business" state. Count the number of large corporations with offices in P.G. and Charles County.
You won't find many.
Lastly, have you considered the condition of the public schools? Many colleges have complained of the recently high number of students graduating from high school that have to take remedial math, reading and writing, before taking a credit class.

@Matthew Weinstein: Yes, it is amazing how the truth can be distorted by statistics, isn't it?

What were the criteria used for the rankings? Let me guess: a bunch of rich white guys got together over a few martinis and decided to slam every state that has a Democratic governor. California 50th?! It has a larger, healthier economy than most of the world's countries. Ridiculous.

So what if a large part of Maryland's economy is based on the federal government? They're not moving the capitol anytime soon, and the government isn't going to stop spending money.

The MDE/MDOT bit above is nonsense. An instream construction permit takes about 6 months from submission and part of that is Army Corps of Engineers review. If someone has proposed something truly ridiculous or there's a lawsuit involved, it certainly could be longer, but that's not the standard case.

People keep claiming that employers are leaving the state, but so far none have been able to produce any evidence of it.

In Maryland you can be thrown in jail for cutting hair, applying makeup, hanging curtain rods, painting a living room, being a private detective, or offering advice on where to plant shrubbery without a license.

Starting a restaurant in Baltimore City takes over 2 dozen steps, involves 3 different city level agencies, and that's without a liquor license or any renovations to the building.

In addition to the MRI cartel that Jay spoke of on here a few months ago, MD also attempts to control health care costs through a Certificate of Need program which limits supply, and flexibility.

If you want to open an ethnic restaurant in Montgomery County, the first thing you need to do is make sure you aren't opening near any other ethnic restaurants.

Various counties throughout the state have a NYC style medallion program for their taxicabs which caps the total # of cabs.

Baltimore City and at least one other county have caps on the total # of liquor licenses. This is why city liquor licenses sell in the 6 figure range.

Montgomery County doesn't allow taxicabs older than 7 model years.

I was going to sell Cafe Hon t-shirts right in front of Cafe Hon to protest the trademark Nazi, until I found out all the hoops you had to jump through to get a street vendor's license and the penalties for operating without one.

Much of these regulations actually help larger businesses because they serve as protective barriers against competition. The cost to society is in the form of less total wealth, more concentrated wealth, less employment, lower wages, higher prices, and less choice.

To Matthew Weinstein who is from Progressive MD,

If you guys truly understood economics, you'd be pushing to deregulate entry level entrepreneurship just as hard as you're pushing to increase the minimum wage.

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About Jay Hancock
Jay Hancock has been a financial columnist for The Baltimore Sun since 2001. He has also been The Baltimore Sun's diplomatic correspondent in Washington and its chief economics writer. Before moving to Baltimore in 1994 he worked for The Virginian-Pilot of Norfolk and The Daily Press of Newport News.

His columns appear Tuesdays and Sundays.
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