Local governments in Maryland are growing thanks to higher taxes banking their payrolls, a trend that bucks the rest of the nation and stands starkly in contrast with downsizing in Virginia, new U.S. census survey data show.

The number of people on local government payrolls in Maryland grew by nearly 3 percent -- or about 6,000 people -- to 220,314 during the year that ended in March 2012, the data released Thursday show. The growth comes while most local governments shrank their payrolls, combining for an average drop of 1.7 percent nationwide. Meanwhile, local governments in Virginia collectively downsized by 1.4 percent, or roughly 4,500 people, to 313,907 total.

By the numbers
  Population Local gov't Annual change State gov't Annual change
Maryland 5.8m 220,314 2.9% (6,104) 86,714 -1.8% (-1,604)
Virginia 8.1m 313,907 -1.4% (-4,463) 124,930 0.2% (224)
U.S. 311.6m 12.0m -1.7% (-204,781) 4.4m -0.4% (-18,397)

At the state level, Virginia stayed relatively flat, adding about 200 people to its roughly 125,000 state employees. Maryland's nearly 87,000 state workers represents a total that's about 1,600 fewer people than last year.

Maryland's surge in local governments is largely due to increased taxes that allow local jurisdictions to keep their higher payrolls, said economist Anirban Basu, CEO of Sage Policy Group in Baltimore. But raising taxes has taken its toll, he added.

"Virginia has been less willing to raise taxes on its people and therefore has sustained a better business climate," Basu said. "Maryland's business reputation, I believe, has deteriorated significantly in recent years, and much of that is due to the almost constant state chatter of raising revenues."

The two states took vastly different approaches to closing budget gaps this year, with the Old Dominion relying almost entirely on spending cuts and Maryland lawmakers pushing for a multimillion-dollar package of new taxes, including raising income taxes on residents earning more than $100,000. Montgomery County raised its property tax rates this year, added a disposable bag fee and, in 2009, increased energy taxes 150 percent on residents.

Basu noted that states -- depending on whether their voters are primarily left-leaning or right-leaning -- have different "tax philosophies," and what's acceptable to most voters in one state might not be in the next. However, he said Maryland's state and local governments could be pushing their taxpayers over the edge.

"Maryland has gone too far," he said, "meaning that the Maryland tax rates are now sufficiently high enough to be driving out a significant level of economic activity from the private sector."

Still, when states spend more, residents get more, he said. Tax-happy Montgomery County has the nation's top-rated large public school system, for example. The top gains in local government employment in Maryland have come in the education, health and law-enforcement sectors. Local Virginia governments have made employment cuts in education.

In addition, some business leaders believe that thriving government employment stimulates private-sector growth.

"The private sector continues to grow in this region apart from ... but also because of its partnership with government [entities]," said Jim Dinegar, president and CEO of the Greater Washington Board of Trade.

The statistics are based on an annual survey taken by the U.S. Census Bureau each March and counts "full-time equivalent" employees, which represents the number of full-time workers that could have been employed if the reported number of hours worked by part-time employees had been worked by full-time employees.