Maryland edged New Jersey to win the wealthiest state in the country label according to recent U.S. Census statistics.
Many economic development officials gushed about the result ? showing the state?s median income reaching $65,144 in 2006 ? saying it signified the strength of Maryland?s economy and the quality of its work force. But the reason Maryland holds that position is in large part because it siphons tax dollars from other parts of the country in the form of high paying federal government jobs and positions created by federal government contracts.
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That is not a stable foundation on which to build a strong economy long term.
The national recession in the early 1990s lasted longer and was more onerous in Maryland because it particularly affected government, the defense industry (largely dependent on government money) and financial institutions ? key industries in the state. According to the 1998 Maryland Legislative Handbook, “While the U.S. lost 1.6 percent of payroll employment between July 1990 and March 1991, Maryland?s job loss continued through September 1992. Overall, Maryland lost 109,700 jobs (peak to trough), equivalent to 5 percent of its workforce.”
If anything, Maryland is more vulnerable to a recession now than it was in the 1990s.
According to 2004 figures, the most recent, Maryland is home to the fifth highest number of federal government employees in the country ? 130,000. Those jobs paid an average of $63,058 in 2004.
The figures do not include employees working at top-secret agencies in the state nor does it include the thousands projected to move to the state through the Base Realignment and Closure process, which would bump both the numbers and the pay higher.
Maryland is also home to the third highest number of companies with federal government contracts ? 350. Only Virginia and California beat it in that position.
Those figures should humble legislators, not embolden them to raise sales and other taxes, as many have proposed, to fix the state?s $1.5 billion “structural” deficit. A declining housing market could push the nation into a recession, lowering tax revenue and the amount of money the federal government can distribute. The housing slowdown already is dampening state revenue from transfer taxes.
It is only prudent for state legislators to acknowledge that fact by not increasing the state?s tax burden on businesses or individuals. In times of need, those in the true private sector ? not dependent on government largesse ? will pay the bills.
Higher taxes on members of that group only mean fewer will be able to survive or choose to stay in Maryland ? and that would mean less backup for everyone else.
