If Washington is heaven, then
Maryland is it?s closest suburb.
Bureau of Economic Analysis statistics make this clear. Maryland ranks first in median household income and fifth in per capita income.
But the real data come from digging beneath the numbers. Almost 14 percent of Maryland?s total income is from the federal government, compared to about 5 percent nationally.
These numbers don?t count federal contractors in the mix. If those could be added, total compensation by the federal government in the state would skyrocket. It?s part of the reason Howard and Montgomery counties enjoy the two highest median incomes in the country.
As Dick Story, executive director of the Howard County Economic Development Authority, told The Examiner: “The bottom line is Howard County still will be better off than anyone else because of our structure and the economic engines that drive the county,” located close to Washington and to Fort Meade.
In recent times, this special relationship with Washington accelerated the state?s economy. It is a big part of the reason the unemployment rate was a full percentage point lower than the nation?s last year.
But that hasn?t always been the case. The recession in the early ?90s hit Maryland twice as hard as the rest of the nation in terms of job losses because of its dependence on the federal government as its economic engine.
With many economists estimating we are already in a recession, it is more than timely to question the value of that special relationship.
A prudent state government would do everything in its power to unleash the forces of the private sector as a hedge against our federal dependence. Instead, our legislators debate how high to raise taxes and on whom. They can?t even agree to drop the sales tax hastily applied in the special session to one of the state?s most vibrant sectors, the computer services industry.
If they don?t kill it, however, the estimated $200 million the tax is slated to generate will be dwarfed by the loss of all forms of tax revenue as personal income and spending drop.
Legislators need to start thinking big about where Maryland fits in the national economy and give the state a chance to thrive amid a recession. Changing its geographic location is impossible. So surely cutting $200 million from the budget is worth the trade-off.
