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Finding Economic Freedom for Maryland

How can Maryland move forward to stimulate an economic development program that has placed the state near the bottom of the national rankings for attracting business?

EconomicFreedomMarylandMacRoReportIt’s only one word: “Leadership” that is what is required according to a report released this month from the Maryland Economic Development and Business Climate Commission (MEDBCC).

The commission made up of a cross section of state business, educational and government  leaders was appointed in March of 2014 by the President of the Maryland Senate and the Speaker of the House of Delegates.

The body was to focus on “the states economic development structure and incentive programs in order to make recommendations to the presiding officer.”

The commission broke the States recourses into three categories:

  1. Knowledge Capital
  2. Human Capital
  3. Entrepreneurial ecosystem

It was concluded that Maryland is very strong in the first two; however the third is very lacking.

While the findings brought tremendous reason for optimism, a number of critical impediments were identified as standing in the way of Maryland forging a clear path to improving its attractiveness to luring other businesses across state lines, retaining existing businesses and fostering new business through entrepreneurship.

Overall Maryland has been found to rank 44 out of the 50 states by a recent state by state comparison study conducted by the Mercatus Center at George Mason University.  The goal of the analysis was to index the Personal and Economic Freedoms of each of the 50 States.

Known as the Freedom Index the results and findings are eerily similar to that of the MEDBCC, which most business people throughout the state have long known about Maryland efforts in economic development:

  1. Economic entities need to be reorganized.
  2. The State’s economic development strategy is ineffectual.
  3. Federal activities in the State warrant increased attention and support.
  4. The State is viewed as deficient in providing customer service.
  5. Business in the State suffers from a lack of certainty and inconsistent timeframes for agency decisions.
  6. The State lacks sufficient data to access the performance of business incentive programs.
  7. Employment needs do not often match workforce skills.
  8. Apprenticeship are seriously under utilized.
  9. Education is a critical element to economic development.
  10. Technology transfer at universities is crucial and impeded by State laws.

To carry these findings a bit further consider the following:

Maryland ranks very high among other states for having a highly educated workforce; “however, many of the State’s workers are not well matched for the positions being created within Maryland.”

The higher educational infrastructure is solid in Maryland, which lays the foundation for growth entrepreneurial efforts. With skill demands changing rapidly, it is imperative that the systems stay on the cutting edge of course and training offerings.

The State is highly dependent on employment from the Federal Government to the point that almost one fourth of Maryland’s economy is bolstered by direct and indirect federal dollars. This is nearly three times greater than the average of all other state. While this is impressive, in the wake of federal cutbacks, there will likely be a negative impact of the local economy.

Maryland state tax “policies serve as a deterrent to businesses considering expanding in or relocating to” The Free State.

There is a “perception” that that Maryland does not foster a business friendly environment.  Most often sited from the interviews held by the MEDBCC was that there is culture problem with state and local governments that comes across as “We are here to assure that you comply with the rules” versus “We are here to help you grow your business and create jobs while complying with the rules.”

The State’s economic development efforts are not consolidated.  They reside in several silos, and furthermore there is no system in place to hold their efforts accountable

Maryland mostly competes for businesses within a geographical region that does not fall into the category of the best job creators since the recent recession.  Unfortunately, The Free State is among the poorest of these poor producers.

This is just a sampling of the 129 page “Interim” report from the MEDBCC.

From these and other findings the commission outlined 32 very doable recommendations to move the state forward. These ranged from suggesting that the entire economic development efforts of the State falls under and be accountable to the proposed position of Secretary of Commerce.

The MEDBCC believes that the most challenging of all of the recommendations will be to fundamentally change the culture within Maryland State government.  Such a change will require strong leadership, “not money.”

Of course such an effort will cost money, but the returns from such things tax cuts should far outweigh any loss of revenue the Democratically appointed commission discerned.

With the primary call for Leadership by the commission is it realistic to expect that Senate President Mike Miller, Speaker of the House Mike Busch and newly elected Governor Larry Hogan can come together to provide the influence to remake The Free State into an economic powerhouse?

Both studies from George Mason University and that of the Maryland Economic Development and Business Climate Commission are worthy reads.

Many lessons can be learned from these reports, especially by the recently appointed Economic Development Advisory Council set up by the Mayor of the City of Frederick, which should find many of the recommendations extremely helpful.

Interested in how economic development affects Frederick Commerical Real Estate? Stay in touch and subscribe to the MacRo Report!

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The author: Rocky Mackintosh, President, MacRo, Ltd., a Land and Commercial Real Estate firm based in Frederick, Maryland. He has been an active member of the Frederick, Maryland community for over four decades.  He has served as chairman of the board of Frederick Memorial Hospital, as a member of the Frederick County Charter Board from 2010 to 2012, and currently serves as Co-Chairman of the Economic Development Advisory Council to the Mayor of the City of Frederick … to name a few.

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