Md. given high marks on economy But report ranking state 2nd in U.S. is too rosy, critics say

May 06, 1993|By David Conn | David Conn,Staff Writer

Despite suffering repeated budget shortfalls and the nation's fifth-worst rate of job loss last year, Maryland still had the second-best economy in the country, according to a Washington consulting firm.

But several economists have criticized the report for painting too rosy a picture of an economy that is trying to shake off the effects of a recession that was deeper and longer than anyone had predicted.

The Corporation for Economic Development (CFED), which each year issues a report card ranking the states' economies, said only Colorado had a better economy than Maryland in 1992, though Utah and Washington also tied for second place. The report card, released today, ranks states according to three categories: economic performance, business vitality and development capacity.

In economic performance, Maryland scored an "A" and ranked fifth, down from second in 1991, because of "strong job earnings, a low poverty rate and fairly equal income distribution," according to the CFED, a nonprofit economic research and consulting organization.

"Maryland claims top-notch technology resources and a strong infrastructure," which contributed to its sixth-place rank, up from ninth the year before, in development capacity, said the company. "Nonetheless, human and financial resources are only fair."

Only in the third category, business vitality, did Maryland drop a grade from the year before, falling to a "C," or 28th place, from a "B," or 20th place. Business vitality includes the competitiveness of existing businesses, the state's entrepreneurial energy and the economy's diversity.

The high overall grades might seem odd in light of Maryland's struggle with the recession last year.

The federal Bureau of Labor Statistics reported last week, for example, that the state lost 21,200 jobs in 1992, the fifth-worst performance in the nation. State and local governments, meanwhile, were hit with a series of painful budget cutbacks in the past few years as individual and corporate income taxes fell far short of original estimates.

"I think that the report generally overstates the economic development environment in Maryland in relation to other states because there are certain things they do not measure that are not readily quantifiable," said economist Michael Conte, director of the University of Baltimore's regional economic studies program.

Maryland is sorely lacking in educational quality, transportation spending and a general willingness by state officials to pull out the stops in attracting companies to Maryland, Mr. Conte said.

Other economists have questioned the CFED report card's high grades for states such as Massachusetts, clearly one of the hardest hit by the latest recession.

The Maryland economy's weakest points were its air quality (46th place), which isn't included in the final grades, and the ratio of business loans to total loans (42nd place) as well as the rate of business closings (42nd place), both of which are included in the grading.

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