Business is good in Maryland even if its reputation isn't

October 22, 2006|By Jay Hancock | Jay Hancock,Sun Columnist

Maybe there was a year when Maryland got more abuse for being "anti-business," but I can't remember it.

The General Assembly's attempts to force Wal-Mart to boost medical benefits, fire the entire Public Service Commission and alter Baltimore Gas and Electric Co.'s rate increase prompted uncountable diatribes.

"Lights out in Maryland," said the headline on a Wall Street Journal editorial. The legislature's approach to the electricity problem, the Journal said, speaking for many, "is just one more example of how Maryland is developing a reputation for being a bad place to do business."

Maryland's fame as a business basher now seems universal -- except among Maryland businesses.

The latest business-climate survey from the University of Baltimore's Jacob France Institute shows that the percentage of companies that believe Maryland is "pro-business" or "business-friendly" was the highest since the survey began a dozen years ago. At the same time, the percentage of companies rating Maryland "anti-business" or "business unfriendly" fell to a record low for the poll.

What's the deal?

Seventy-four percent of the companies responding to the poll gave Maryland a pro-business score. Sometimes in the mid-1990s, fewer than 40 percent gave the same answer in the quarterly survey.

Nine percent of the companies said Maryland is anti-business. A decade ago as many as a fourth of the firms sometimes said so.

You might suspect that because Gov. Robert L. Ehrlich Jr.'s Department of Business and Economic Development paid $30,000 for the France Institute report, and that the governor is running for re-election, surveyors cooked the books to make him look good.

But the institute hasn't changed its methodology since the survey began, says Richard P. Clinch, director of economic research. Besides, it got a lesser amount of DBED money when Parris N. Glendening was governor and had no problem delivering bad news then.

Maybe companies that think Maryland is friendly are focusing on Ehrlich, who vetoed the Wal-Mart bill, fought the PSC defenestration and had his own plan to ameliorate electric-rate increases. He might be seen as the grown-up keeping the wacky legislature in line.

Problem: Pro-business ratings for Baltimore and its mayor, Democratic gubernatorial candidate and Ehrlich opponent Martin O'Malley, are also up.

"The business perception of both the mayor and the governor are positive," says Clinch. "You see that perceptions of Baltimore City as a place to do business have gone from below average to average to above-average, in some quarters."

Maybe companies see the courts as pro-business bastions. The Maryland Court of Appeals reversed the PSC purge, and U.S. District Judge J. Frederick Motz tossed out the Wal-Mart bill after the Assembly overrode Ehrlich's veto to approve it.

Or maybe they correctly interpret as pro-business the General Assembly's attempts to make Maryland electricity more affordable (although the attack on the Public Service Commission was too much). Kilowatts, after all, are a crucial economic input. There is no free market for electricity in Maryland, so policymakers must step in. Consumers who pay less for electricity have more to spend in stores.

But the real answer to the conundrum is probably that Maryland companies are so busy making money that they think profits and a good business climate are the same thing.

Pro-business is as pro-business does, and the mid-2000s will be looked back on as one of Maryland's great booms along with the late-1990s dot-com bonanza and the 1980s defense buildup.

The University of Baltimore survey "has always kind of moved in tandem with how the economy is going, and the Maryland economy is good," said Clinch.

"We never had a recession. We're growing. We're growing faster than the national average. And the growth doesn't appear to have any point of stopping in the near term."

What's Maryland's business climate really like? The work force is highly educated and competent. The industry of the future -- biotechnology and health care -- has deep roots here. The state continues to grow as a transportation hub. Quality of life is high, and the taxes to support it are not suffocating.

On the other hand, the Wal-Mart attack suggests a chill beneath the sunshine.

The Wall Street Journal. The University of Baltimore report. The truth is somewhere in the middle.

jay.hancock@baltsun.com

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