Storms chilled Md. economy

February 14, 2010|By Jamie Smith Hopkins and Lorraine Mirabella

Back-to-back snowstorms in Maryland put more than the roads into a deep freeze.

As the state was blanketed with record snowfall, much of the usual activities of business and government ground to a halt for the better part of a week. That's a lot of lost productivity - not to mention shopping, eating out, entertainment and all the other reasons consumers pull out their wallets when they're not trapped at home.

In all, Maryland lost about $830 million in economic activity, according to a rough estimate by the state Department of Business and Economic Development. That's a conservative back-of-the-envelope figure - just over a single day's worth of normal commerce - as researchers are trying to account for businesses that managed to continue operations, plus the catch-up that's expected as life gets back on track.

Putting a precise dollar figure on the economic impact is tricky because the effect on someone selling shoes is far different from that on a mechanic who fixes plows. But the economic benefits for a relative few are far outweighed by the downsides.

"Whenever the economy comes virtually to a standstill, that's not a good thing," said Ellen Valentino, state director of the National Federation of Independent Business. Even a couple of days after the second storm, some restaurants and retailers were "struggling to reopen," she added.

The weeklong disruption rippled across the economic landscape. Retail sales were down. Business expenses were up. And some individuals' incomes took a hit.

Meanwhile, transportation hubs were crippled, slowing commerce that depends on moving goods and people via the state's highways and through Baltimore- Washington International Thurgood Marshall Airport and the port of Baltimore. On two days, bad weather forced carriers to stop delivering mail. At one time or another, more than 130,000 Baltimore Gas and Electric customers were without power as downed trees knocked out lines.

But the storms were not just bad for business. They sapped Maryland sales and income taxes, even as the state is stuck with a tab for clearing highways that is expected to far exceed $50 million. That could lead to even tougher choices for state leaders already grappling with a yawning budget shortfall.

Warren G. Deschenaux, the General Assembly's chief fiscal analyst, estimates the snow-related tax revenue hit at $20 million, which includes the big December storm.

The state might receive federal aid to help with snow-removal costs, but any lost revenue "will make it that much tougher on the budget," Deschenaux said.

Scott Bernhardt, chief operating officer with Planalytics, a Pennsylvania firm that does weather intelligence for businesses, guesstimates that February's one-two punch erased nearly $2 billion in anticipated retail sales across states hit by the snow. That's almost as much as was lost in the snowstorm that hit the Mid-Atlantic region the weekend before Christmas when shoppers typically hit stores in force. While February isn't normally a high-traffic shopping time, the storms caused a longer whiteout affecting more of the country.

Jim Adams, owner of the Falls Road Running Store in Baltimore County, crunched the numbers and found that his sales so far this month are down nearly 60 percent from the same period last year. Even when he made it in, customers could not.

"People trickled in, but it was just a trickle," he said.

Businesses that had to keep operating as usual during this highly unusual period - hospitals in particular - had a lot of extra expenses to bear. That is particularly painful in the Baltimore area, where the health-care sector is a major driver of the economy.

The University of Maryland Medical Center estimates that overtime costs added at least 15 percent to its weekly $8 million payroll for the six-day storm period. At any given time, the hospital was housing 360 employees in parts of the hospital or in administrative offices with cots and linens, while another 300 employees were at area hotels taking turns getting four hours of sleep.

Hundreds of patients ready for discharge - and their families, in some cases - had to stay put because they couldn't get out. Some additional patient care costs might be borne by the hospital. And the snow-removal costs were "enormous," said Jeffrey A. Rivest, the hospital's president and CEO.

"No patient was turned away, and there were no unusual events - things were normal," Rivest added. "The financial impact is just a tough thing to swallow, but it's there. This will impact our bottom line for the year, and that's painful."

Also hard-hit were hourly workers who might not be able to make up for lost time on the clock.

Connie Kourtsounis, a 33-year-old hostess who earns $10 an hour, said she lost at least $250 in pay because the Towson Diner on York Road was forced to close last weekend and part of Wednesday. It's usually open 24 hours a day.

Kourtsounis was counting on last week's earnings to make car and health insurance payments.

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