December 31, 2011|Jay Hancock
What the year is likely to bring: Further housing price declines, more federal budget fights, the departure of Baltimore's only Fortune 500 corporate headquarters and computerized electricity meters that many seem to fear will read their minds and give them cancer.
Happy 2012! Actually, the business news will be better than that makes it sound.
The economy will continue to heal from the financial crash. People will continue to replenish savings. Housing prices will be getting closer to the bottom, and we'll be one year closer to normal unemployment and normal growth.
That said, however, things will continue to be challenging. Many of the stories will still be generated by aftershocks from the 2008 financial collapse and the gap between means and desires in Washington, which is still Maryland's most important employer. Here's what to expect:
Energy. Even the impending sale of Baltimore-based Constellation Energy, owner of Baltimore Gas and Electric, is connected to the market plunge. If Constellation boss Mayo Shattuck were still booking big profits on borrowed money and derivatives, Goldman Sachs style, he wouldn't be selling out to Chicago-based Exelon.
In contrast to previous buyout deals involving BGE and Constellation, this one is likely to go through. Gov. Martin O'Malley gets green-energy resources. Exelon has promised to double Maryland's solar- and wind-generated electricity capacity, at substantial cost to Exelon shareholders. Exelon boss John Rowe gets a signature merger to wrap up his career. Expect a closing in February or March.
BGE will start installing its first household "smart meters" this spring. The computerized gauges will track your electricity use by the hour and beam signals to the utility when the juice gets shut off and alert households to reduce consumption when the grid is threatened by blackouts. All 1.2 million BGE households are scheduled to get the hardware by 2014.
Maryland is unlikely to be spared the worry, glitches and controversy of smart-meter rollouts elsewhere. Some argue that smart meters' wireless signals are a cancer risk, even though there is little or no evidence. Smart meters in California were found to be generating inaccurate bills.
Last year Maine allowed customers who don't want smart meters to retain the old-fashioned ones. California is considering a similar measure.
Health care. Barring some extraordinary action, such as a fatal blow from the Supreme Court, health care reform is coming to Maryland and every other state. This year will be critical for planning Maryland's health benefit exchange, the one-stop insurance store for individuals and small businesses.
Details matter. For example: Will Maryland let insurers skim off young, low-risk beneficiaries and leave older, sicker folks to the exchange? That's a recipe for failure. But one remedy, subsidizing the sick by making insurance more expensive for the young, healthy and unemployed, is also problematic.
We'll also learn the results of St. Joseph Medical Center's search for a strategic partner. Revenue plunged at the Towson hospital after its star cardiologist was accused of implanting unnecessary coronary stents and the center was alleged by federal authorities to have paid kickbacks to referring cardiologists.
The Baltimore Sun reported last month that St. Joseph was talking to the University of Maryland Medical System as well as LifeBridge Health. But an alliance with nearby Greater Baltimore Medical Center seems most likely.
Real estate. Although declines in home prices seem to have been easing recently, housing will come under new pressure. After delays caused by robo-signing and other irregularities, Maryland foreclosures are set to spike up again.
Lawyers have refiled their paperwork and moved anew to seize homes owned by delinquent borrowers. That'll bring much of the so-called "shadow inventory" of unsold houses onto the market. However, mortgages of 4 percent and cheaper, enabled by the Federal Reserve, should continue to lure buyers at a gradual rate.
A group of downtown landlords challenging the State Center redevelopment project in midtown Baltimore may not get a final answer this year, but the case will make headlines when Baltimore Circuit Judge Althea M. Handy renders her decision.
The landlords, fearing the billion-dollar project will pressure downtown real estate, say it was improperly awarded to a development team led by Ekistics. If Handy rules against them, the landlords will probably appeal.
Manufacturing. From November 2010 to November 2011 Maryland lost 2,600 factory jobs, a substantially smaller shrinkage than what the state experienced during and immediately after the financial collapse. From the beginning of 2008 to the end of 2009 almost 15,000 manufacturing jobs disappeared, according to the Labor Department.
