Don Fry Commentary on WYPR
The Maryland General Assembly recently ended a difficult, deficit-dominated session. Despite the budget trauma, a number of bills passed that will have a positive impact on Maryland’s business climate and economic growth.
For instance, in a tight budget year, the state was still able to provide $6 million in available tax credits for investment in Maryland bioscience companies. The new state budget also includes a $7.7 million increase in funding for Maryland’s community colleges, which are key workforce-training partners with businesses. This is one of the few areas where budget funding will increase.
Other positive outcomes include measures to strengthen Maryland’s minority business enterprise programs and to provide $15.4 million for stem cell research – down slightly, but still a significant amount.
Meanwhile, a bill to re-regulate electricity did not pass. That’s a good outcome, in my opinion, because acting in haste on the complex issue of electricity re-regulation would have been foolish, especially since a recent report by the Maryland Public Service Commission argued against it. Hasty re-regulation would be fraught with potential unintended consequences.
Budget balancing will remain the big challenge in Annapolis. The Fiscal 2010 budget reflects not only the negative impact of the recession on Maryland’s finances, but the positive fiscal effect of Maryland’s federal stimulus funding share.
Lawmakers used $2.5 billion in stimulus money to plug budget holes in the current fiscal year and for Fiscal 2010. Using this short-term federal windfall still leaves the state with a substantial built-in deficit. Next year, lawmakers will again look to the second round of stimulus funding to resolve deficit issues.
But stimulus funding will last only so long. The state could face larger deficit challenges two years from now. The Governor and state lawmakers are hoping that, by then, Maryland’s economic performance will return to pre-recessionary levels. But I’m thinking that it would not be fiscally prudent for anyone in Annapolis to count on it.
Maryland dodged a budget bullet this year, but a major fiscal reckoning still lies ahead.
For the Regional Business Report, this is Don Fry, President and CEO of the Greater Baltimore Committee, for 88.1 WYPR, your NPR news station.