By Christopher anderson
WASHINGTON – Maryland got $1.31 back in federal spending for every tax dollar it paid to the federal government during the last fiscal year, according to a recently released study.
The state’s return on its federal dollars has grown steadily over the past 10 years, according to the Northeast-Midwest Institute, and economic experts expect that trend to continue, with increased spending in security, defense and biotechnology following the Sept. 11 attacks.
“These are some of Maryland’s key industries,” said Anirban Basu, , a Towson University economist. “It just cements our notion that the federal government would play an enormous role in Maryland’s economy.”
The study, which only measured federal taxes and spending through Sept. 30, 2001, showed that Maryland was among the top five states in terms of federal spending per capita. The study, released in November, also showed Maryland had one of the highest rate of return on its federal tax dollars in the Northeast in fiscal 2001.
Overall, states in the South and West got back more of their federal tax dollars in government spending than those in the Northeast and Midwest, the study showed.
“Maryland, because of its proximity to the capital, comes out smelling like a rose,” said Matt Kane, a policy analyst for the institute, a non-profit research group funded by Northeast and Midwest states.
That proximity has helped both Maryland and Virginia bring in federal jobs and contracts, allowing them to buck the regional trend toward lower returns on federal tax dollars. Virginia got $1.54 back on every tax dollar, the report said, and nearby West Virginia got $1.83.
Other Northeast states did not fare as well as: Pennsylvania got $1.09 for every dollar it paid in federal taxes, Ohio got back $1.02, while Delaware and New York each recouped only 84 cents.
“While many of the states in the Southern United States and in the Plains states generate extraordinarily high returns . . . the fact of the matter is the most distinguishing characteristic of both Maryland and Virginia economies is the presence of the federal government,” Basu said.
Pradeep Ganguly, chief economist for Maryland’s Department of Business and Economic Development, agreed that the presence of agencies like the National Institutes of Health, NASA, the Food and Drug Administration and others “has a major effect in Maryland.”
Not only do these federal agencies bring jobs and other federal spending to the state, Ganguly said, they have also helped soften the blow of the recent economic downturn.
“In this recession we are noticing the job losses have not been as extensive as in the entire United States,” he said.
“Maryland went into it (the recession) later, and it has been much more shallow,” added Michael Evitts, a spokesman for the state economic development department.
Ganguly agreed with Basu that the numbers will likely get better for Maryland.
“It does appear that post-Sept. 11, 2001, the areas where government spending has gone up are areas where Maryland has an advantage,” Ganguly said.
