WASHINGTON – The federal government spent more than $57.6 billion on contracts, salaries and aid payments to Maryland last year, or $10,464 per state resident, according to a report to be released today by the Census Bureau.
The per capita spending rate was third-highest in the country, trailing only Alaska’s $12,244 per person in federal funds and Virginia’s $11,163, according to the Consolidated Federal Funds Report. Maryland moved up from fifth place in fiscal 2002, when federal spending totaled $9,076 per person.
Maryland’s overall federal spending grew from $54 billion in fiscal 2002, mirroring a national increase in federal spending of about 6 percent, the report said. Overall, federal agencies doled out $2.1 trillion last year for domestic spending, it said.
The state saw the biggest increases in procurement spending, or money that primarily went to private companies for federal contracts, which shot up 20 percent from fiscal 2002 to fiscal 2003.
The $16.2 billion in procurement contracts was almost double what state businesses earned in 1994, the report said. Spending in other areas included $13.3 billion for retirement and disability payments, $10.3 billion toward federal workers’ salaries and wages, $9 billion toward direct payments such as Medicare and college loans, and $8.6 billion toward grants.
Mark Goldstein, an economist at the Maryland Department of Planning, said “geography is key” to the state’s sharp increase in procurement contracts.
“You have private businesses located in this area for easy access to the . . . government,” he said. “Firms will locate in the state to get access to the agencies, and that’s why the procurement dollars are flowing into Maryland on a disproportional basis.”
But one labor union official speculated that there may be other factors at work in the increase in private contracts.
Jacqueline Simon, public policy director for the American Federation of Government Employees, noted that more and more government work is being outsourced to private companies, including some jobs formerly held by civil servants.
“We have a shadow of a contractor workforce that is three to six times bigger than the federal workforce,” Simon said. “No one knows about how much tax dollars are going to fund these shadow workers.”
Chris Foster, the deputy secretary for the Maryland Department of Business and Economic Development, agrees that there has been a trend toward privatization, but he sees it as a boon for the state.
“We have a good economy, especially in the aerospace and defense economies . . . we’re doing really well,” Foster said. “We’re big winners in both of these markets.”
He added that higher procurement spending is “indicative of a slightly more diverse economy” that includes companies working in such sectors as information technology, homeland security, aerospace and defense. Those factors are a big reason why Maryland’s contractor funding grew at a faster rate than neighboring Virginia’s during the past five years, Foster said.
Despite that growth, however, Maryland’s overall federal funding level still fell behind that of Virginia, which received $82.5 billion last year, good for sixth-highest in the nation.
Maryland finished 10th among states. California took in the most overall in fiscal 2003, receiving $219.7 billion for the year, well ahead of No. 2 Texas, which took in $140.5 billion.
In virtually all areas of federal spending during the past decade, Maryland has kept up with or surpassed the national rates of increase during the past decade. Since 1994, the amount of federal money given to Maryland rose 61 percent, slightly higher than the national 57 percent increase.
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