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Even Keel Economy

Feb 10, 2014 01:26PM ● Published by Cate Reynolds

By LEN LAZARICK and MARK SMITH

"Not bad” is the new normal for the Maryland economy and the local outlook in 2014. “Things are getting better,” says economist Anirban Basu of the Sage Policy Group, “but that doesn’t say a whole lot.”

The stock market is up in nearly every category, home sales and housing prices are on a rebound, car sales are up—though not as much as nationally—and unemployment is down. Yet “it doesn’t quite feel like a full recovery,” says Daraius Irani of the Regional Economic Studies Institute at Towson University. Maryland has actually been able to recover all the jobs lost since the Great Recession began in 2008. That’s hardly good enough, though, as college and high school grads have entered the labor market, keeping state and Anne Arundel County unemployment at nearly twice what it was before the downturn hit.

Yet, Irani notes, “Consumers are out there spending like crazy.” Overall, he’s predicting 2.4 percent growth in 2014, a little lower than Basu’s projections, and lower still than the 3.2 percent growth and higher that Marylanders were used to. Moreover, notes an analysis by the Maryland Association of Realtors, “a number of tailwinds have emerged more recently, each positioning the Maryland housing market to accelerate this spring if not before. Home prices continue to rise, helping to create greater urgency among prospective buyers and to restore the investment motivation that generally supports home buying activity. Gas prices have fallen. Job growth has accelerated. Equity markets have achieved record highs.”

FEDERAL DOMINANCE HAS PLUSES AND MINUSES

There’s always a “but,” particularly when it comes to actions by the federal government.

“Federal austerity and gridlock are impeding Maryland’s recovery,” Moody’s Analytics says in its forecast. “As budget cuts continue, federal agencies have cut positions in Baltimore and Washington, D.C., leading household employment to fall and pushing the unemployment rate to 7 percent, just a shade below the national rate.” Anne Arundel’s rate is a point or so below that.

The biggest “but” on the state and county economy is the role of the federal budget. As of press time, we don’t know how ongoing budget talks in Congress will turn out. Maryland is third in the nation for most government-financed employment, according to a new economic study from the Mercatus Center of the George Mason University. The state ranks fifth in the U.S. for the number of public-sector and federal contract jobs as a percentage of total jobs at 27.3 percent. More than a quarter of Maryland jobs are a direct result of taxpayers’ dollars, and the figure is higher for Anne Arundel.

Yet, on the other hand, while the Defense Department is targeted for some of the most severe cutbacks, Basu and many other observers doubt those cutbacks will much affect Anne Arundel County’s core employers—the National Security Agency and U.S. Cyber Command, both headquartered at Fort Meade. Thousands more work at the private contractors that fill nearby office parks. One of the recent leaks about NSA showed the agency’s budget was close to $11 billion. Some of that is spent elsewhere in the country and overseas, but much of it likely stays here.

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INTERESTING CHOICE FOR ECONOMIC DEVELOPMENT

County Executive Laura Neuman made an interesting choice in selecting Col. Edward Rothstein, the retiring garrison commander at Fort Meade, as the new president and CEO for the Anne Arundel Economic Development Corporation (AAEDC).

That news was greeted with some raised eyebrows within the region’s business community. In Rothstein’s 30-year Army career, he served as intelligence operations officer in Afghanistan and worked as intelligence staff action officer at NSA. He provides a key link to the huge military base, while he and his staff keep in tune with other economic development generators.

Most recently, those efforts have included the creation of Business Week—where various AAEDC-led crews met with local businesses and nonprofits—and the capital boost that is available via the VOLT Fund.

Image title“Anne Arundel County’s location has been described as the cyber corridor,” Rothstein says. “I am committed to promoting this great county as the destination for business rather than a pass through. From the location of major government and corporate entities in our area, particularly around and near Fort Meade, to initiatives we are developing to foster a more business friendly climate, and, certainly, to our commitment to supporting the growth of a diverse business community, I know that more entrepreneurs and innovators will be calling Anne Arundel County home for years to come.”

Rothstein left Fort Meade during a serious expansion mode, as the Base Realignment and Closure process (BRAC) resulted in the relocation of the Defense Information Systems Agency, the Defense Media Activity and the Defense Information School to new headquarters on the post. That occurred just as the construction of the new U.S. CyberCommand got under way at the old golf course site, among several other upgrades on and around the sprawling campus.

“Anne Arundel County has an important distinction as home to more than 50,000 small and large businesses, and government agencies,” Neuman says. “I am relying on Col. Rothstein to assist our businesses that do work with the government and the military. “With [his] well-earned reputation as a connector, I am also looking to him to be a strong and dynamic link between businesses and the Office of Public Zoning and Inspections and Planning, often the greatest challenges to businesses. Col. Rothstein will be an extraordinary asset to my administration.”

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OUTREACH TO BUSINESS

During Business Week in November, representatives of the AAEDC visited “about 90 businesses via six teams from all different kinds of industries,” says Mary Burkholder, who served as a consultant/ interim president and CEO for the organization until Rothstein’s arrival. She is now executive vice president.

The effort was the first business outreach in many years, Burkholder says, and it employed the services of about 70 business ambassadors, including county officials and representatives from the county’s assorted chambers of commerce.

“We gained a considerable amount of useful information,” Burkholder says, “including that some of the businesses owners were pretty happy. We stressed to the teams that we were looking for honest reports, so we wanted the good, the bad, and the ugly. Therefore, we also heard about issues with planning and zoning,” and other problems related to stormwater, roads, and sidewalks. “Some of the visits were to local businesses that we had helped with funding,” she says, noting that Neuman joined in on several visits. “From what I saw, the businesses were very happy to have someone call on them.”

The AAEDC is in the midst of follow-up efforts after finding out several of the businesses want to expand/add services, and others who experiencing permitting issues. “We’re very happy with the overall effort and we’re already planning a similar effort for 2014,” Burkholder says.

“And the businesses we missed this time,” she adds, “we’ll catch up with next time.”

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