Maryland's "traditional status as one of the nation's most prosperous states" is threatened by high taxes, inadequate energy resources, local growth controls and environmental restrictions, according to a bleak report by government economists.
At the same time, the number of workers on the state payroll is growing at a pace faster than in any other state in the nation.
The report was prepared by the Maryland Department of Economic and Community Development, the agency charged with luring business into the state.
While the state remains one of the more prosperous, it is the change in Maryland'd relative growth that worries the state's economists.
As late as 1970 Maryland occupied an envviable position out-ranking the majority of states with respect to all favorable economic indicators. But in the 1970s, most states are outperforming Maryland in terms of growth, the researchers discovered.
Here is how Maryland's economy compared to other states between the 1960s and the 1970s: in population, it slipped from the sixth fastest growing to 29th; in per capita income, from 18th to 32d; in nonagricultural employment, from ninth to 32d; in manufacturing employment, from 44th to 49th: in federal government employment from sixth to 15th; in service sector employment, from fourth to 38th.
Only in state government employment per capita, population, from 27th to first, and local government employment, from 33d to 13th, did it outperform the record of the 1960s.
Maryland's loss of 41,200 manufacturing jobs since 1970, 15.2 per cent of its total, was steeper than all but New York and the District's declines.
Between 1970 and 1975, the number of state employees grew at a rate of 7 per cent a year, ranking Maryland first among the 50 states and the District of Columbia, the report showed.
Figures supplied by the U.S. Departments of Commerce and Labor though not included in the report, show the Maryland had 45,410 employees in 1970, and 64,270 in 1975. As of October, 1976, there were 65,450 employees on the state payroll.
The report, and especially the part that dealt with the spiraling state payroll, evoked criticism from Lt. Gov. Blair Lee III, who said that "a great deal" of the increase in the number of employees resulted from the state taking over functions previously assigned to local governments.
Lee also took issue with a numner of recommendations contained in the report, saying "I get the feeling the department is grinding its own ax."
Joseph G. Anastasi, the cabinet-level secretary of the Department of Economic of Community Development, said one goal of the report is to "make economic issues a matter of discussion" in next year's state elections, and from Lee's reaction, he will succeed.
Lee, who will seek the Democratic nomination for governor next year, scoffed at the pessimistic tone of the report, saying "it says our per capita income ranking increased from 12th (in 1970) to 11th (in 1975) yet they are not happy about the rate of the increase."
Anastasi acknowledged that the sharply worded.142-page report "breaks tradition" with previous glowing reports about the status of the state's economy by "examining Maryland's long-term economic prospects."
Anastasi said that during the 1960s, the state "grew despite itself," and a result, paid little attention to economic factors.
One hint of trouble on the horizon is that between the late 1950s and 1970, Maryland tended to fare better than other states during recessions but worse during economic upswings that trend did not occur between 1970 and 1975, the report said.
The state lost about 41,200 manufacturing jobs between 1970 and 1975, prompting Anastasi to express concern about young people growing up in the state and being told there are no jobs, and "that we are running out of gas and oil and a new house will cost $100,000.
"It's frightening," he said. "It's time for the legislature to address its concerns to out-migration . . ." He indicated that the governor and legislature "never really addressed economic problems . . . It's not a sexy issue until you're broke or can't pay a bill.'
The report identified these factors as major obstacles to growth in Maryland:
Energy supply. "Probably the most serious handicap to economic growth in Maryland is the unavailability of natural gas to new customers," the report said. It found that Maryland is "one of the few states . . . whose gas utilities will not hook up any new customers. It is among 23 that will hook up no new industrial customers. Obviously, if firms can get natural gas in other states but not in ours, they may well decide to locate outside Maryland, since natural gas is by far the least expensive source of energy in many industrial processes."
The price and availability of electricity also puts the state at a disadvantage, according to the study. Maryland's small industries paid the fourth highest bills in the nation in 1975, while its medium-sized industrial consumers paid the seventh highest.
Taxes. The study concluded that the average tax liability per household is greater in Maryland than in seven states with shich it competes for new industry: Ohio, Pennsylvania, New Jersey, Virginia, West Virginia and North Carolina.
Business taxes alone are about equal among the eight states, but individual among the eight states, but individual taxes in Maryland are higher even before the higher sales tax, that goes into effect June 1 is considered.
Growth controls. "Restrictive zoning, sewer moratoriums and particularly adequate facilities ordinances discourage economic development, impose higher costs on consumers by inflating developable land values and inhibi job creation," the report stated.
Enviromental regulations. While the report noted that most of these restrictions are of federal origin and therefore no particular disadvantage, it added that some state legislation has imposed more stringent standards, specifically in the case of the ambient standards for suspended particulate matter and sulfur dioxide, and emission regulations on particulate matter and hydrocarbons.
If these higher levels of environmental protection are justified, the report suggested, "pressure must be exerted on the federal government to tighten pollution regulations nationwide."
The department was critical of growth, limiting laws that have been increasingly applied in Maryland's counties. Both Anne Arundel and Baltimore counties have adopted temporary "adequate facilites" ordinances that requires all sewer and water lines to be in place before building permits are issued.
"Communities rarely build ahead of demand," said the department's research director, Padraic P. Frucht, "but only when pressure is applied on existing facilities. Adequate facilities ordinances prevent a build-up of demands, so therefore you never get the facilities," Frucht said.
"If we opt not to grow," said Anastasi, "we will lose our people to states that want to grow, such as North Carolina, Virginia and Pennsylvania."
The report also recommended various measures designed to stimulate business investment in the state.
The state should give funds to local governments to enable them to grant tax benefits to new industries, the report said.
The state should oppose the movement towards shifting the burden of electricity costs from residential to commercial and industrial users. The report favored setting aside and allocation of natural gas for new firms locating in the state.
The department suggested resisting all efforts to create "agricultural districts" and other proposals that make it more difficult to convert farmland to other uses.
The report also opposed any law that would ban one-way beverage containers or impose a deposit on them.
To restore tax revenues to Balitmore City - the state's commercial center - the report recommended that a fund be created throughout the state with money from increased assessed valuations.