Yesterday I posted on Third Friday, a monthly event that’s become so successful that it spawned a similar spin-off called First Saturday and may have pushed downtown redevelopment over the hump. Similarly, there are some new businesses and apartments going up on the northern edge of the city along U.S. 13, and even the venerable Centre of Salisbury – venerable as a 27-year-old mall can be, I suppose – has the promise of something Salisbury has longed for, a Cracker Barrel restaurant. It’s slated to be built in the parking lot outside the abandoned J.C. Penney store. (Shoot, I was happy when Buffalo Wild Wings finally made it here from Ohio.)
But there is one prime area that has all the ingredients needed for success – plenty of traffic, good visibility, and reliable city utilities. Yet it sits vacant and unused because its plans for development came along at a bad time.
Several years ago, before my unplanned exile from the building industry, I helped draw up a proposed project which would have established a third attraction for Salisbury. Obviously we know the Centre of Salisbury was a retail destination point and at the time the downtown area was being discussed as something which, as it turns out, it is in the process of becoming – a place where visual and performing arts serves as the draw, along with a handful of local eateries.
But the plot of land just south of Perdue Stadium had its own node, with a guaranteed gathering of anywhere from 500 hardy, weather-tested souls to overflow crowds of over 8,000 people 60 to 65 times a year during the spring and summer. Add in the thousands of travelers driving by and there was the potential for a destination of its own; close enough to the beach to be a viable alternative for budget-concious travelers looking for something with a slower pace, yet with the attractions to enjoy a summer evening without the need for driving around.
As originally envisioned, the development had several key elements for success: office space for workday usage, restaurants for both travelers and those seeking a place to have a business or casual lunch, and lodging for those who wanted to have an anchor point to explore the area yet not have to deal with beach crowds. Its misfortune was beginning the development process at a time when we were entering the Great Recession of 2007-whenever. (Some may argue the area is still in one based on employment numbers.)
One other proposal envisioned for the site was the construction of a new Civic Center on the opposite side of the Perdue Stadium parking lot. Besides the obvious plentiful parking available, a new Civic Center would have the advantages of making beer sales at events possible (a deed restriction for the property of the current Wicomico Youth and Civic Center prohibits alcohol sales as a condition of having it donated to the county for its use) and could be configured for more seating than the current arena to attract larger acts.
Any action on that, however, is several years to a decade away. Yet the county is putting money into 20-year-old Perdue Stadium and the owners of the Delmarva Shorebirds are committing themselves to another two decades as the station’s prime tenant. In short, the main attractions aren’t going anywhere.
Yet this valuable land sits as a part of Salisbury time and economics seemingly forgot.
I understand the emphasis our city fathers have placed on revitalizing downtown and trying to make it a close-by gathering place for both young professionals and Salisbury University students. With a transit system already in place to ferry students from campus to downtown several nights a week and grand plans to spruce up the Business Route 13 corridor from SU to the east edge of downtown, city visionaries and elected officials have it covered. Meanwhile, the part of town encompassing the Centre of Salisbury up toward Delmar seems to be doing just fine although admittedly some of that retail may be getting long in the tooth and due for upgrades. The closing of J.C. Penney was just another pockmark on a facility which may need its own transformation in the next decade lest it suffer the fate of the old Salisbury Mall it replaced.
But that rebirth can be set on the back burner for now. Downtown development may be the place where the cool kids go, but there are other assets Salisbury can put in play with the proper foresight and investment. Imagine what could be there now if things had proceeded a decade ago, and work to make it a reality in the next few years. The infrastructure is already there thanks to the aborted previous plans, so let’s get this diamond in the rough to shine.
A couple weeks ago I pointed out that about two dozen bills passed by the Maryland General Assembly this year were still pending after Larry Hogan had his final bill signing session May 12. Here was the list of bills I urged him to veto:
- House Bill 51 (Circuit Court fees)
- House Bill 54 (Circuit Court fees)
- House Bill 345 (flexible leave)
- House Bill 449/Senate Bill 409 (fracking regulations)
- House Bill 838/Senate Bill 416 (mandated IVF coverage)
- House Bill 862/Senate Bill 743 (birth certificates)
- House Bill 980/Senate Bill 340 (ex-felons voting)
- Senate Bill 190 (travel tax)
If he wishes to let the decriminalization of marijuana become law without his signature, that’s quite all right.
So I’m very disappointed to report that the deadline came and went while Hogan was away in Asia, and only two of those bills were properly vetoed: HB980/SB340 and SB190.
Yet while he turned aside the travel tax, Governor Hogan increased a number of court fees and kept an additional O’Malley fee increase scheduled to sunset this year for another five years.
The governor who claims to be business-friendly and who wanted to create jobs went against the wishes of his party on flexible leave and thwarted the introduction of fracking to Maryland for another two years. This after announcing during the campaign:
States throughout the country have been developing their natural gas resources safely and efficiently for decades. I am concerned that there has been a knee-jerk reaction against any new energy production.
Now we have our own knee-jerk reaction.
He also added yet another unnecessary mandate to health insurance with in-vitro fertilization coverage for same-sex couples, and if Bruce, uh, “Caitlyn” Jenner were born in Maryland s/he could legally have his/her birth certificate changed to reflect the “fact” he bills himself as a female.
Perhaps you believe Hogan was making the political calculation about whether a veto could be sustained. With the Senate in Democratic hands by a hefty 33-14 count, it’s not likely a veto could be sustained there. However, a 50-seat group of Republicans in the House only need seven Democrats to keep a veto in play, and given enough political pressure there are still a handful of centrist Democrats who could go along with the governor.
These were the House votes on the eight measures I advocated a veto for. I’m also adding the votes on the handful of bills he vetoed for policy reasons.
- House Bill 51 passed the House 97-40. It would have difficult to uphold this one.
- House Bill 54 passed the House 82-58, after originally failing on third reading. This veto could have been sustained.
- House Bill 345 passed the House 86-52. This one was right on the cusp of a maintaining the veto; definitely doable.
- House Bill 449 passed the House 93-45, and its crossfiled SB409 passed 103-36. But if Governor Hogan had vetoed this and put the whip to his department heads to come up with regulations by next January they may have upheld this veto.
- The margins on HB838/SB416 were 94-44 and 93-45, respectively. That’s iffy but the onus should have been placed on the General Assembly to vote on it again.
- Similarly, HB862/SB743 only won the House by margins of 85-50 and 91-49. Still unlikely to hold, but should have made them vote again.
- HB980/SB340 only had 82 votes apiece in the House, which makes these good candidates to be upheld.
- SB190 only passed 84-56, which means it’s also a good possibility to be sustained.
- SB517, which decriminalized marijuana possession but was vetoed, is right on the cusp of overturn as it passed 83-53.
- Similarly, SB528, which dealt with seizure and forfeiture (also vetoed), passed the House 89-51 so it’s also a possible overturn.
I suppose I should be happy with the half a loaf I have received from Governor Hogan considering the absolute disaster we’ve had to endure under eight years of Martin O’Malley. But the leftists are crowing about the fracking ban, and see it as just an initial step to a permanent halt.
The only way to curb an ambitious, leftist agenda is to put up a conservative one of your own and stomp out any attempt to sneak things through. Instead, what we are receiving is a leftward drift in lieu of pedal-to-the-metal liberalism. However, to borrow the words of a former governor, we really need to turn this car around and not using the veto pen as much as it should be won’t get us going in the correct direction.
Rumor has it that he’s going out the door by not standing for re-election as mayor, but if this is so Salisbury Mayor Jim Ireton is declaring war on private property as his swan song.
On Monday, according to a press release from his office, Ireton will set the wheels in motion to eliminate the non-conforming “4 to 3″ or “4 to 4″ properties in the city, with the stated goal that all housing units in the city will either have no more than two non-related occupants or be single-family housing. Approximately 400 households in the city would be affected.
Ireton is also looking to hire a Community Development Specialist, with the stated goal for this new position being “someone who can identify funding sources, and coordinate with the various agencies involved to shepherd properties through the tax sale process.” That last part is interesting because it brings me to my main point: it looks to me like the city wants to become a much larger landowner. To wit:
According to Salisbury’s Vacant Building Registry, there are 187 vacant and/or abandoned houses within City limits. The effect of these properties on their surrounding communities is demonstrably negative, causing losses in neighborhood property values, increases in crime and vagrancy, and public health concerns. The proposed budget amendment would set aside $45,000 for a fund which the City would use expressly to purchase vacant and abandoned homes at tax sale. Starting in FY2016, an additional $500,000 in bonded debt would be earmarked for acquisition, rehabilitation, repurposing, demolition, and legal fees. Homes bought by the City would be determined to be either eligible for donation to Habitat for Humanity or Salisbury Neighborhood Housing Service, or unfit for rehabilitation and demolished.
Imagine if you will an entrepreneur suddenly deciding to go out a purchase a whole bunch of houses at a tax sale, and the hoops this owner would have to jump through to secure all the permits, inspections, and other hassles a prospective investor would endure because the wheels of city government move so slowly. It’s a climate that discourages investment, so oftentimes properties sit vacant or abandoned. Factor in the difficult economic times of the last several years and there’s no question that too many people believe investing in Salisbury would be a losing cause.
So instead of addressing the situation of why investment is such a risk, the city will go into the business of home ownership. Not only that, they plan on running up plenty of debt to get themselves into a position to decide whether to renovate or tear down these dwellings.
It seems to me the better use of tax dollars would be to take care of what they do own. For example, I live across from a city park that is essentially an empty, semi-wooded lot with one lonely basketball hoop in the middle of it. For a few thousand dollars they could perhaps install a walking path, nice flower beds, and perhaps a couple trash receptacles. It’s not a large space, but it is a focal point of this little neighborhood.
If you believe the rumors that Jim is going to try and trade places with Jake Day, this isn’t the way to do it. Six years ago, we were promised that “help is on the way” but this isn’t going to be much help in making Salisbury an attractive place in which to invest. Why take a chance on buying a house when your next door neighbor could be a property owned by the city?
As a person who now has a job created in Delaware, I’m taking more of a vested interest in what goes on in the First State. I’ve been on the mailing list of the 9-12 Delaware Patriots for some time now, and today they sent out an update from the state’s Senate Republican Caucus. (Like Maryland, the Senate GOP is on the short end of the stick insofar as numbers are concerned, but the deficit is closer as it’s only a 12-9 Democrat majority there.)
The one thing I found interesting was a twist on the trend of states becoming right-to-work states. In Delaware, Senator Greg Lavelle had the thought of creating small “right-to-work zones” encompassing specific employers. I’ll let the Delaware Senate GOP pick it up from here:
The Senate Labor and Industrial Relations Committee declined this week to release a bill aimed at revitalizing Delaware’s manufacturing industry.
By not releasing Sen. Greg Lavelle’s (R-Sharpley) legislation to create right-to-work zones in Delaware, the Democrat-controlled committee has essentially killed the bill.
Under the measure, workers within these zones could not be forced to join or financially support a union as a condition of employment. It would also exempt manufacturing businesses adding at least 20 new workers from paying the Gross Receipts Tax for five years.
During Wednesday’s hour-long public hearing in Legislative Hall advocates of the bill, including representatives from several business organizations, argued such an initiative would create a more competitive environment, attract new businesses to Delaware and generate more jobs.
Sen. Lavelle identified multiple Delaware locations where the idea could take root, such as the former General Motors Boxwood Road plant near Newport, as well as other existing facilities in New Castle, Kent and Sussex counties.
His feeling after the meeting was that while the bill may be dead, the idea is not.
“For me, what came out of the meeting was that this was the first formal discussion that we’ve had about this issue in Delaware,” he said. “The fact is, coming out of the recession, where many other states have added manufacturing jobs, Delaware has lost another 3,000. So the conversation on how to turn that around has to continue. And judging from the many comments we heard in committee supporting this bill, there’s no doubt this conversation will continue.”
Worth pointing out is that Delaware has lost many of its manufacturing jobs over the last decade, declining from 33,800 such jobs in 2005 to 25,500 a decade later. That’s a 25% decrease, meaning for every 4 manufacturing jobs the state once had one was lost over the last decade. If you were the unlucky one to lose your job, it means you either had to relocate out of state or change careers, with the unfortunate byproduct of that choice being that skills gained atrophy over time.
This is a different approach than the one tried in Maryland, where Delegate Warren Miller has annually introduced a statewide right-to-work bill where the compelling arguments in its favor unceasingly fell on deaf Democratic ears in the Economic Matters Committee. Personally I think the way to go about it is a piecemeal approach, beginning with the Eastern Shore. Far from what Big Labor critics believe, Indiana – a recent convert to right-to-work – added 50,000 union jobs last year as part of an overall surge in employment growth. We can use the Eastern Shore as a petri dish for a right-to-work experiment, because Lord knows they try to impose everything we don’t want on us (tier maps, onerous septic regulations, and the PMT, to name a few.)
One big difference between Maryland and Delaware is the fact that over half of its Senate will be at stake in the 2016 elections – it is possible for the GOP to gain a majority by winning 6 of the 11 contested seats. The state GOP should make this an issue in trying to decrease joblessness – after all, a union does you little good if you are not working and over 8,000 onetime factory workers are doing something else because the state lost its competitive edge.
Delaware has always had a reputation of being business-friendly, but in this changing employment climate they have to step up their game. Going into an election year, an issue has to be made of how the state will compete going forward – after all, my job depends on it.
I don’t know our governor’s position on Senate Bill 190, dubbed by some as the “travel tax,” but no less than Grover Norquist of Americans for Tax Reform is urging a veto. His organization has sent a letter (detailed at the previous link) to Governor Hogan asking him to reject this bill that was passed by both chambers during the session. As they explain:
This legislation would disparately impact the Maryland travel industry by apply the Maryland sales tax to online travel agents, brick and mortar travel agents, wedding planners, tour operators, and other service providers. With summer almost here, and tourism season gearing up, a new tax would hurt many small businesses in Maryland who rely on tourism for revenue.
Interestingly, the ATR letter quotes local Delegate Christopher Adams, who cites the hundreds of travel agents who would be affected by the bill. On the other hand, his Senator, Addie Eckardt, was the only GOP sponsor of the bill and lone GOP Senator to vote in its favor.
Perhaps the best explanation of the legalese of the bill comes from its Fiscal Note:
Online travel companies (OTCs) typically obtain access to hotel inventory (rooms) through contractual agreements with hotels. OTCs pay a discounted rate for these hotel rooms that they sell (as room rentals), and then retain certain fees that are part of the total price paid by customers. The purchaser of the room rental is typically charged the same rate as the person would be if the hotel room rental was purchased directly from the hotel. The issue that has arisen in recent years is the definition of taxable price that state and local sales and use taxes and hotel rental taxes are to be based on. OTCs have typically been paying and remitting these taxes based on the reduced rate that they pay for the hotel rooms; however, states and local jurisdictions have been arguing in court that these taxes should be collected on the total room rate paid, which is the base for which the taxes would have been imposed if a customer rented the hotel room directly from the hotel.
As I understand it and to create an example, let’s say a hotel room rents at $150 per night to the general public. An OTC comes to the hotel and says they will rent the remaining lot of rooms for $75 apiece – obviously the hotel profits by not having to deal with unsold inventory for the night while the OTC can provide a discount to the standard rack rate and still make money. Everybody wins – but the state.
The contention is that OTCs are paying room taxes based on the $75 rate, while the state believes they should be paying based on the $150 rate. That’s what this law would provide for, and while some jurisdictions in the state have come to agreements with the OTCs (and there is a court case on the subject pending) this law would force OTCs to pay taxes based on the higher rate, eating into their bottom line for dubious overall benefit. The Travelocity vs. Comptroller case cited by the Fiscal Note involves $6 million over eight years; even if Travelocity is accounting for just 10 percent of the overall market the amount in question is only a few million dollars out of a $40 billion budget.
If Hogan vetoes the bill, the margin in the House is close enough to make it very possible a veto would be sustained as it passed in the House of Delegates by an 84-56 margin – one vote short of 3/5. Delegate James Proctor could be the swing vote since he was absent from the original balloting.
Because Maryland law allows the governor to sign bills well after the legislative session has concluded, it’s quite likely that Hogan can wait as long as he needs to make the decision. While this bill is dubbed the “travel tax,” there is the complication of Marriott possibly moving from Maryland that Hogan may have to consider.
But the idea of electing Hogan was that of no new taxes, regardless of whether this is a “clarification” or not. Let the court case take its course, and veto the bill. It’s another vote that is likely to find its way to the monoblogue Accountability Project.
Now that the shoe is on the other foot for the first time in eight years, thousands were interested in how newly-inaugurated Governor Larry Hogan assessed the state of our state. And it didn’t take long for him to assess that:
But while our assets are many, and our people are strong and hopeful, their state is simply not as strong as it could be – or as it should be.
Yet in reading through the speech, I didn’t see it as a negative in any way. Instead, Hogan proposed a number of solutions which, instead of spending money or growing government, generally worked in the opposite direction. Breaking the laundry list into eleven parts, it’s easy to summarize the Hogan plan for year one:
- Analyzing and enacting portions of the upcoming Augustine Commission report on business competitiveness. The idea here is to make Maryland more business-friendly and hopefully wean the state’s economy off a long-term dependence on federal government jobs.
- Restructure government to be more efficient and effective, using the new faces placed at many of the Cabinet-level departments.
- Legislation repealing the “rain tax.” This may get some serious opposition from the environmentalist groups who believe this is a fair way to pay for Bay restoration efforts, even though the fees were set by county and only affected ten of 24 county-level jurisdictions.
- Legislation proposed to exempt military, police, fire, and other first responder pensions from state income taxes. Eventually Hogan would like this to cover all retirement income. It’s an effort to improve Maryland’s dismal standing and reputation as a place not to retire.
- Legislation to exempt the first $10,000 of personal property from taxation, a move Hogan claims would eliminate the tax for half of Maryland businesses.
- Legislation to repeal the automatic gasoline tax increases baked into the Transportation Infrastructure Investment Act of 2013.
- Restoring the local share of Highway User Revenues, a sore spot among the state’s rural counties in particular.
- On education, strengthening the charter school laws. More controversial will be the oft-tried BOAST tax credit, which gives a tax credit to those who contribute to parochial or private schools. Hogan noted previous iterations have passed the Senate only to fail in the House.
- Hogan has already shelved the Phosphorus Management Tool, and called for farmers and environmentalists to work on a better, more equitable solution. He also promised to address the “long-ignored impact of upstream polluters,” including the problems at Conowingo Dam.
- An executive order to deal with the heroin epidemic. Lieutenant Governor Boyd Rutherford has been tasked with this issue.
- Reinstating the Fair Campaign Financing Act fund by bringing back the checkoff on the tax returns, and also establishing a commission to examine the state’s redistricting process via executive order. If I have the time, I’d love to serve on that one because we really do need to reform the system.
Certainly it’s not the strongly conservative agenda some may prefer, but I would consider it a good first step. Much of the reform will have to go through the General Assembly, and perhaps the strategy is that of picking off just enough Democrats on various issues to build an ever-shifting coalition with the Republicans. The fifty Republicans in the House and 14 in the Senate would be joined by one group of Democrats who consider education reform a must, but may not agree with Hogan’s approach to cleaning up the Bay. Yet some Democrats may like that idea, but won’t budge on changing the gas tax – and so on and so forth. Just as long as Larry gets 71 votes in the House and 24 in the Senate, the means do not matter.
Because of the nature of how our state’s political process, the honeymoon for Hogan was barely existent. He had to have a budget mere hours after taking office, and some legislation he probably wouldn’t support was already being discussed in the General Assembly. Obviously Larry was working in a shadow government of sorts as he awaited inauguration, but once he took the reins that horse quickly accelerated to full gallop.
So while it’s not necessarily less government, at least Larry is working on making things more efficient and streamlined. Hopefully we can get it to such a level that it wouldn’t be missed when the reductions occur. That’s the next logical step.
It’s not quite a GO Friday, but relatively close. I’m going to point out a piece on the Manufacture This blog, which is a product of the Alliance for American Manufacturing. In it, they note: “We asked Americans in manufacturing about the State of the Union. Here’s what they said.” The post excerpts from interviews with 10 Americans about how they assess the current economic situation; of course, most are worried about some of the pet issues AAM talks about and advocates for as well.
Jobs, opportunity, and a growing economy are what middle-class families want President Obama to speak to during Tuesday’s State of the Union address. The faces in the Alliance for American Manufacturing’s (AAM) “Manufacturing State of the Union Box” will not be in Washington for the speech. Instead, they will watch from home or work, hoping President Obama will offer solutions on issues that matter to them, including manufacturing jobs that afford them a middle-class lifestyle.
Quite honestly, the AAM’s leftward bias shows through in that statement because it’s highly likely both the Republican and TEA Party responses will advance possible solutions for what ails the middle class as well. In fact, I would be brash enough to state that government is not the solution at all – getting it out of the way as much as possible seems to me a more likely prescription to cure an ailing economy. Let entrepreneurs of all stripes thrive, workers have the freedom to work in a union shop without joining the union, and minimize regulations so that more labor is spent being productive than reactive. Somehow, though, I don’t think these will be addressed in either the State of the Union speech or its responses, although the TEA Party one may come relatively close. Unfortunately, not a lot of people will see it because viewership for the SotU is relatively light to begin with and the patience of most Americans with Barack Obama wears thin quickly.
So it will be interesting to follow the reaction of the AAM ten after the speech on Tuesday, and whether they paid any attention to the Republican or TEA Party responses.
The big news around these parts today was the announcement that Labinal Power Systems would be closing its Salisbury plant and consolidating operations in Texas. Gone will be an estimated 600 jobs as the plant phases out operations over the next two years.
On top of that, there are rumors that both of the April tourist draws to Salisbury – the annual Salisbury Festival and Pork in the Park – have been scrubbed for 2015. While another local blogger swears this is not true and the Salisbury Festival is simply being repositioned to the fall, one has to ask how that would fit into an October already crowded with other local events. (As for Pork in the Park, my understanding is that it was a money loser as the county had to plow too much into it up front for its continued survival.)
Salisbury’s downtown has been doing well with the increased popularity of 3rd Friday, a successful New Year’s Eve event, the upcoming opening of Headquarters Live - an entertainment venue which is the remodeled former Fire Station 16 – and a popular Thursday – Saturday night trolley service connecting these venues with nearby Salisbury University, but other parts of town haven’t done as well over the last year. The closing of Labinal decreases further the traffic to a once-booming part of the outskirts of Salisbury that formerly boasted the old Salisbury Mall, torn down several years ago for a development that never got off the ground.
Everything is cyclical, of course, and one example is the development around the SU campus. But losing these Labinal jobs would be a major blow to a county already on a long losing streak when it comes to year-over-year jobs. And the problem with such a long transition to a shutdown (almost two full years) is that lag time is going to be longer than some potential employers want to wait for the facility.
We all better hope that Maryland becomes a lot more business-friendly over the next two years. It’s ironic that Senator Mikulski made a big deal out of a large federal contract secured for the facility just weeks before the announced move to Texas. Call it Rick Perry’s revenge.
In the quest to get America back to making things, it was good news to find that manufacturers added 17,000 jobs in December. That brought the 2014 growth in that sector to 186,000, continuing the steady growth in that sector since the job market hit bottom there in 2009-10. When you consider that 2012 predictions saw the manufacturing sector losing jobs through this decade, having a very positive number nearly halfway through is a good sign.
Naturally Barack Obama tried to take some credit for this during a speech at a Ford plant near Detroit last week. As I noted in a piece I wrote for the Patriot Post, it’s ironic that the plant was idled due to slow sales of hybrids and small cars built there, but the auto industry has played a part in the resurgence of manufacturing jobs in America. This is particularly true in the construction and expansion of “transplant” auto plants in the South by a number of foreign automakers.
But there has been criticism of Obama from his political peers. As a carryover from my American Certified days I often quote Scott Paul, the president of the Alliance for American Manufacturing, because his organization is strongly influenced by Big Labor and presumably supported Obama in both his elections. Yet Paul is none too happy with Obama’s progress:
Manufacturing job growth slowed to 17,000 in December, which portends some of the challenges an overly strong dollar, weak global demand, and high goods trade deficits may bring in 2015. While President Obama is touting factory job gains and our Congressional leaders are looking for ways to rebuild the middle class, what’s missing for manufacturing is good policy.
Congress and the president need to hold China and Japan accountable for currency manipulation and mercantilism, and invest in our infrastructure. New innovation institutes are a good thing, but their presence alone won’t bring manufacturing back. And as the president enters the final half of his second term, he’s falling way behind his goal to create one million new manufacturing jobs.
The innovation institutes Paul refers to are public-private partnerships being created around the country in various fields, in the most recent case advanced composites. But Obama lags behind on his promised 1 million new manufacturing jobs for this term as it nears the halfway mark as he’s created just 283,000. It’s great if you’re one of those newly employed workers, but his policies are leaving a lot of chips on the table. In fact, National Association of Manufacturers economist Chad Moutray frets that:
…manufacturers still face a number of challenges, ranging from slowing global growth to a still-cautious consumer to the prospect of increased interest rates. With the start of the 114th Congress, manufacturers are optimistic that there will be positive developments on various critical pro-growth measures, including comprehensive tax reform, trade promotion authority and a long-term reauthorization of the Export-Import Bank, and focusing on important infrastructure priorities like building the Keystone XL pipeline and addressing the solvency of the Highway Trust Fund.
While manufacturers would like to see these measures, attaining some of them may be tough sledding in a conservative Congress. There are a number of representatives and conservative groups who don’t want to give the President fast track trade authority, wish to see the Export-Import Bank mothballed out of existence, and will not consider increasing the federal gasoline tax – an action for which Moutray uses the euphemism “addressing the solvency of the Highway Trust Fund.” These actions may benefit the large manufacturers but won’t help the bread and butter industries solely serving the domestic market like the 24-employee machining shop or the plastics plant that employs 80.
Turning to the state level, our local manufacturing (so to speak) of poultry has a big week coming up. On Wednesday morning, the final deadline to submit new regulations to the Maryland Register for the January 23 printing will pass. You may recall that the December 1, 2014 Maryland Register featured the new Phosphorus Management Tool regulations as proposed (page 1432 overall, page 18 on the PDF file.) The new regulations were not in the January 9 edition, so January 23 may be the last chance to get these published under the O’Malley administration due to the deadline being set in MOM’s waning days.
Yet I’m hearing the rumors that a legislative bill is in the works, to be introduced in the coming days by liberal Democrats from across the bridge. Doing this legislatively would perhaps buy a few months for local farmers because such a bill would probably take effect in the first of October if not for the almost certain veto from Governor Hogan. If Democrats hold together, though, they would have enough votes to override the veto in January 2016, at which time the bill would belatedly take effect. Still, it will be difficult to stop such a bill given the lack of Republicans and common-sense Democrats in the General Assembly. To sustain a Hogan veto would take 57 House members and 19 Senators, necessitating seven Democrats in the House and five in the Senate to join all the Republicans.
We haven’t received the data yet to know whether the installation of Bob Culver as County Executive was enough to break an 11-month job losing streak year-over-year here in Wicomico County, but his task would be that much tougher with these regulations put in place.
The outburst of cold weather during the first few days of January was the result of a meteorological anomaly which happened to occur on the same days for two years in a row. The polar vortex which occurred on January 6 and 7 in 2014 struck again with full force on those same dates this year, and the cold weather proved to reinforce a point made by a surprising beneficiary.
According to the American Wind Energy Association, which advocates for wind power as an alternative source of energy, consumers saved $1 billion in the 2014 polar vortex thanks to the availability of wind power. As they note:
Wind energy does this by protecting against spikes in the price of other fuels in the Mid-Atlantic and Great Lakes states. While other power plants failed in last January’s extreme cold or faced skyrocketing prices for fuel, wind energy continued producing electricity with zero fuel cost, not only keeping the lights on but also keeping money in consumers’ pockets.
With extreme cold now gripping much of the Eastern U.S., wind energy is once again helping to keep the lights on and protecting consumers against energy price spikes by diversifying the nation’s electricity mix. This is a repeat of the value wind energy provided to consumers during the “Polar Vortex” event exactly one year ago (Wednesday.)
Further, I also learned that the amount of electrical power created by wind reached an all-time high in two regions of the country overnight Tuesday night. Yes, it was blowing hard the other day so wind turbines were at their maximum effect and production.
In the last 24 hours wind set a new output record for the MidContinent ISO (MISO) and for the Southwest Power Pool (SPP), an area that covers much of the Midwest. Wind also performed at near-record levels in the PJM market (PJM).
Overnight on January 6-7, the MISO experienced a record 11,725 MW of wind production while the SPP region added another 7,625 MW – between the two, they powered 15 million homes. AWEA also claimed “near-record” production in the PJM area, which includes our region. In some areas, wind power was a far more significant provider during the event than its overall 4 percent share of the market.
Yet while wind power has made some significant achievements, no story is complete without pointing out a couple of realities: wind energy is not as reliable as fossil fuels, and its distribution pattern in this country makes it a tenuous backup plan for some regions, such as the southeastern part of the country. Negligible wind energy production exists there because of unfavorable conditions.
The reason wind power was so useful in this instance of cold weather was that natural gas has to serve two masters when it’s cold: electricity generation which occurs all year and home heating for the winter. With the difficulty in building the infrastructure needed to move our abundant supply of natural gas to markets in some areas of the country, the spot price surged. AWEA’s $1 billion assertion was based on that price spike for natural gas.
Because of the fickle nature of wind power, it’s interesting to note that PJM keeps a constant eye on the output of its wind turbines and their predicted effects. As of the moment I write this, the wind turbines are producing 4,424 megawatts, which is slightly below the 4,585 megawatts forecast. To meet needs other sources will have to come into play if they’re not already accounted for.
The economics of wind are fickle as well. While the on-again, off-again nature of the Wind Production Tax Credit of 2.3 cents per kilowatt-hour produced has affected the building of turbines – opponents consider them a handout both to the industry and Wall Street – state government mandates for clean energy prop up the demand. Without the prescribed mandates from states like Maryland, which has a current goal of 10% of its energy source generation from wind and other renewables, it’s likely the wind energy industry would be non-existent in America.
But its legitimacy was bolstered from a surprising source this week. Each year, the American Petroleum Institute puts out a State of American Energy Report, and for the first time it addressed a number of alternative energy sources including wind power. As Jack Gerard of API puts it:
Rather than focus solely on the oil and natural gas industry, API this year is pleased to partner with organizations representing various energy sectors to highlight the contributions of each toward America’s current and future economic wellbeing, and collectively stress the importance of adopting a lasting “all of the above” energy strategy.
In their section of the API report, AWEA notes that potentially 35 percent of America’s electricity could be created from wind power by 2050. Of course, there are questions about the health risks of living near a wind turbine which will merit further study, but it is relatively convenient that most of the best places for wind production are in sparsely-populated areas.
If you subscribe to the “all of the above” energy strategy, you may be setting a place at the table for wind energy. Certainly it won’t serve all of our needs as well as the versatile roster of fossil fuels has over the years, and it may have to navigate a brave new world without the tax credits that have built the industry up over the last two decades – in fact, I think it should. Logic would dictate that, since the fuel is free of charge, the only cost should be the infrastructure, transmission, and occasional maintenance and monitoring, so who needs a tax break?
We won’t always have a polar vortex, but if the wind energy industry is where its backers say it is, we won’t need one to make wind a good choice. Let’s put it on a level playing field and see how it fares.
It was somewhat lost during the holiday week, but Larry Hogan made the case to the Baltimore Sun that the city of Baltimore needs to take its place once again as Maryland’s economic driver, rather than “declining.”
I know that many, many people around here consider the city of Baltimore an economic sinkhole that sucks up an outsized proportion of our state’s tax money, and to some extent that is true. But once upon a time – just a generation or two ago – the city of Baltimore was thriving while the capital region of Montgomery and Prince George’s counties were still sleepy, relatively rural backwaters. Baltimore City was the state’s largest jurisdiction until the late 1980s, but now that distinction belongs to Montgomery County while Baltimore City is fourth. Combined, the capital region of Montgomery and Prince George’s counties is now nearly 30% larger than the combined Baltimore city and county.
Yet what made Baltimore grow was that people made things there, shipped them around the country and world from its railroad hub and its port, and settled in the region as middle-class workers who could raise families without necessarily securing a college education. In other words, it was a blue-collar city much like Detroit, Cleveland, Chicago, or other Rust Belt towns. On the other hand, the fuel to the capital region’s growth is an ever-expanding federal government and some of its associated suppliers and contractors. While Baltimore took a lot of things and added value to them in some way, too much of the work done by denizens of the capital region amounts to pushing paper, metaphorically digging holes here to fill them up there.
I doubt that we will ever get to a point where thousands of Baltimore citizens are “makin’ Thunderbirds” as the old Bob Seger song goes – or even the GM minivans they cranked out there for over two decades at the former Baltimore Assembly plant. But with the right conditions, marketing, and incentives (but not subsidies) I think it is possible to put a lot of that region’s workforce back into positions where they add value, using the relatively inexpensive energy produced in the region to aid the process. I was also pleased to see that Larry Hogan was looking to revisit the weak charter school laws which saddle Maryland’s educational system, but there needs to be an emphasis placed on vocational and technical education to create the type of workforce needed to make things efficiently in the way a liberal arts major just can’t. These reforms can go hand-in-hand.
I’ve already suggested that we jumpstart business in Maryland by doing away with the corporate income tax, which only provides for a small piece of the budget and could help create an environment where the returns from other taxes and economic activity from those who find work in the state could easily justify the “investment” in our businesses. But why not try another experiment?
As a general rule, unemployment is higher than the state average in Baltimore City, the Eastern Shore, and the western counties of Maryland. All of these areas could use an economic shot in the arm, but the influence of Big Labor is felt most in Baltimore City. I think it would be a good idea to write a bill creating “right-to-work zones” in these three areas of the state that have higher unemployment than the state average, with the law being written in such a way that it sunsets in ten years – unless it works so well that it could be expanded to the rest of the state and made permanent, as I’m confident it would. Think of it as at least a small temporary incentive for employers to create jobs in these areas, based on the success right-to-work states have in attracting industry.
All of Maryland should be putting out the impression that we are open for business, but it’s only natural that with its existing transportation infrastructure and available industrial land, Baltimore can lead the effort. Too much of our state’s money falls into the category of wealth transfer as opposed to wealth creation. But it doesn’t have to be that way, and in order to create a more economically viable Maryland I agree: we need to get Baltimore’s economic engine back on track.
It was good news in November for manufacturers, at least as expressed on the employment front – based on the November jobs report and revisions to previous reports, the sector gained 48,000 workers over that timeframe.
Naturally, manufacturing supporters were cheered by the news, with the union-backed Alliance for American Manufacturing (AAM) noting that Barack Obama is now over 1/4 of the way to his promise of a million new manufacturing jobs in his second term, while economist Chad Mowbray of the National Association of Manufacturers (NAM) trade group pointed out robust growth in new orders was beginning to translate into new employees.
However, both groups saw some clouds among the silver linings. In the case of AAM, their complaint was the “failure to stop currency manipulation by China and Japan” while NAM cited “headwinds such as rising health care costs and regulatory burdens.”
Each complaint has some validity, but for the majority of manufacturers the specter of operational costs is a key deterrent to expansion or even staying in business. While it’s not manufacturing in a traditional sense – and certainly applies on a more limited scale than federal edicts which can overturn an entire industry – one example could be how the local processing of chicken would take a blow from ill-advised state phosphorus regulations that have the potential to drive the poultry business to different areas of the country. Needless to say, such a result would be devastating to this part of the state, leaving just tourism and some limited local services to provide the employment to support our region.
And while I’m mentioning Maryland politics, I may as well make one other pronouncement here. As I followed his gubernatorial campaign for a year, I paid attention to how Ron George studied and shared his thoughts on the prospect of making things in Maryland. I hope Larry Hogan can utilize Ron’s passion and expertise in his administration. While we would love to score an auto plant or other similarly large employer in this area of the state, a more realistic goal might be to, as Ron stressed during his campaign, fill up the existing facilities and areas several towns on the Eastern Shore have already laid out for manufacturing. To use a local example, adding 100 jobs for Wicomico County residents would immediately shave 0.2% off our unemployment rate, not to mention bring up the standard of living for everyone else.
A week ago yesterday we celebrated Small Business Saturday, but the best way to support them (other than shopping there) would be to make their lives easier by calling off the government regulator’s dogs and encouraging them to grow so that sometime down the road we can be the manufacturing power we once were.