Gambling: Maryland’s growth industry?

There are guys who really must like parsing economic statistics, and I’m getting the impression Change Maryland employs several of them. Toying with Martin O’Malley like a catnip-addled feline pawing about a ball of yarn, their latest effort is summed up neatly this way by Change Maryland head Larry Hogan:

Combined, the gambling industry is expected to generate 3,250 jobs or nearly 40% of the 8,500 new jobs announced in 2012. Other sectors pale in comparison with cyber security expected to generate 2,612 jobs, healthcare 379 jobs and manufacturing 334 jobs. By contrast… sectors (lauded) by the O’Malley Administration, most notably green energy, are expected to generate just 110 jobs.

“I don’t know how Martin O’Malley can say with a straight face that jobs are a priority of this Administration with numbers like these,” said Hogan. “These numbers are lopsided and pitiful.”

I’m not sure if the total includes the dozens of jobs created by the fat Christmas bonuses awarded by the media conglomerates who own the television stations made wealthy by the millions of dollars spent contesting Question 7, but it is a sad state of affairs when casinos create more jobs than manufacturing. Yet that’s the reality in Maryland. And as Hogan pithily adds:

While I’m glad that some will get jobs as blackjack dealers and cocktail servers, the best careers are those that require science,  technology and engineering skills that Maryland educators are working so hard to develop in the classroom.

The Change Maryland release compares the job creation in Maryland and Virginia, and makes the case that our neighbor to the south is kicking our tail in that regard.

Looking at these statistics in a more parochial manner, the Eastern Shore as a whole is getting very little benefit this year from the state’s economic development team, with one project apiece in Dorchester and Worcester counties. Total jobs created (over three years, mind you) are projected to be 80. The two companies in question invested a total of $3.5 million in new facilities, but by way of comparison that’s less than a month’s revenue from the casino at Ocean Downs. And 80 jobs is a drop in the bucket compared to some of the major employers here in Wicomico County alone.

Needless to say, the state’s efforts are puny and minuscule compared to how much they put into attracting jobs along the I-95 corridor. Our tenth or so of the state’s population could use more assistance in trying to grow and develop as opposed to the War on Rural Maryland we’re forced to endure from Annapolis. More or less we’d like to be left alone, although if you could work with Delaware and the federal government on an interstate-grade highway from Salisbury to I-95 at Wilmington we would be mighty thankful. I look at it this way:  if we could get ourselves to be an easier 4 hour drive from the New York megalopolis, I believe it could help both tourism and industry. Something I didn’t know until I looked it up is that we here in Salisbury are actually closer to New York City than to Cumberland, Maryland.

But whatever the job creation task required, the folks at Change Maryland are generally quick to point out that Maryland is lacking in that department. You can call it partisan politics if you want, and perhaps you’d have a point since Hogan is a Republican. But facts are facts, and the numbers which come from neutral referees continue to show that Maryland isn’t the job-creation machine our state government would lead you to believe that it is. And when three of the four counties which make up our little corner of the state lag with unemployment over 9 percent (Wicomico isn’t much better at 7.9%) it tells me that the “One Maryland” fallacy espoused by our governor is just that.

If a chain is defined by its weakest link, we’re the ones who need the attention. Stop listening to the Agenda 21 crowd who would like to return the Eastern Shore to a pristine wilderness (aside from the beachfront condos they annually rent in Ocean City and from Ocean Downs, since it creates revenue for the almighty state) and start listening to what we who live here have to say. Really: I’m not lying to you when I say growth is good for us, so help us cut our unemployment rate down by stepping aside and letting us do it.

Gambling on our fiscal future

It appears the Maryland General Assembly will be working this summer after all, as Governor O’Malley announced there will be a Special Session beginning Thursday, August 9. A few observations:

First of all, beginning the Special Session on a Thursday probably means they’ll try and wrap things up in two days. It’s doubtful the General Assembly will want to be working over the weekend and it’s probable that the session has the single-minded goal of getting authorization for a sixth casino in Prince George’s County and offering table games at existing facilities before voters. The rumors I’ve been hearing make it sound as though the change from a 67% tax rate may be dead for now – but don’t be surprised if that issue is revisited in the regular session next year.

But the question is what people like us get in the deal. I understand the proponents are making all sorts of claims that counties will see a bounty of cash flow into their coffers, but any and all of the financial components are subject to change at the whim of the General Assembly. Since the Eastern Shore only has nine House votes (seven of which are minority Republicans) and three Senate votes (2 of the 3 are GOP), it’s more than likely that any sweetheart deals will be made to entice General Assembly members from Baltimore City and Montgomery County to vote for the plan at the expense of other parts of the state. That claim of $4.9 million for Wicomico County may end up being 4.9 thousand by the time all is said, done, and horse traded.

(Also worthy of note regarding the Eastern Shore delegation: the only three who voted for the bill in 2007 were Democrat Delegate Norm Conway and two Republicans: Senator Rich Colburn and the late Delegate Page Elmore. As it stands now, Senator Jim Mathias – who was a Delegate then – may be a vote against in the Senate, leaving Conway and Colburn as the lone gambling supporters of the Eastern Shore delegation.)

Oh, and speaking of horses: I thought the intention of the original gambling bill was to prop up local racetracks by allowing them to be slot machine locations. Yet I believe Ocean Downs is the only racetrack which doubles as a slot location – the other sites are standalone sites with no racing. Nor would it shock me to see at least some part of a prospective tax cut for casino operators come out of the 9.5% the equine industry is guaranteed in Maryland. The 48.5% for education will be the last thing they touch.

We all have to concede that, compared with the rosy predictions of $1.36 billion dollars in revenue by FY2013 – the year we are in now – slot machines have been an utter failure in Maryland. The reasons for this are legion:

  • Not all of the expected locations are up and running yet – locations in Baltimore City and Allegany County (Rocky Gap) won’t be open until 2013 and 2014, respectively. The Maryland Live! casino in Anne Arundel County just opened this year.
  • Because other states weren’t shackled by the poorly thought-out system of needing voter approval to make technical changes, they have already put table games in place, making them more attractive to gamblers.
  • Entertainment options are limited at the Ocean Downs casino by state law. This puts them at some disadvantage to nearby Delaware locations in Harrington and Dover which permit live music.
  • Finally, a poor economy has limited people’s “fun money.” On a personal level, I used to go to Harrington maybe once or twice a year with the bowling prize money I received at season’s end or other “mad money” I came across. But that’s no longer possible when there are more bills to pay and less income being made; certainly I’m not the Lone Ranger in that particular situation.

So don’t look for gambling to be a cure-all, and take any predictions of revenue from the state with a significant grain of salt. It’s clear that those in charge of Maryland didn’t think things through when they sold us the bill of goods known as Question 2 four years ago, and now that potential big-money campaign contributors and Big Labor are beckoning to build a casino in Prince George’s County just outside Washington, D.C. (talk about regressive taxation there) it’s suddenly enough of an emergency to call our legislature in.

I know Senate Minority Leader E.J. Pipkin was not amused:

The real crisis in Maryland is not whether there should be a sixth casino location, but rather the trend of recent job losses. The state lost 11,000 jobs in June and has witnessed 4 straight months of job declines.  Gaming expansion won’t create jobs for at least another year, and then at most 3,000 jobs.  Marylanders need help today.

Meanwhile, this has been the ‘Summer of Union Handouts’ with teachers’ unions getting their own special session in May and now the trade unions getting their own special session in August.  Curiously left out are the close to 2,000 union steelworkers laid-off last month at the Sparrows Point plant. The state is bleeding jobs at a rate of tens of thousands on a monthly basis, and the best the Governor O’Malley can muster is, ‘If you give me another casino, I can get you 3,000 jobs in a few years.’  How is that relief?

The Governor should know that economic development is more than just bio-tech and casinos.  Instead of a special session for a single casino, we should be taking this time to develop policies benefiting all of Maryland’s working families – not just those with powerful unions.

Five years ago, Governor O’Malley called a Special Session which dealt not just with gambling but also raised taxes and spent big money on providing coverage to a small fraction of those Maryland residents who didn’t have health insurance. All this was supposed to solve our state’s structural deficit once and for all.

But a half-decade later, buffeted by damaging economic winds created in no small part by Democrats just like those who run Maryland’s government with an iron fist, we still struggle with financial hardship as a state – unfortunately, these troubles also affect the federal and local governments as well as many millions of Americans who by no means are better off than they were four years ago.

In short, there are two key problems with Martin O’Malley’s Democratic approach to state finances: rich people don’t stay to be hosed by higher taxes and broke people don’t gamble. Other than that, things are just going swimmingly.