Economic Forecast
January 15, 2009
Introduction
Good morning and thank you for having me here today. Thank you Dr. Hoy for your introduction and for opening the doors of this great campus to me once again. I also want to thank Chamber President Michael Kleger for your service. I deeply believe that business owners and employers provide a great public service and I’m proud to partner with you, Michael and all of the members of the Salisbury Chamber.
I’ll be brief, this morning, because I’d like to leave time for a conversation and to take some questions, but – more importantly – to hear your answers. So, let’s get to it.
Start of Session
Yesterday, the General Assembly returned to Annapolis and over the coming 89 days, all of us will have difficult decisions to make. We face challenges today that we haven’t faced in a lifetime. And while the challenges we face are new and unprecedented, they are not unique.
Every state faces a similar situation: joblessness is up, earnings are down, consumer confidence is hitting record lows, and the housing market may not have hit it’s low point yet. These are tough times, indeed – they’re tough on working families, tough on small businesses, tough on local government and they are tough on states.
Today, more than any other time during my career in public service, we need to reaffirm our partnerships and come together to protect our families and fight for the goals we share: Goals to strengthen and grow our middle class and family owned businesses and farms; Improve public safety and public education in part of the State – including the Eastern Shore; and expand opportunity to more Marylanders.
Our goals don’t change during tough times, but these tough times require us to work harder to protect our goals.
Economic Situation
We’re looking at deficit of nearly $2 billion for FY2010 – a deficit that will require more budget cuts. That’s not a choice we take lightly. We understand the impact cuts will have on families and business. But by working together, we can do everything in our power to ensure that these cuts are as temporary as possible and get back on a path of prosperity and opportunity…
We’re not in this alone. Our challenge is part of a national recession. Forty-four of the 50 states are dealing with budget shortfalls. If you took all those shortfalls combined, we’re looking at a $370 billion deficit in FY2011.
Positive Signs for Recovery
But there is a silver lining, at least in Maryland. Our economy is more likely to bounce out of this national economic slump than others.’ Look at our job growth, for example. Between November 2007 and November 2008, the nation shed nearly 2 million jobs. But here in Maryland, we created 12,700 jobs – more new jobs than all but two states – and our overall job growth clocked in at .5 percent – higher than 80 percent of the other states. Our unemployment rate is higher than we’d like – 5.3 percent, but that is still nearly a percentage point and a half below the national average. Exports out of the Port of Baltimore are up 34 percent. And we’ve attracted 6 foreign-owned companies to set up shop in Maryland over the past six months (and 60 others are considering doing the same).
We also have a workforce pipeline in place to keep Maryland competitive for years to come once this crisis is behind us: According to Education Week, we have the best public schools in America. And that’s owed in large part to the $5.3 billion investment we’ve made in public education and the $741 million we’re investing in school construction.
Because of our efforts to hold the line on tuition increases and our increased investment in community colleges, our highly-skilled and educated workforce was rated third by Forbes Magazine. We have a higher concentration of professional and technical workers than any other state and our science and technology assets are rated 2nd in the nation.
We are in a better position than many states, but we still face a significant challenge. A challenge, though, that could have been much larger and much more difficult to navigate if we did not take action during the Special Session. Had we not addressed the structural deficit and had we failed to get Maryland’s fiscal house in order in 2007, the crisis we face today would be much greater and the decisions we must make in the coming days would cause much more pain. This budget crunch is cyclical and reflects the national economic trends: rising energy costs, falling home values, and the virtual collapse of the mortgage and credit industries: the housing market dropped 28 percent in 2008, consumer sales declined during 7 of the 10 months for which we have data, and light vehicle sales were down more than 17 percent through September.
Working Together to Weather Tough Times
Despite the bleak picture we read about every morning, I’m confident we’ll get through this trying time by working together. We’ll weather the storm because of the strong communities we’ve built. And, through our partnerships with local government, nonprofit communities and the public sector, we’ll continue to do everything in our power to protect Maryland families:
By working together, we passed what the Washington Post wrote were “among the most sweeping [reforms] in the county” to keep Marylanders in their homes. We’ve extended the foreclosure process – giving families more time to get their accounts in order. And other states and leaders in the Federal government are looking at our work as a model to combat foreclosure.
By working together, we expanded access to health care for 100,000 uninsured Marylanders; we helped seniors get the prescription drugs they need; and we are working with you – small business owners – to make it easier to do the right thing and provide health insurance for your employees.
By working together, we’re helping Marylanders who have lost their jobs get through these tough times. We’ve extended hours at call centers to make it easier to receive Unemployment Insurance. We fought for $2.4 million to support the Emergency Food and Shelter Program. And DLLR is providing rapid response service to companies with impending layoffs to help workers transition smoothly into new jobs and to access training opportunities to enhance new skills.
And in five days, we’ll have a new partner. After eight years of ‘do it alone’ governance, the Obama-Biden Administration offers a new promise to states struggling during tough times. (That’s change we believe in… And change we need.) President-elect Obama will fight for working families and join the efforts Governor O’Malley and I – and administrations across the country – are leading to strengthen the middle class. His priority agenda includes a plan to provide $25 billion in state fiscal relief to so states can continue to provide essential services – health care, education and public safety – without being forced to raise state property taxes. And he’ll work with his economic team to open the credit markets to small businesses and state and local government.
Conclusion
We’ll get through this economic crisis. We didn’t get into this crisis overnight, and we won’t get out of it overnight. But we will endure and we will get out of it by working together. We’ll get out of it because our kids deserve to inherit the country they believe in. And a country you and I know exists…
Thank you very much for having me here today and for doing your part to keep Maryland strong.