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Fact checking the debate [Editorial]

BusinessFinanceUnemployment and LayoffsHeather R. Mizeur

For today's edition of the Maryland Democratic gubernatorial debate fact-check, we'll focus on a recurring point of contention between Lt. Gov. Anthony G. Brown and Attorney General Douglas F. Gansler, and on the one aspect of Del. Heather Mizeur's platform that generated significant disagreement among the candidates.

Is Virginia 'cleaning our clock'?

Mr. Gansler attacked the economic record of Mr. Brown and Gov. Martin O'Malley in part by suggesting the economy in Virginia is much stronger than the economy in Maryland. Mr. Brown said that isn't true.

Here are the facts, according to the Bureau of Labor Statistics: Virginia's unemployment rate is 4.9 percent and Maryland's is 5.5 percent. Virginia's unemployment rate has been better than Maryland's in virtually every month since at least 2004. However, Maryland now has 2,617,000 non-farm jobs, up slightly from its pre-recession peak of 2,615,900. Virginia has 3,764,900 non-farm jobs, down slightly from its pre-recession peak of 3,791,900. Neither state has returned to its pre-recession level of private sector employment, however. In Maryland, average private sector weekly earnings are up 4.3 percent compared to a year ago, to $931.95. In Virginia, earnings are up 1.6 percent to $883.57.

Another way to look at the issue is business creation. A recent Brookings Institution report examined the rates at which businesses were created and failed nationally and in the states. It found that the United States has become less entrepreneurial over time and in recent years that more businesses have disappeared than have been created. That's true in both Maryland and Virginia, though Virginia fares a bit better, in that 7.4 percent of firms there are less than a year old, compared to 6.7 percent in Maryland.

Finally, Mr. Gansler claimed that Maryland lawmakers return to Annapolis every year to face billion-dollar deficits while Virginia lawmakers enjoy billion-dollar surpluses. That is simply untrue. Virginia's supposed "surplus" is not an ongoing difference between revenues and expenditures but a reflection of its cash balance and rainy day fund. Maryland had a substantially larger rainy day fund than Virginia as of the end of the last fiscal year. According to the Department of Legislative Services' latest projections, Maryland's structural deficit — that is, the difference between ongoing revenues and ongoing expenditures — will be $404 million next year. Though weak income tax collections may make that worse, it's a far cry from $1 billion.

Mizeur's marijuana math

Kudos to Delegate Mizeur for pointing out that the other two candidates' plans for funding a pre-K expansion would require taking money already pledged to K-12 education. But does her funding plan add up?

She says legalizing, regulating and taxing marijuana would bring in $160 million for the state. Is that realistic? Ms. Mizeur's proposed taxation scheme is somewhat different than Colorado's, but that state's experience since it legalized marijuana in January is instructive. Through the first three months of the year, Colorado brought in $12.6 million in total taxes and other revenue, or about $50.4 million on an annualized basis. An April analysis by Moody's said that likely understates the full impact, since many retail operations are still coming on line. Colorado's governor now expects total annual revenues of $134 million. Maryland's population is 13 percent larger than Colorado's, and it's conceivable, given our more central location, that we would see more marijuana tourism. That makes $160 million a reasonable estimate.

More suspect is the notion that Maryland would save $280 million a year in law enforcement and incarceration costs as a result of marijuana legalization. That comes from a 2009 article in the Bulletin of Cannabis reform and results from what the author admits to be the somewhat crude methodology of multiplying the percentage of total arrests related to marijuana by the total costs of the criminal justice system — that is, total spending on police, courts, jails and prisons.

The notion that the state spends as much on a marijuana possession arrest as it does arresting, prosecuting and incarcerating a murderer, for example, is absurd on its face. In fairness, Ms. Mizeur is not pledging to spend all of the phantom $280 million on new programs, but she did mention at least one during the debate: an additional $25 million per year for affordable housing. The trouble is, eliminating marijuana prosecutions doesn't automatically save the state money. First, many of the costs involved, such as police protection, are primarily funded locally. Second, saving money from legalization would require that the state lay off correctional officers, judges, public defenders, police and the like. If that's what she intends, she's not saying so.


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