Annapolis, Md.- Maryland ranks No. 42 in the country for economic outlook in the 19th annual Rich States, Poor States report released this month by the American Legislative Exchange Council. The ALEC-Laffer State Economic Competitiveness Index evaluates 15 state policy variables, with higher marks for states that spend and tax less to drive growth.
Utah, Tennessee and Idaho hold the top three positions. Maryland held the same No. 42 spot last year and ranked No. 43 in 2024. The report notes that states spending less, especially on income transfer programs, and taxing less on productive activities like working or investing tend to see higher growth rates.
Maryland, the 19th largest state by population with an estimated 6.2 million residents up about 100,000 since 2020, placed No. 38 in economic performance. Its strongest category was No. 8 in sales tax burden at $15.03 and No. 13 in average workers compensation costs at 89 cents. The state ranked No. 50 in estate or inheritance tax levy, recently legislated tax changes at $4.89, and right-to-work status.
The findings arrive as Southern Maryland counties of Calvert, Charles and St. Marys navigate local economic pressures. St. Marys County benefits from Naval Air Station Patuxent River, which supports high-tech jobs in aviation and uncrewed systems with strong median household incomes. Charles County works on workforce diversification amid federal job uncertainties. Calvert and Charles explore data center proposals to expand the tax base while addressing community concerns over infrastructure.
These regional efforts highlight how state-level policies affect local growth in Southern Maryland. The area draws residents and businesses with its Chesapeake Bay proximity, lower costs than central Maryland, and access to federal installations. Local leaders in the three counties focus on sectors like advanced manufacturing, renewable energy and tourism to build resilience.
The index measures variables including tax rates, regulatory burdens and labor policies. Maryland’s middling position reflects challenges in high-tax categories offset by strengths in certain cost areas. The report emphasizes forward-looking competitiveness based on current policies.
Southern Maryland Chronicle coverage of regional planning shows ongoing discussions about balancing growth with quality of life. Residents in Calvert County raised questions about data center impacts on power and water resources. Charles County advances budget measures and volunteer tax credits to support community stability. St. Marys maintains focus on defense-related innovation that anchors its economy.
Statewide, the ranking underscores debates over tax structure and spending priorities. Maryland’s population growth remains modest compared to top-ranked states experiencing faster inflows. The report, co-authored by experts including Arthur Laffer, provides a benchmark used by lawmakers since 2007.
For Southern Maryland families and businesses, the outlook connects to housing affordability, job opportunities near Pax River and Indian Head, and efforts to attract new investment without straining local services. County economic development offices promote the region’s skilled workforce and natural assets to counter broader state trends.
