Friday Five | June 2, 2023
A recap of this week’s top-five news items and resources from the intersection of business and government.
1. Maryland gas tax will go up to 47 cents per gallon in July
Maryland motorists will need to dig deeper at the gas pump starting July 1.
The state tax rate of a gallon of gas will increase to 47 cents per gallon, an increase of more than 10% compared to the current rate. Over the last two years, the rate has increased by 30% due to inflation and surging fuel prices.
Owners of diesel-powered vehicles will experience a similar increase with the state gas tax increasing from nearly 43.5 cents per gallon to roughly 47.8 cents per gallon on July 1. Over the last two years, the state tax on diesel has increased by more than 29%.
The increase that takes effect July 1 would add about 65 cents to the fill-up of a 15-gallon gas tank, or about $33.54 more in additional state gas taxes on an annual basis. In all, motorists with that same weekly fill-up would pay more than $366 annually in state fuel taxes.
2. National financial agency downgrades assessment of Md.’s utility regulation. What does it mean?
When Governor Moore took office, he vowed to shake up the Maryland Public Service Commission, an obscure agency that regulates gas and electric utilities throughout the state. Critics in recent years have complained that the PSC hasn’t been proactive enough when it comes to the state’s strategy for fighting climate change.
Moore moved swiftly to remake the five-member PSC. He rescinded two recess appointments to the commission that his predecessor made last summer. He appointed a new chair to take over on July 1. And he consistently said his goal for the agency is “environmental stewardship while ensuring ratepayers are protected.”
But the transition at the Public Service Commission has prompted a national ratings agency for energy and utility investors to downgrade its assessment of Maryland’s regulatory framework.
Last month, Regulatory Research Associates, a group within S&P Global Commodity Insights, a national analyst of commodity businesses, said it was downgrading its assessment of Maryland’s regulatory environment “to reflect increasing uncertainty and the potential for a more restrictive regulatory climate in coming months, as the new governor, Wes Moore, moves forward with his energy agenda and recasts the Maryland Public Service Commission.”
When a financial ratings agency downgrades a government’s bond rating, it has a tangible impact on that government’s ability to borrow and spend money on major infrastructure projects and other services.
3. From ghost town to supply chain linchpin, changing times at Sparrows Point
A decade ago, Sparrows Point in Eastern Baltimore County was saddled with a shuttered steel mill. 30,000 jobs had been lost and both the land and water were contaminated. But since 2014, The Point has been undergoing a dramatic redevelopment. Thousands of jobs have returned to Sparrows Point, and both the wind and the sea factor into the developer’s future plans.
A driving tour of the 3,300-acre site now known as Tradepoint Atlantic includes huge buildings like Amazon’s and FedEx’s distribution centers. The biggest of them all is the 1.9 million square foot global distribution center for McCormick & Company.
While driving around the property, Aaron Tomarchio, Tradepoint’s Executive Vice President of Corporate Affairs, pointed out dozens of businesses, from a vegetable grower and a water bottler to a manufacturer of nitrile gloves.
“This is a result of the pandemic honestly, where the United States realized that there was a shortage of PPE,” Tomarchio said. “It was all being made overseas. So this was an effort to onshore the manufacturing of PPE in the United States.”
4. Senate passes bill to raise debt ceiling, preventing first-ever U.S. default
The Senate late Thursday passed a House-approved bill to raise the debt ceiling and cap government spending for two years, sending the legislation to President Biden’s desk where he is expected to sign it and address the nation later today – just three days before the U.S. risked its first-ever sovereign debt default.
“No one gets everything they want in a negotiation, but make no mistake: This bipartisan agreement is a big win for our economy and the American people,” Biden said in a statement after the vote.
The compromise debt ceiling bill passed the Senate by a 63-36 margin, enough support from Democrats and Republicans to overcome the chamber’s 60-vote threshold to avoid a filibuster.
5. U.S. economy little changed, outlook ‘deteriorated’: Fed survey
U.S. economic activity appeared to stall in recent weeks, a Federal Reserve report published on Wednesday showed, with job growth and inflation both slowing, and near-term business prospects looking slightly worse than previously forecasted.
“Expectations for future growth deteriorated a little, though contacts still largely expected a further expansion in activity,” the U.S. central bank said in its latest “Beige Book” compendium of surveys and interviews, conducted across its 12 districts through May 22.
Fed policymakers last month increased the benchmark short-term interest rate a 10th straight time, taking it to a range of 5.00%-5.25%, and signaled they were near or possibly at the end of a rate-hike campaign that began last March. Since that early-May meeting, economic data has generally come in stronger than expected, with the unemployment rate at a decades-low 3.4% and inflation by the Fed’s preferred gauge at 4.4%, more than twice the Fed’s target.
But many Fed policymakers since then have signaled they may rather wait before undertaking any further policy tightening. While inflation is still too high, they say, the full impact of the Fed’s rate hikes so far is still making its way through the economy, and the degree of credit tightening from bank failures in March remains difficult to gauge.
