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Maryland falls five places in business climate ranking

Maryland slipped five spots this year in Forbes magazine’s ranking of state business climates, highlighting an issue that has drawn the attention of state leaders crafting job-creation proposals.

Forbes ranked Maryland No. 19 on its Best States for Business and Careers list, down from No. 14 in 2010 and the 12th spot the year before.

Virginia ranked No. 2 and North Carolina, No. 3, both maintaining their 2010 spots.

Utah, at No. 1, North Dakota and Colorado complete the top five. The western half of the country also dominated the rest of the top 10, with Texas, Washington, Oregon and Nebraska making strong showings.

“Maryland takes prosperity for granted,” said Anirban Basu, chairman and CEO of Sage Policy Group Inc. “Its taxes are too high and its regulations are too burdensome and confusing.”

The Forbes ranking for Maryland falls in the middle of a wide range of competitiveness surveys. The State Technology and Science Index ranked Maryland second in its January report. The North American Business Costs survey ranked the state No. 45 in April.

The Old Line State’s slide in the Forbes list came as the magazine dinged Maryland for its regulatory environment and growth prospects. The regulatory ranking, which includes state fiscal conditions and economic development, dropped from No. 9 to No. 22, and growth prospects, from 29th to 40th.

Maryland loses on the regulatory side as its debt grows higher and higher toward the state’s limit and because it is not a right-to-work state. Those states, mostly in the South and West, do not allow union membership or dues payments as a condition of employment.

The threat of federal budget cuts and a decline in government spending already evident in the state has cast a pall over Maryland’s economic future. Virginia, too, saw its growth prospects slide, landing 25th on the Forbes list after capturing No. 14 last year.

Maryland improved in 2011 on the business costs measurement, the heavily weighted category used by Forbes. Its ranking went from 49 to 42. The economic climate ranking also improved, climbing from 19 in 2010 to 13.

The state’s unemployment rate of 7.2 percent in October is well below the national average of 9.1 percent.

Discussing the jobless rate Monday, Maryland labor secretary Alexander M. Sanchez said there are “misleading myths out there that Maryland is not a good state for business.”

Those myths are “as dangerous to the recovery as anything else,” he said. “We have to push back against that.”

Gov. Martin O’Malley has pursued a series of administrative remedies to the criticism of over-regulation.

Last year, the Department of Business and Economic Development worked with transportation officials to overhaul highway permits for construction projects. And in July, O’Malley announced a program that would expedite reviews for major new developments.

O’Malley ordered a review of all state regulations in October to find those that are outdated, duplicative or onerous. Findings from agency heads are due Dec. 17 and regulatory changes could be a piece of the job creation package the governor is expected to introduce in the General Assembly in January.