By ALANA KEYNES
Capital News Service
December 1, 1999

WASHINGTON - Maryland residents received $1.36 in federal goods and services for every dollar they paid in federal taxes in fiscal 1998, according to a report released Wednesday .

The study by the Northeast-Midwest Institute said that while Maryland has a relatively high federal tax burden, the return it gets on those tax payments is 13th-highest in the nation.

The state does even better when federal spending per capita is measured. Maryland gets $8,095 per person in federal funds compared to a national average of $5,249.

Maryland had the second-highest per capita federal spending in the nation, trailing only Virginia, which got $8,221 per person in fiscal 1998. Officials attributed the high federal payments in those states to their concentration of government agencies.

"We have a strong federal research presence. Federal government is a major employer so it would make sense," said Susan Sullam, a spokeswomen for Rep. Benjamin Cardin, D-Baltimore.

The Northeast-Midwest Institute, a non-profit organization dedicated to economic development of that region, released the report Wednesday as evidence that states in its part of the country were being forced to subsidize Southern and Western states.

"There's a bias in the spending patterns," said Paula Duggan, senior policy analyst at the institute. "The feds have to look at what they're buying and where they're buying it."

The report was based on data from the Census Bureau and the Tax Foundation. It broke federal spending into five categories: retirement and disability, salaries and wages, grants, procurement, and other direct payments like Medicare.

Most of Maryland's federal funds go for procurement and toward retirement and disability payments, which includes programs like Social Security. Federal spending on salaries and procurement in the state were about three times the national average, according to the report.

It said Maryland paid $34.8 billion in federal taxes, 13 percent more per person than the national average. But the report said Maryland's tax burden has been declining steadily for nine years, while the return from the federal government hit the highest rate in a decade in 1998.

Duggan said Maryland was the beneficiary of $41 billion in federal spending in 1998. The institute reached a figure of $1.36 return on Maryland's $1 by adjusting the tax burden for each state to account for federal deficit spending.

The institute report did not include federal spending for Washington, D.C. But other nearby states did not fare as well as Maryland and Virginia.

Per capita federal spending in Delaware was $4,778, almost $500 below the national average. Pennsylvania and West Virginia both got back more than the national average, with those states receiving $5,612 and $5,906, respectively, in federal funds per person.

Virginia also received large amounts of federal funds mostly because of procurement and retirement payments to residents of the commonwealth, said Duggan. Federal procurement in Virginia is mainly based on military purchases while Maryland procurement is based on civilian departments, said Duggan.

"Maryland really benefits just from geography in this case," she said.