Source Bureau of Revenue Estimates of Maryland State Comptroller's Office, June 30, 2000

The joint acquisition of Conrail by CSX and Norfolk Southern has meant little additional traffic so far for
Maryland and no additional employment. An expected pick-up in traffic this fall has failed to materialize,
possibly due to a slowdown in manufacturing, especially for chemicals. Mild summer weather has also slowed
demand. Recently, an increase in fuel costs has hurt the railroads, but long-term elevated prices could be beneficial
for two reasons. First, transportation by rail is more fuel-efficient than by road, the major competitor, and
second, a substitute fuel-coal-is best transported by rail.

The Port of Baltimore is the fourth largest on the East Coast and generates almost 145,000 direct and indirect
maritime jobs. In September, the Masonville facility opened, which allows the Port to strengthen its market
share in the Roll On/Roll Off (Ro-Ro) market. Its Ro-Ro share reached 46% of the East Coast market in 1999.
It continues to dominate in the import of tractors and trucks and the export of automobiles. Baltimore also
imports more wood pulp than any other U.S. port and growth in forest products soared 41% during the past year.
This was highlighted by a decision by UPM-Kymmene and Mesta-Serla, both of Finland, who each decided to
use the Port of Baltimore as their main destination for imported magazine-quality paper.

Deregulation has brought a tremendous amount of uncertainty and change to the utility sector. While these
businesses may take advantage of deregulation and grow rapidly, there is certainly no guarantee that the
Maryland-based companies will prosper; even if they do, with their market reach now nationwide, there is no
guarantee that the Maryland economy will directly benefit. Nonetheless, the early signs are promising as
Maryland firms seem to have joined the vanguard of deregulation despite a later start than was available to
utilities in many other states. Maryland's electric utilities have changed dramatically over the past year. Pepco has
reached an agreement to sell almost all of its generating facilities, and BGE's have been transferred to
Constellation Energy Group, which will shortly be separating from BGE. Similarly, Allegheny Energy has
transferred its generating assets to its non-regulated affiliate, but at this point they plan to remain affiliated.

Consolidation and competition will result in job losses in these areas, particularly in the aspects of this sector
directly related to the old regulated businesses. These losses will be offset to a degree by the new ventures
undertaken and supported by these companies. More importantly, the dynamism and efficiencies generated by
these changes may have a substantial impact on the State in the longer term. These dramatic changes to the
utility sector are expected to result in modest job losses in 2000 and 2001, before stabilizing in 2002.

The communications sector is likewise undergoing rapid change as a result of both deregulation and the
Internet. The recent merger of Bell Atlantic and GTE into Verizon will have a tremendous impact on the
operations of a long-time Maryland institution. Since a large amount of infrastructure and customer service
needs will remain, and since neither Bell Atlantic nor GTE had major management operations in Maryland, the

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COMPTROLLER OF MARYLAND