Monthly Archives: September 2013

Maryland Governor: The Race is On

Establishment vs. Outsider?

By Barry Rascovar

September 30, 2013 — NOW THE RACE for Maryland governor starts for real. The two main contenders are in the ring for what promises to be an aggressive contest race that has no precedent in Maryland history.

What makes the 2014 gubernatorial election so unusual is the timing.

Ballot Box

Ballot Box

Rather than holding the primary in September as is traditional, this one takes place June 24. That early date will cut down substantially on turnout, play havoc with fund-raising and compress the full fury of the campaign into about 80 days once the General Assembly ends its session on April 7.

Making History

It’s also unusual in that the leading contenders hold two jinxed state offices.

No lieutenant governor has ever been elected to succeed his boss in Maryland.  Blair Lee III, Sam Bogley, Joe Curran, Mickey Steinberg, Kathleen Kennedy Towson and Michael Steele all had dreams of sitting in the governor’s chair but never did.

No attorney general has won election to the state’s top office in 75 years, either. Most settled for prestigious judgeships but a few considered running or failed trying — Tom Finan (1966), Bill Burch (1978) and Steve Sachs (1986). None made it past the primary. (The last attorney general elected governor was Herbert R. O’Conor in 1938. Ironically, he was succeeded eight years later by William Preston Lane, who had been attorney general  just before O’Conor.)

So Lt. Gov. Anthony Brown and Attorney General Doug Gansler not only are battling against each other but also battling against history.

Two-Way Contest

They are far and away the ones to watch.

Del. Heather Mizeur of Montgomery County is a peripheral issues candidate who is making this high-visibility campaign her political swan song. Republican candidates can’t come close to winning in Democratic Maryland unless there’s a inside-the-party revolt against the Democratic primary winner.

That’s not likely to happen.

Even worse, Republican candidates are taking extreme positions to appease Tea Party voters, thus eliminating their already slim chances. (More in a future column.)

Divergent Strategies

Brown prematurely kicked off the campaign by declaring in May — a stunningly early announcement.

Lt. Gov. Anthony Brown

Lt. Gov. Anthony Brown

He followed by making an early choice for a running mate and announcing a slew of endorsements meant to show his bona fides. Yet few voters pay attention so far from Election Day.

Now, though, the media has turned its sights on the gubernatorial race because a second heavyweight, Gansler, has announced. He’s running as “the outsider” against the “entrenched political establishment.”

It’s an apt description given that Brown had been running a “coronation campaign” stressing the inevitability of his elevation.

Gansler wasted little time debunking that campaign myth. It’s now a two-person race with Mizeur providing intriguing side-commentary.

Brown is Gov. Martin O’Malley’s anointed choice. The governor will work hard to get his No. 2 elected. Why not? Brown claims credit for all of O’Malley’s achievements and then promises voters he’ll “do more.”

In fact, Brown was not a major contributor to most of O’Malley’s legislative successes and only played a role on a few issues late in the administration’s second term.

But O’Malley is joined at the hip with Brown and will push hard to make his No. 2 look good in the next legislative session. It’s the best way for the governor to ensure his legacy is embellished and extended.

Gansler the Outsider

Gansler had even less to do with O’Malley’s achievements so he can rightly claim the title of outsider. Indeed, the more endorsements Brown announces, the more Gansler can rail about the political establishment’s cabal to keep control of the state’s highest office.

Atty. Gen. Doug Gansler

Attorney General Doug Gansler

Brown’s approach is to lock in all the top Democratic endorsements and ride to victory on the strength of O’Malley’s liberal record, the political establishment’s clout with voters and the unified support of Maryland’s large African American community, especially in Prince George’s County.

That leaves Gansler room to appeal to moderate and conservative Democrats who have been largely abandoned by O’Malley and Brown and to his strong base in Montgomery County.

The attorney general has staked out positions slightly to the right of O’Malley — opposing the gas tax increase, criticizing the governor’s embrace of a “zero tolerance” arrest policy, proposing a corporate tax cut, urging steps to bolster manufacturing and criticizing O’Malley’s prison policies.

At the same time, Gansler isn’t abandoning his long-standing liberalism. (He was, for example, one of the first state officials in Maryland to endorse Barack Obama’s candidacy and to endorse gay marriage). He spoke out before others on raising the minimum wage from $7.25 to $10 an hour. He proposes legislation to protect women from domestic violence and implement transparent policies for state government.

Two Big Tests

The next General Assembly session will test both candidates. Gansler will pick and choose where he wants to attack the O’Malley-Brown administration. Conversely, Brown has to show success in getting administration bills enacted. Much of what transpires for those 90 days will be colored by the campaign for governor.

Gansler has the clear edge in fund-raising at the moment. If that’s still true come May, he will have the upper hand in advertising his name and face on local television. At a time when neither candidate is a well-known commodity, that’s a big advantage.

What may settle the race are the campaign debates. Gansler is quick on his feet and a fierce advocate; Brown can be an impressive speaker when reading from a script.  How they match up on issues voters care about and how they come across to a large debate audience could determine the outcome.

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The 50th State: Delmarva?

Pipe Dreams Don’t Come True

By Barry Rascovar

September 25 — Several reader comments, plus a former congressman’s email to MarylandReporter.com, take exception to an omission from politicalmaryland.com’s September 23 column: “The 51st State: Western Maryland.

Why wasn’t secession talk on Maryland’s Eastern Shore part of that blog?

Yes, unhappy Eastern Shore politicians have earned a few headlines in local papers over the decades by submitting secession bills to the Maryland General Assembly that have no chance of being taken seriously.

From ‘Outhouse’ to ‘Our House’

Reader Brian Klaff comments:

“If you’ll recall, this isn’t even the first time this has happened in Maryland.  I distinctly recall that in 1991 when Governor [William Donald] Schaefer called the Eastern Shore “the state’s outhouse” (in not-quite-as-nice terminology), there was a movement for those counties (Cecil, Kent, Queen Anne’s, Talbot, Caroline, Dorchester, Wicomico, Somerset, and Worcester) to secede and start a 51st state called Chesapeake.

“And according to Wikipedia, there were similar proposals for the Eastern Shore in 1833, 1835, 1852, and even 1998 (put forth by State Senators [Richard] Colburn and [Lowell] Stoltzfus) to create a break-away state of Delmarva.”

Maligned and Neglected

Former Rep. Robert E. Bauman, who served the Eastern Shore in both the House of Representatives and state Senate, commented to Maryland Reporter editor Len Lazarick:

Former U.S. Rep. Robert Bauman

Former U.S. Rep. Robert Bauman

“If any area of Maryland has a right to feel neglected it is the Shore, maligned by the late Governor Schaefer as the ‘outhouse’ of Maryland and by H. L. Mencken as ‘booboisie.’ It is viewed by [Governor Martin] O’Malley as a hotbed of Tea Party Republicans who cannot be gerrymandered congressionally, unfortunately from his very partisan perspective.

“In 1972 I sponsored a bill to allow a referendum on the issue in my five Upper Shore counties…. We had a major pro-statehood rally at the State House that drew about a thousand people from all over the Shore, complete with Shore food (oysters, crabs, chicken), music and speeches. Of course the Democrats, led by the late [Eastern Shore] Sen. Fred Malkus, blocked my bill but the publicity contributed to my election to the [U.S.] House in a special election in 1973.

“Research will show that advocacy of Eastern Shore statehood goes back to the 1800s when there were two administrative co-capital cities, one in Annapolis and the other in Easton with separate State Treasurers, Comptrollers and Secretaries of State — and the only transportation connection was by boat.

“When I was asked at the statehood rally by a WTOP reporter what the Eastern Shore state would be called, I replied: ‘Maryland — let those other folks on the western shore get another name.’ ”

Yearning To Be Heard

Indeed, it was a good publicity stunt for Bauman. But it was nothing more. The yearning to be heard and heeded in liberal Annapolis is strong on the conservative Eastern Shore. Conservative Western Marylanders have a similar yearning. Secession talk is a useful way to make that point.

As a separate state,  those nine Shore counties could not make it alone.

Six of the counties have poverty rates above 10 percent. Direct aid from Maryland far overshadows what those counties pay in income taxes. Over 3,000 jobs would be lost if Maryland closed its two college campuses and a big prison on the Shore.

Over $360 million in annual spending at those three Maryland facilities would be lost. The new state would have to create a vast new police force to replace the State Troopers now patrolling much of the Shore for the counties east of the Chesapeake Bay.

A far more sensible approach would be to create an entity called Delmarva, consisting of the nine Maryland Eastern Shore counties, the two isolated Virginia counties to the south and the state of Delaware.

State of Delmarva

State of Delmarva

It would be an ideal geographic fit: the entire Delmarva Peninsula united as a single government entity.

The poor and sparsely populated Delmarva Virginia counties (45,500 folks) have much in common with their Delmarva neighbors to the north.

It’s a rural farming and fishing region.

All of them are separated from the “mainland” by the nation’s largest estuary, the mighty Chesapeake. Why not join them all together in the re-named state of Delmarva?

What Would Wilmington Say?

There’s no chance of a merger with prosperous Delaware, though. Democrats there rule the state capital and all the congressional offices. There’s no advantage for Wilmington to annex two territories from other states that are far more conservative, Republican and less well off.

Perpetuators of the State of Delmarva myth can’t overcome that reality.

If the new state were limited to the nine Maryland counties, it would be unable to afford current government services without increasing — not decreasing — taxes. The Eastern Shore gets far more in Maryland revenue that it returns to the Annapolis treasury.

So while it’s entertaining to give fanciful secession talk media coverage, it’s wishful thinking — the same kind of day-dream I employ when the multi-state lottery reaches $100 million.

In that dream, I’ve already decided not to take the cash option.

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Read more columns at www.politicalmaryland.com

 

The MD State Pension Debate Rolls On. . . .

September 24, 2013

SOME ISSUES never lend themselves to permanent solutions. Government-run pension plan projections fall into that category.

I posted a pension column on July 31, which spurred historical recollections from former state Sen. Bobby Neall (August 7), state Treasurer Nancy Kopp  (August 8) and  former Ehrlich budget director Cecelia Januszkiewicz (August 8), followed by Del. Andy Serafini’s plea for a more cautious approach to estimating future rates of return, and state pension director Dean Kenderdine’s explanation of why the state pension trustees opted for a gradually reduced rate, but not by as much as some urged.SRPS_Logo

Now Serafini delivers another essay that lays out more reasons why the state should further lower expectations of investment returns in the years ahead.

Economic Puzzle

His point echoes conservative economists, who see the glass as half-empty rather than half-full. This is an age-old conundrum: Should the Federal Reserve encourage or discourage higher interest rates and if so by how much? Should the Fed reduce its quantitative easing policy or maintain it? What’s the proper projection for pension investment returns?

No one has a crystal ball that is accurate all the time. Only after the fact does someone suddenly claim “genius” status for predicting a bull or a bear market — until the next time.

Del. Andy Serafini

Del. Andy Serafini

Serafini, a financial planner, notes there are political reasons for Maryland maintaining a much higher expected rate of investment return than he would like.

That was made clear when the pension trustees opted to gradually lower the projected rate of return a tad. Len Lazarick, ace reporter/publisher of MarylandReporter.com, covered the pension trustees meeting and noted that when the state’s actuary said it would be wiser to drop the projected rate right away to lower levels, state budget secretary Eloise Foster responded: “I don’t know whether we could afford it right now.”

It would cost hundreds of millions of dollars each year to drastically scale back Maryland’s assumed rate of investment return. That money would have to come out of the general fund budget, forcing major cutbacks in social programs and aid to the counties.

Democratic Gov. Martin O’Malley isn’t about to ruin his reputation for preserving and strengthening social programs just to fortify the pension program’s financial underpinnings . Even Republican Gov. Bob Ehrlich didn’t pursue that course.

Dissatisfied Conservative Voices

Given this fact of life in Annapolis, the pension trustees voted to take a gradual approach in shaving projected investment returns. It doesn’t satisfy Serafini and other conservative voices, as he makes clear in his latest essay:

Dear Mr. Rascovar,

I read with great interest [Dean] Kenderdine’s recent response to my comments. Unfortunately for Mr. Kenderdine [Executive Director of the Maryland State Retirement and Pension System] I have kept him very busy responding to my various letters to the editor or other past commentaries.  I should say that I have tremendous respect for members of the Board of Trustees as well as Mr. Kenderdine.  They have a very difficult job to do.  It is made more difficult having to put up with politicians.

Currently, there is a great debate occurring across our country regarding the proper basis for valuing liabilities in pension plans.  Whether it is the bond rating agencies, Pension Benefit Guaranty Corporation or the American Academy of Actuaries, the opinions vary greatly.  Corporate defined-benefit pension plans are federally required to use an index tied to corporate bond rates, which allows them to use a rate in the 4% to 6% range (with certain exceptions).  Many public pension plans justify their current rates in the range of 7% to 8% based upon past experience.  However, the current assumptions are forward-looking and few believe the next 25 years will prove to be as favorable to investors as the past 25 years.

I particularly found Mr. Kenderdine’s comment that Moody’s “arbitrarily” selected a lower rate in calculating the unfunded liabilities of states such as Maryland to be interesting.  If we are supposed to trust that the AAA rating Maryland receives to be well-earned through the august body of analysts such as Moody’s, why would we expect that they would be arbitrary in choosing such a significant method for determining pension liabilities?  For the record, they use an indexed rate based upon a corporate bond rate that is duration specific and relevant to most plans, including Maryland’s.

To remove all the clouds and esoteric conversations, we need to consider what is really going on here. If we consider what is known as the “prudent man rule,” it may shed a different light. This is a requirement of all fiduciaries that states that any one exercising control over assets for another person (i.e. the pension participants as well as the taxpayers) should exercise the care and prudence acting in the beneficiaries’ sole interest. The problem is that if we use a lower assumed rate like private pensions and the others are suggesting, that would lead to significantly higher annual contributions.

What Mr. Kenderdine did not say is it is politically uncomfortable to lower the expected earning rates because of these significantly higher annual contributions. These increases could be as much as several hundred million dollars or more over the years if we were to lower the rates just by a percent or two. Compounding matters, the annual growth in contributions to these plans is currently restricted by Maryland law, which precludes contributing an amount recommended by the actuaries.  Such a practice would be illegal in private sector pension plans. While it may create significant budget strains, I believe as fiduciaries the lower rates tied to an index is acting in the best interest of the plans. Keep in mind that if there are shortages the taxpayers and participants ultimately bear the risk. Just ask the people in Detroit.

They will argue that public plans can use higher rates due to the past performance and that, unlike corporations, they do not risk going away. In my previous letter I explained why future results will struggle to match the past 30 years. Warren Buffet has also said that anyone expecting over 7% is foolish.

Rick Dreyfuss a senior fellow with the Manhattan Institute and pension expert argues there is another problem with the current funding methodology.  Most of the current employees that have significant accrued pensions will retire in the next 15 years. We are planning to pay off the unfunded liabilities for these individuals over 25 years. This would be like buying a car that you plan to own for five years and taking out a ten-year loan. This means that we will be paying for the liability well after the people retire. Not a prudent approach in my opinion.   Moreover, such a demographically driven accounting policy for pensions was recently revised and adopted by the GASB as their formal accounting standard. Bond rating agencies such as Moody’s also analyze credit risk with such a concept in mind.  Both entities also favor the use of the market value of assets to determine annual pension cost versus the rolling average approach used by most public sector plans including Maryland’s.  The use of the market value of assets is also a federal requirement of private sector defined benefit plans. This approach, while arguably creating somewhat more volatile results, better ensures costs are properly recognized rather than deferred to future generations.

The bottom line is, as I said in my earlier correspondence, a more cautious rate is more prudent to properly fund the pension plan. If the performance is better that would mean future contributions could be reduced once the funded status reached appropriate levels of 80% or more. Using higher expected interest levels reduces the mandatory contributions and passes the risk not only to pension participants but to the taxpayer who is the ultimate backstop. As a public official, taxpayer, and financial adviser I cannot support that type of approach.

Andy Serafini

The 51st State: Western Maryland

 How to Succeed Without Seceding

By Barry Rascovar

Sept. 23, 2013 – The mountain natives are restless in Maryland. They want to have it their way, though they represent just 10 percent of the state’s population.

Here are a few things that annoy them:

  • A stream of tax increases (including one on rain!) from Annapolis.
  • State restrictions that devalue their land.
  • Tougher gun-control laws.
  • A bleeding-heart law that does away with the death penalty.
  • A state law legalizing gay marriages.
  • Political map makers who deprive them of their conservative congressman.

It’s enough to make you want to secede, which is the plan put forth by a Carroll County blogger, Scott Strzelczyk of New Windsor, for the five counties (in red below) often lumped together as Western Maryland.State of Western Maryland-WBFF

The verb “to secede” is a curious term not to be confused with the similar-sounding verb “to succeed.”

Indeed, were the five western counties to secede from Maryland, there would be no chance for that movement to succeed.

It Won’t Happen

Here’s why.

–The 51st state: Western Maryland would be the third smallest by population (less than 660,000). Only Wyoming and Vermont would have fewer residents.

–It would be a state divided between “haves” and “have nots.” Under-populated and impoverished Garrett and Allegany counties would be heavily outvoted by the far more crowded, well-off jurisdictions to the east. As the French say, “the more things change, the more they stay the same.”

–It would be one of the most homogeneous states, close to 90 percent white with few African Americans or Latinos. Nearly everyone would be Christian, too.

–It would be filled with non-productive residents. Folks of retirement age and children 18 years or younger would constitute over 40 percent of the population.

–Two wealthy counties – Carroll and Frederick – would be forced to support the other three jurisdictions that have high unemployment (Washington County’s jobless rate, for instance, stands at 8.4 percent).

–The five counties would lose $622 million in direct Maryland school aid and a lot more Maryland aid earmarked for other social programs. Yet these jurisdictions only produce $326 million in income tax revenue.

Too Many Economic Barriers

How can secessionists afford to cut taxes? How will they pay for essential services without raising what they claim is an already onerous tax burden?

The numbers don’t add up.

The state of Western Maryland would lack a sound employment base.

Moreover, all the thousands of Maryland government jobs in the five counties (especially in the many state prisons) would disappear under secession.

It’s an idea whose time will never come.

Beyond Maryland

Rural counties elsewhere want to try the same thing.

In August, Siskiyou County (population: 44,000) voted 4-1 to secede from California. It wants to join with southern Oregon rural counties to form the new state of Jefferson.

State of Jefferson Flag

State of Jefferson Flag

Their movement, Defend Rural America, started way back in 1941. Secessionists even designed a flag with two Xs – signifying the double-cross of rural residents by the two states.

Their complaints echo what is heard from rural Marylanders:

Urban legislators are attacking our way of life. No one with power listens to our complaints and concerns. Our constitutional rights are being taken away. Land-use laws are depriving us of our wealth. Our religious and cultural beliefs are being undercut.

Colorado has its own secession movement. Six counties vote in November on creating the state of North Colorado.

North Colorado State Flag

State of North Colorado Flag

They hope to be joined by like-minded counties in Kansas and Nebraska.

In Michigan, residents in the Upper Peninsula feel isolated and unappreciated and want to secede.

In New York, politicians have proposed various secessions for New York City, Long Island, conservative parts of the Big Apple and upstate New York.

In California, partition proposals frequently surface. In 1965, the state Senate voted 27-12 to split the Golden State in two.

In Texas, the independence movement remains active. The Texas Nationalist Movement claims 250,000 members, though its website reminds seniors that under secession they’ll still receive their U.S. Social Security checks.

Resisting Change

What binds these movements is disillusionment and a feeling of disenfranchisement.  America is changing and they don’t like it.

Urban and increasingly dense suburban communities control state legislatures. Residents there are growing more polyglot. What was once a white, church-going nation of farmers and small merchants is no more.

The battle to preserve and protect rural America really was lost in 1787.

That’s when urban Federalists led by Alexander Hamilton had the votes to write a Constitution creating a strong central government. This sealed the fate of Jefferson’s agrarian republic in which states would hold the power to define and defend individual rights and liberties.

Pockets of discontent with the governance structure championed by Hamilton and Washington have never disappeared. The only movement that achieved its goal was the breakaway of 50 pro-Union northwestern counties from Virginia during the Civil War to establish West Virginia in 1863. (Few landowners in mountainous western Virginia had slaves.)

Republic of Texas, 1836

Republic of Texas, 1836

Texas also seceded, but from Mexico, gaining its independence in 1836.

Nine years later, in 1845, the Republic of Texas voted to join the United States.

Door No. 1, No. 2 or No. 3?

For those unhappy with the current state of affairs in Maryland, there are three realistic options to consider.

Move.

That’s been the answer for many discontented Americans. Religious minorities that felt persecuted sought greener pastures. Those wishing to control their destiny or start a new life moved into the western frontier.

There are plenty of states where strong conservative views predominate. Pick one and live there.

Stay and complain.

Shout at the top of your lungs at public gatherings. Write angry letters to the editor. Vent your spleen on blog posts.

None of this helps achieve your objective. In fact, it turns off the electorate and leaders who count.

But it is salutary and a form of therapeutic self-expression.

Stay and fight.

People with deeply held libertarian or conservative views probably will never be in the majority in Maryland.

Still, they have a shot at influencing public policy with thoughtful, innovative ideas and a willingness to debate, explain, compromise and work collaboratively with those in power. Incremental steps add up over time.

It comes down to whether you want to make a difference or make a statement.

In this country, thank goodness, the choice is yours.

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The Incredible Shrinking Presidential Debate

O’Malley vs. Perry (Sort Of)

By Barry Rascovar

Sept. 19, 2013 — IF CNN’s DREADFUL news show “Crossfire” is this generation’s version of a presidential debate, we’re in trouble. It was hard to know the featured players on Wednesday’s program: the obnoxious hosts or the demure and all too pleasant guests, Maryland Gov. Martin O’Malley and Texas Gov. Rick Perry.

Neither governor could compete with the interruptions and rants in the form of attack questions posed by Newt Gingrich from the conservative right and Stephanie Cutter from the far left.

You had to feel sorry for the two guvs.

They wanted to banter about which state was better for business (Texas) or for the middle class (Maryland). Instead, most of the program centered on the ego-centric, “I’m smarter than you are” political obsessions of Gingrich and Cutter.

Who Won?

From what we could glean, O’Malley and Perry are well-versed in statistics supporting their state’s economic strengths and the other state’s weaknesses. But it was impossible to gauge from the blizzard of back-and-forth data which governor had the better argument.

If you’re looking for low taxes and limited government, move your operation to Texas. If you’re interested in highly educated workers and a high level of government services, move your offices to Maryland.

Yet the program failed to tell us much about the presidential timber of O’Malley and Perry.

MD Gov. Martin O'Malley at play

Presidential Timber?

Is Rick Perry presidential?

Presidential Timber?

 

 

 

 

 

 

 

 

They came across as cool, competent, experienced governors – which they are — not as candidates for the nation’s highest office.

What Presidential Debate?

Only one question (Obamacare) dealt with a national issue. On that query, we got predictable answers – Perry is dead set against government-mandated health insurance, and O’Malley is adamantly supportive.

Where do they stand on raising the nation’s debt ceiling, the sequester, gun control, immigration, tax reform, Syria, Iran, Russia, NSA communications surveillance, the farm bill, food stamps, infrastructure funding, unemployment and the next Federal Reserve chairman?

On those issues, “Crossfire” misfired.

Whether either O’Malley or Perry has the skill and know-how to run the world’s dominant nation remains a mystery. That will have to wait for another, more serious debate forum. This one was all fluff and politicized posturing by the hosts.

You have to wonder if the guests would have shown up if they had known what was coming.

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Perry vs. O’Malley — Early Presidential Showdown?

Two Longshots Slug It Out In Maryland

 

By Barry Rascovar

Sept. 16, 2013 — TEXAS GOV. RICK PERRY is poaching in Maryland. He’s camouflaged his Wednesday visit as an economic development pitch — including a $500,000 TV and radio ad blitz — to get companies to move from Maryland to low-tax, pro-business Texas.

He’s not fooling anyone.

It’s all part of Perry’s nascent presidential campaign for 2016. His move-to-Texas gambit comes with plenty of media coverage and new business contacts. He’s done it in other states that just happen to have important primaries like California, New York, Illinois, Missouri and Connecticut, where Perry needs to connect with Republican voters well before the 2016 GOP primary heats up.

It’s a brash, aggressive move that underlines Perry’s macho reputation for sweeping aside political niceties.

Texas Gov. Rick Perry

Texas Gov. Rick Perry

Maryland is an ideal state for Perry to visit, which is ironic considering the state’s overwhelming Democratic tendencies.

By hammering hard in the ads at Maryland’s “job killer” tax increases and the state’s anti-business reputation, Perry sparked a response from Democratic Gov. Martin O’Malley, who shares Perry’s presidential ambitions.

“All hat and no cattle,” quipped the Maryland governor. (That’s a Western and Midwestern expression for folks who wear cowboy hats but have never worked a farm.)

You can expect lots of similar zingers from O’Malley this week and perhaps a mano a mano meeting with the Austin poacher. The Baltimore and Washington media will eat it up. That’s precisely what Perry wants.

MD Gov. Martin O'Malley

Maryland Gov. Martin O’Malley

The two governors are ideological poles apart on issues and philosophy. It’s O’Malley’s strident New Deal liberalism versus Perry’s strident right-of-Reagan conservatism.

A war of words is the script both politicians desire. The more media stories this visit generates, the more Perry and O’Malley grab much-needed visibility.

It’s true that Texas has a warm and cozy relationship with its business community. You don’t see Texas leaders bashing businesses. O’Malley, though, has resorted to angry denunciations of corporations to emphasize his dedication to working men and women. Any time O’Malley needs a scapegoat, he lobs a verbal grenade in the direction of Corporate America.

That’s why O’Malley will have a hard time disputing Perry’s statement that Maryland has a terrible reputation with the business community. A CNBC survey this summer placed the Free State near the bottom (No. 40) when it comes to business climate. (Texas ranked No. 2.)

Advantage O’Malley

The fact that O’Malley’s hostile comments and actions drag down Maryland’s efforts to recruit new companies and jobs is of scant concern to the governor. State corporate leaders are not fond of O’Malley’s policies, but they have to cooperate. As Maryland governor, he holds all the high cards.

O’Malley is most vulnerable on the 40 times he’s raised taxes or fees while in office. Many of those increases socked it to the business community.

In sharp contrast, Texas has a sterling reputation for keeping corporate taxes low and companies happy.

Historically, the Lone Star State has limited government intrusions. The opposite is the case in Maryland.

Down With Washington!

While O’Malley yearns for a return to the days of FDR and LBJ when liberalism dominated Washington’s power centers, Perry expresses disdain for virtually everything related to the nation’s capital.

In his 2012 campaign book, “On Fire! Our Fight to Save America from Washington,” Perry calls Social Security unconstitutional, Medicare too expensive, banking laws unnecessary, consumer protection unneeded and federal education policy illegal.

He’s an unabashed Tea Party conservative who comes close to mouthing the words from that movie classic, “Network”:  “I’m mad as hell and I’m not going to take it any more!”

Maryland: The ‘Tax and Fee State’

For O’Malley, his spat with Perry indicates what he’ll face as a national campaigner. His record on taxes is unprecedented in Maryland history.

It is true that many of those tax levies were needed to help state and local governments weather the Great Recession, but this subtle distinction is lost on a public that only reads headlines, not the fine print below.

And while the Maryland governor can point to high-achieving schools, low-tuition state colleges and a “green” environmental record, his critics need only point to all those increased taxes and the frightening violence and murder rate in the state’s largest city.

Texas Fracking Boom

Perry’s situation is quite different.

He’s been governor of Texas for 13 years and that state’s economy is charging ahead, thanks in large measure to the oil and gas fracking boom.

He can brag about keeping taxes down and free enterprise free of government entanglements.  He also can draw cheers from conservative crowds by denouncing the Affordable Care Act (Obamacare) as un-American. (He skips over Texas’ abysmal record in helping the poor.)

By starting his presidential campaign early, Perry hopes to gain far more name recognition across the country than in 2012. He’ll be better organized this time, too.

Yet he’s still a longshot, as is O’Malley.

In that regard they are much alike – two ambitious governors nearing the end of their terms with nothing better to do than reach for the brass ring that could lead to a presidential showdown.

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The Working Family’s Governor

Throughout his two terms as governor, Martin O’Malley has portrayed himself in words and deeds as a champion of Maryland’s working class. He’s a neo-New Dealer who sees his political future through the lens of becoming known as “the working family’s governor.”

Now O’Malley has joined the Democratic stampede to support a major jump in the state’s minimum wage. He also has made it clear he will not be sponsoring any bills to lower Maryland’s corporate income tax as a sop to the business community.

Neither move is unexpected.

Jumping on the Bandwagon

The drumroll from liberal Democrats for a higher minimum wage is building rapidly. It’s natural to jump on this bandwagon as state legislators start campaigning for reelection.

Gov. Martin O'Malley

Gov. Martin O’Malley

For O’Malley, it’s also a no-brainer. He’s looking to run for higher office nationwide. What better way to impress liberal Democrats who will vote in presidential primaries in 2016 than to show your admiration and support for working men and women?

With an improving economy in Maryland, O’Malley and legislative leaders know that boosting the minimum wage may not be the giant job-killer opponents claim. Besides, hiking the wages of lower-income folks will be a big hit with them at the ballot box.

Still, there’s no denying many low-wage employers will make cuts in staffing to compensate for paying higher wages. That’s an economic truth O’Malley & Co. don’t want to face.

It’s also true that raising the state minimum wage by $2.75 or more from the current hourly rate of $7.25 could crush many small business owners. They can’t afford to see their payroll expenses rise nearly 40 percent.

Another verity is that minimum-wage jobs are not supposed to be career positions. They are not designed for people seeking to raise a family on that meager income.

The Real Purpose of Minimum Wages

Historically, minimum wage jobs were filled by young people seeking to start their careers by showing solid work ethics at these part-time positions. It’s a building block for people. It’s not supposed to be a lifetime job, only a part-time way to add to your resume, provide supplemental funds for your family, or add extra money to pay your way through college.

Still, a series of small increases in Maryland’s minimum wage does make sense, especially if Republicans in Congress continue to block any effort to do the same thing nationally. It must be a balancing act, though, to make sure the wage increases don’t jeopardize existing jobs.

One way to offset this blow to business is to work out a deal for lowering corporate taxes. O’Malley, though, isn’t interested.

In an appearance before a state business group, the governor once again showed his disdain for addressing the problems businesses face in Maryland, which has one of the highest corporate tax rates in the region.

A Package Deal?

Legislators seem a bit more amenable to discussing a cut in the corporate levy. And why not?Maryland is at a competitive disadvantage with the higher business tax rate.

Attorney General Doug Gansler, who is running for governor, already has voiced his support for phasing in a corporate tax reduction that might help the state attract job-creating companies.

If, indeed, tax revenues continue to grow, there will be ample funds to start shrinking the levy on corporations as part of a package deal that includes a higher minimum wage.

Eventually, even O’Malley might have to set his animosity toward businesses aside long enough to support such a package. It’s a small price to pay for easing the path to passage for a higher minimum wage.

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The MD GOP — From the Inside and Outside

My column on the fading future of the Maryland Republican Party prompted a variety of Republican responses.

The Inside Perspective

Del. Tony O’Donnell, the former House minority leader from Calvert County Maryland, gave his upbeat assessment to Maryland Reporter, concluding, “I am pleased to say that the GOP is here to stay in Maryland, by no means ready  to kick.  The narrative of certain ‘media operatives’ who have made a  career out of periodically smacking the MDGOP around for their own designs is  bunk.”

Republican Del. Tony McConkey of Anne Arundel County sent in his positive slant, which you can read under “Recent Comments” at www.politicalmaryland.

David Furguson, who quit on very short notice as state party director, objected to the column, too. He denied reports in other publications that he was unhappy with the state party chair, Diana Waterman. “Please stick to factual reporting,” he wrote in an email. “I left to pursue other opportunities just like I said in my letter.

“The only person who is reporting on how I feel is me.

“The majority of your article was way off base and not just the part where I was mentioned.”

The Outside View

Also chiming in was a Prince George’s County voter, Diane C. Russell. She read O’Donnell’s positive outlook for the state GOP in Maryland Reporter and responded this way:

“You must be kidding!

“From my standpoint, there is no Maryland GOP.
“I have voted Republican for over 50 years, 48 of them in Maryland.  What has it gotten me?
“Nothing!
“When I went to the polls in 2010, my ballot had:
  • No GOP candidate for Maryland senate.
  • No GOP candidates for three delegate positions.
  • No GOP candidate for county executive.
  • No GOP candidate for county council;
  • No GOP candidate for sheriff.
  • No GOP candidate for states attorney.
  • No GOP candidate for any other local office (except one GOP candidate for the orphan’s court). . . .

“We’re not near the end for the Maryland GOP, we passed it long ago.

“No amount of wishful thinking or self-delusion will change the fact that the Maryland GOP has ceased to be a viable political party and has, instead, turned into social club devoted to internal bickering, with no real effort to field, much less elect, a full slate of candidates.”

Obviously, the debate continues.

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Law Clinics, Farmers and Fairness

By Barry Rascovar / August 3, 2013

THE SAD SAGA of the Hudson Family farm continues.

You remember the Hudsons, who raise Cornish hens for Perdue and also a herd of beef cattle on 300 acres near Berlin on Maryland’s Lower Eastern Shore.

Alan and Kristin Hudson

Alan and Kristin Hudson

Alan and Kristin Hudson got sued in 2007 by the New York-based Waterkeeper Alliance, which hoped to win a landmark case holding Perdue liable for water pollution in drainage ditches caused by chicken manure from a sub-contractor like the Hudsons.

The plaintiffs, represented in part by the University of Maryland’s Environmental Law Clinic, embarrassed themselves. It was such a botched job that it makes an ideal case study (perhaps at the rival University of Baltimore Law School).

Now comes the sequel: The federal judge who threw out the Waterkeeper case with critical comments about the poor quality of attorney work has now denied Perdue and the Hudsons $3 million in legal fees.

But in doing so, U.S. District Senior Judge William Nickerson pounded the law clinic and environmental group once again. He said their lawyers presented a weak case; they intentionally misled the public in statements to the media; settlement efforts were insincere, and their terrible pre-trial preparation led to defeat in court.

If ever there was a teachable moment for law school students, this is it.

Plaintiff’s Missed Opportunities 

Here’s what Judge Nickerson had to say:

“Plaintiff only needed to establish that Hudson’s chickens contributed in some way to the high levels of pollutants coming off the farm and ultimately entering the Pocomoke River.” But the Waterkeeper lawyers missed that chance by “the lack of sufficient and appropriate sampling and testing.” Such an elemental mistake, the judge concluded, made it impossible to tell if the chickens or the cows caused the water pollution.

When the clinic’s legal team switched tactics and tried to blame bacterial pollution on “chicken dust” from exhaust fans in the chicken houses, it again failed to take samples. The judge wrote in a biting commentary, “One is left to ponder why Plaintiff failed to conduct the testing that, at least in hindsight, seems so obviously necessary and critical to the proof of its claim.”

This, according to the judge, was a key “tactical misjudgment.”

The case turned, in his view, on the Waterkeeper and law clinic lawyers’ “failure to properly prepare its case by conducting the necessary sampling.”

Poor Legal Work

In a classic judicial understatement, Judge Nickerson added, “In this Court’s view, Plaintiff’s claim was not pursued or litigated as well as it could have been.”

Put in more common terms, it was a royal screw-up.

Yet because the case wasn’t frivolous or unreasonable, the judge decided punitive payment of legal fees should not be assessed.

Judge Nickerson was especially upset about the Waterkeeper and law clinic attorneys’ handling of pre-trial settlement talks. He looked at all the negotiating documents and concluded litigators were “not seriously working to settle this matter.” Indeed, they demanded more concessions from Perdue than they could have gained in court, according to the judge.

They rejected a Perdue offer to jointly fund an educational institution to study agriculture-related issues. As a result of the Waterkeeper’s hostile action, Perdue also ended a clean waters initiative to help chicken farmers become better environmental stewards.

With considerable sadness the judge wrote, “It is disappointing that no agreement that could have actually benefitted the Chesapeake Bay came from these negotiations. . . . It is most unfortunate that so much time and so many resources were expended on this action that accomplished so little.”

The non-diplomatic version: What a pathetic effort and what a waste of time and money that could have been put toward cleaning up the bay.

On to Annapolis

That’s not the end, though.

The Hudsons’ lawyer says he will go before the state Board of Public Works demanding reimbursement for legal fees.

There’s $300,000 in the state budget because of the law clinic’s questionable involvement in prosecuting (critics use the word “persecuting”) the Hudsons. Gov. Martin O’Malley got so angry he wrote to the law school dean about the propriety of such partisan educational activity.

Enraged rural legislators also tacked another $250,000 onto the budget for the University of Maryland to start an agricultural law clinic or advisory group to “assist farmers in the state with estates and trusts issues, compliance with environmental laws and other matters necessary to preserve family farms.”

Clearly, the law clinic’s ill-fated representation of the Waterkeeper Alliance in going after Eastern Shore chicken farmers has generated widespread State House skepticism.

When the reimbursement issue comes before the board, pointed questions will almost surely be directed at the law clinic and the University of Maryland, Baltimore’s president.

This unfortunate judicial episode could have and should have been avoided. It is proving costly to taxpayers and deeply embarrassing to the law clinic.

It’s time to move on, if only leaders at the law school can put their personal and professional egos aside long enough to find an even-handed way to teach students about both sides of environmental law.

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