Category Archives: Maryland Budget

Sen. Kasemeyer Responds

This missive arrived the other day from Sen. Ed Kasemeyer of Howard County, chair of the Budget and Taxation Committee — a defense of his entire committee and his own role in the budget process.

Kasemeyer’s low-key approach to legislating — first in the Maryland House of Delegates and now in the Maryland Senate — rarely grabs the headlines. It is a refreshing reminder of how lawmakers can work effectively but quietly, with fewer partisan and parochial conflicts.

He chairs one of the hardest-working committees, given the unenviable task of cutting budget allocations rather than adding to them.

Sen. Kasemeyer Responds

Howard County Sen. Ed Kasemeyer

Here is Kasemeyer’s email:

“I was reading one of your articles in [MarylandReporter.com] dated 4/16/17 regarding the Maryland budget and the out-year predictions.

“I realize that most of the people who follow the legislature are constantly praising Sen. [Rich] Madaleno — and I totally agree that he is incredibly competent and intelligent.

“However, your comment about [Gov. Larry] Hogan, [Del.] Maggie McIntosh, and Sen. Madaleno working together to put the budget together is an insult to my committee and me.

“I met with Del. McIntosh from early in the session to deal with Baltimore City’s issues so that she knew we (the Senate) would be totally supportive. I think if you asked any of my members they would tell you I am firmly in control.

“As a progressive leader I am supportive of my members and try to put them in situations where they will shine (including Rich). Sometimes I wonder if you all know what is really going on.”

Ed Kasemeyer

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Maryland’s Balanced Budget – For Now

By Barry Rascovar

April 17, 2017 – Another Maryland General Assembly session has come and gone with Gov. Larry Hogan proclaiming victory and legislative leaders breathing a positive sigh of relief.

There were no big wins for Hogan but no shocking defeats, either. His ideologically driven, conservative agenda may sell well with die-hard Hogan backers but it was a non-starter with Democratic lawmakers.

His most solid step forward?

A compromise bill giving manufacturers tax breaks, especially if they provide workers with new job skills (that’s the part Democrats insisted on). It’s not a huge benefit for those companies but it is another incentive that could help persuade manufacturers to move to the Free State.

His biggest defeat?

A set of restrictions imposed on the Hogan-selected state school board, which had its hands tied by Democratic lawmakers to prevent state intrusions into local school board autonomy on figuring out how to turn around failing schools.

Constitutional Mandate

Still, the most important issue of every General Assembly session revolves around dollars and cents.

Passing a balanced budget is the only constitutional requirement both the governor and legislature must achieve every year.Maryland's Balanced Budget--For Now

This time, they cobbled together a fiscal blueprint that avoids deep spending cuts while expanding state aid and services in targeted areas.

The outcome is a budget for the fiscal year starting July 1 that grows only 1.2%, to $43.6 billion.

The general fund budget essentially remains level. The state workforce holds at 80,000 (no pay raises or longevity increases).

That is a tribute to Hogan’s ability to hold down spending without taking a Trumpian axe to state government and local aid.

That’s the good news.

Dark Days Ahead?

The bad news: Those ominous storm clouds coming from the nation’s capital – potentially massive federal job losses, large cuts in healthcare, medical research and local aid.

This could give Hogan an Excedrin-sized headache he doesn’t need as he approaches an election year.

There’s an additional problem, too.

The respected Department of Legislative Services (DLS) predicts that over the next five years, Maryland’s revenue will grow 3.5% annually – versus a 5.4% rise in state spending.

That yawning gap was partially closed in the just-passed budget, eliminating 88 percent of the state’s structural budget gap.

The trouble is that this budget magic was achieved by stripping out money from the state’s Rainy Day reserve fund and moving other money around –$202 million worth of “fund transfers.” Another $185 million was saved through budget cuts by the legislature.

Thus, Hogan, Del. Maggie McIntosh and Sen. Rich Madaleno, among others, worked together in the budget process and balanced the state’s books with $91 million to spare.

Tepid Economy

Yet DLS predicts the budget gap will reach $716 million next year, $1 billion in two years and a staggering $1.5 billion by FY 2022.

Why?

“. . .a combination of tepid revenue growth, fueled by a lackluster economy, and growth in mandated spending and entitlements.”

DLS concludes “the Administration will need to take action to address a shortfall in excess of $700 million in Fiscal Year 2019.”

It adds, “The magnitude of the projected shortfalls suggests that discussion will need to focus not only on what services are provided by the State but also the fundamental revenue structure currently in place.”

That’s a polite way of announcing tax INCREASES could be back on the table, whether Hogan likes it or not.

This is especially true if the dire forecasts of historic Trump budget cuts become reality.

Closing a $700 million fiscal gap next year in Annapolis exclusively through spending reductions would be extraordinary – and painful. If Trump multiplies that deficit through massive federal budget cuts and layoffs of Maryland residents, the state could face a financial crisis.

For now, though, the state’s revenue and spending plan for the next fiscal year is in good shape.

But things could change in a hurry between now and year’s end as Trump and the Republican Congress get serious about slashing federal programs, positions and aid to local counties and states.

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Hogan dodges Trump bullet, fracking, ‘road-kill’ & more

By Barry Rascovar

March 27, 2017Maryland Gov. Larry Hogan can thank his lucky stars the bitter and intractable Republican disputes in Washington sabotaged plans to do away with the nation’s current healthcare plan, the Affordable Care Act.

Passage of the Trumpcare alternative – imposing horrific added costs on older Americans, endangering Medicare funding and removing healthcare coverage for 14 million citizens next year – would have had cataclysmic effects in Maryland and placed Hogan on an untenable political hot seat.

Hogan dodges Trump bullet

President Trump

Instead, Hogan gets a slight reprieve, which helps his chances of getting reelected next year.

Then again, if the president and GOP hardliners insist on pressing a second time to wipe out the ACA and succeed, Hogan will be in the bull’s eye when furious Maryland Democrats seek revenge at the polls.

Equally ominous for the first-term Republican governor is Trump’s obsession with making exceedingly deep cuts in the federal budget. Even if Congress ignores the president’s budget submission from last week, the administration has its marching orders – cut personnel wherever possible, cut back severely on spending wherever possible and hold back on doling out money for programs run by the states.

Take, for instance, Trump’s budget that eliminates all federal funds for Chesapeake Bay restoration. Any sizable elimination of funds will infuriate many moderates and independents who voted for Hogan in 2014. Anger toward Trump could be taken out on Hogan on Election Day next year.

Hogan Dodges Trump Bullet

Maryland Gov. Larry Hogan, Jr.

The Maryland governor’s silence about Trump’s assault on federal spending isn’t helping him, either. Of course he’s in an unwinnable bind – criticize Trump and Hogan’s conservative followers will feel betrayed; support the president and Democrats will unload on Hogan.

It’s a tough time to be a Republican governor in a heavily Democratic state. Hogan has his work cut out trying to separate himself from a wildly unpopular president without alienating died-in-the-wool Republican voters.

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From the “sound and fury signifying nothing” department, here are two items of wasted energy by elected leaders in Annapolis who should know better:

Pointless fracking debate

Environmental activists are in a tizzy over their insistence that hydraulic fracturing of Marcellus shale rock formations deep beneath Garrett County and a portion of Allegany County be forever banned in Maryland.

They’ve made such a stink that Hogan has flip-flopped on the issue – abandoning his efforts to help Republican Western Maryland landowners who might some day benefit from extraction of oil and gas using this “fracking” technique that has been in use for over 60 years.

Yet here’s the reality:

·         There is no fracking taking place anywhere in Maryland.

·         There is no likelihood of fracking taking place in Maryland any time in the years to come.

·         Fracking in Maryland is uneconomical today and will be for a long time to come.

·         Regulations proposed by Hogan are so tough that no exploration companies in their right mind will venture into Maryland unless oil prices soar far beyond $100 a barrel – an unlikely scenario thanks to the glut of fracked oil wells in more hospitable, resource-rich regions of the country.

So environmentalists will win this empty victory and Hogan will win over some environmentalists come Election Day – but he might also lose votes from the Western Maryland landowners he betrayed.

Ludicrous “Road Kill Bill” dispute

Both Hogan and lawmakers are in the wrong here.

The governor has completely politicized a law that is so insipid and toothless it’s not worth arguing about.

The law in question has no enforcement provisions and leaves the governor in full control of road-building decisions. All it does is provide a bit of transparency on the relative value of each project being funded.

Hogan’s empty threat of not funding projects because of this law is strictly for next year’s campaign sloganeering. He’s made a mountain out of a teeny molehill just to win political points with rural and suburban voters.

Democratic lawmakers said they were going to amend the law this year to make it even clearer the law is strictly advisory. They also said they would simplify the evaluation process.

Instead, Democrats in the Senate are pushing for a two-year delay in implementing a toothless law while wasting time studying how to make the law even more meaningless.

The whole thing is pointless and a turnoff to voters of all stripes.

Surely the governor and lawmakers can spend the remaining days of this General Assembly session on something that really is constructive and helps Maryland citizens.

Moxie from the mayor

Here’s a shout-out to new Baltimore Mayor Catherin Pugh, who took an unpopular stand because it was the right thing to do.

She vetoed a bill mandating a $15 an hour minimum wage for most workers in the city – a move that would have been an economic calamity for Baltimore.

Hogan dodges Trump bullet

Baltimore Mayor Catherine Pugh at her inauguration in December.

We all want every worker to take home a decent paycheck. But not if it means businesses will fire personnel, reduce hours for their remaining staff and consider moving across the city-county line.

Those weren’t idle threats when this well-meaning but idealistic bill passed the naively liberal City Council.

Such an ordinance would leave the city deep in debt, according to its own financial analysts, with businesses fleeing to Baltimore and Anne Arundel counties to take advantage of a lower minimum wage, far lower property taxes and lower insurance rates.

Baltimore City must be competitive. The state’s minimum wage already is scheduled to rise this July and in succeeding years, too.

Besides, minimum-wage jobs are not intended to be permanent positions but rather a starting point for people eager to work their way up the economic ladder to more responsible and good-paying jobs with long-term career potential.

Pugh’s veto protects Baltimore’s economic well-being, even if liberal critics unfairly condemn her.

She’s been quiet and withdrawn during her initial months in office. Yet when it truly mattered, Pugh didn’t hesitate to analyze the facts and make a tough, courageous decision.   ###

Avoiding MD’s Pension Reality

By Barry Rascovar

Feb. 14, 2017 – Let’s be honest: No one wants to face up to Maryland’s giant $19 billion long-term shortfall in its retirement program for state workers and teachers. Not the Republican governor nor the Democratic legislature.

True to his Lone Ranger approach, Gov. Larry Hogan is calling for a dramatic change – an optional 401(k)-style retirement program for new state employees.

It sounds good but falls apart when examined close up.Avoiding MD's Pension Reality

The best that can be said about this plan is that it saves both the state and new workers upfront money. Unfortunately, it could leave tens of thousands of state workers far worse off in their retirement years.

Hogan didn’t bother consulting with legislative leaders, pension agency officials or the employee unions to get their input and cooperation. Thus, the governor’s plan has zero chance of passing.

But it goes over well on TV and radio. It allows Hogan to brag that he tried to fix Maryland’s pension problem – though he really didn’t.

Flawed Retirement Approach

Hogan’s plan would weaken the current retirement program by encouraging new workers to leave the system and instead sign up for his 401(k) savings plan. This could mean the loss of a huge sum of regular contributions to the existing pension system. The retirement system’s shortfall would grow, not shrink.

As for workers opting for this “defined contribution” program, 5 percent of their paychecks would go into their IRA account, matched equally by the state. (State workers today contribute 7 percent of their salaries into the pension fund.)

Workers then could invest all that retirement money into the stock market or other financial instruments.

That’s where the risk soars.

In bad economic times, state workers could lose much of their retirement nest egg if they’re not careful. Worse, they’d no longer be eligible to receive a regular state pension. They could find themselves leading a hard-scrabble life in retirement.

The notion of providing state workers with optional ways of saving for their “golden years” makes sense. But not if it means entirely eliminating that pension check.

Existing 401(k) Option

There’s no reason to embrace Hogan’s plan because the state already offers supplemental retirement programs that do much the same thing: a 401(k) investment option and tax-deferred annuity and investment plans. Workers can defer up to $18,000 in salary annually.

The only catch is that the state does not offer a matching payment, as nearly all private-sector businesses with 401(k) plans do. A healthy state match could go a long way toward encouraging workers to save a lot more for retirement.

Perhaps the best way to go is a hybrid system combining a smaller, defined pension benefit with a 401(k) savings component that includes a generous state match. That would put most state retirees in a much stronger position after they leave work. It also could ease the state’s retirement-fund shortfall over the long run.

The catch: It would cost Hogan & Co. a lot more money each year to get such a program started, money the governor doesn’t have in these uncertain economic times.

Besides, Hogan isn’t about to pour more money into worker pensions if he can avoid it.  In fact in his new budget he eliminated a mandated $50 million supplemental contribution to the retirement program created to help bring down the shortfall.

That move deepens Maryland’s pension predicament.

There’s no incentive for Democratic lawmakers to support Hogan’s poorly thought-through bill, either. They’d just as soon let the pension problems slide, hoping against hope for a return of strong economic growth, which could mean high investment returns for the retirement agency.

Thus, the governor’s bill will get a polite hearing – followed by a dignified burial.

Then Hogan can denounce Democrats for failing to “save” the state retirement program. He’ll score political points while kicking the true pension-funding dilemma into the future.

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Hogan and the Elephant in the Room

By Barry Rascovar

Feb. 6, 2017 – If a Martian had landed in Annapolis last week and watched Gov. Larry Hogan’s State of the State address, he/she would have thought: “Wow, what a nice guy. What a perfect blend of bipartisanship and leadership. He’s my kind of governor.”

Indeed, that’s the image Hogan wants to project to the voting public – nice guy, good ideas, wants to cast politics aside and work with his foes to get things done.

Except the reality, rather than the distorted image, is quite different.

Hogan acts the role of bipartisan governor quite well for the cameras. Behind the scenes, though, he’s unwilling to open the door to Democrats and quick to play the blame game. He sharply mocks his political critics.

During his two years in office, Hogan rarely has worked cooperatively with Democrats. Instead, he lays down a take-it-or-leave plan of action – and he did last week – and refuses to negotiate a middle ground.

Back-Patting

You can chalk up his most recent State of the State speech to political hype and self-congratulatory back-patting. If there’s anything wrong happening in Maryland, it’s not his fault but those self-absorbed Democrats. Nary a negative word was sounded by Hogan – until he took some swipes at Democrats.

Hogan and the elephant in the Room

Gov. Larry Hogan delivers State of the State Address in House of Delegates Chamber

There’s no surprise here. Hogan wants to put a politicized, glossy filter on the Maryland scene.

What did come as a surprise was Hogan’s complete avoidance of the proverbial elephant in the room – widespread fear and trembling as a radical populist takes charge of the U.S. government just 32 miles away.

Hogan’s high popularity numbers stem in part from his careful “I’m not involved” approach to hot-button societal controversies. That now includes anything and everything happening in Trumpland.

Yet how can the governor ignore the dire situation Maryland could face later this year once President Trump and determined tea party Republicans in Congress demolish the Affordable Care Act providing health insurance for 430,000 Marylanders?

He said not a word about the ACA’s demise and what, if anything, he will do to avert a health-care crisis in the Free State. Hogan remains mum.

Cuts Coming from Washington

Similarly, Hogan ignored the clear and present danger to Maryland posed by vast federal budget cuts Trump and congressional Republicans have promised. Such massive reductions will reverberate throughout Central Maryland, costing possibly tens of thousands federal jobs.

The implications for Marylanders and Hogan’s budget are immense. That should have been a priority item in Hogan’s address to the legislature. Instead, he remained silent.

Once again, Hogan proved himself anything but a pro-active governor. He’s almost completely reactive, and only after factoring in popularity numbers and his reelection campaign effort.

Hogan gave no indication he is making plans to cope with what appears to be a whirlwind of destructive actions in Washington that could bring Maryland to its knees.

Maryland and Virginia are the states most at risk from Draconian budget moves by Trump and Congress. Federal employees constitute 8 percent of Maryland’s workforce.

Sweeping personnel and spending reductions will affect all of the Maryland economy. Yet we’ve heard not one word about this from Hogan.

No More Balanced Budget?

Trump’s anti-immigrant executive order is causing confusion, fear and uncertainty at Maryland colleges and universities and within immigrant communities.  It could create massive disruptions at research and education centers at College Park, the University of Maryland Medical Center and Johns Hopkins – both the university campus and the sprawling East Baltimore medical complex.

For state government, Hogan’s balanced budget could rapidly tumble into a deep deficit, requiring massive revisions this legislative session and special sessions later in the year to react to sharp federal funding cuts and job layoffs.

Hogan could have no choice but to make highly unpopular cutbacks, a move that won’t help his reelection chances.

It would have helped if the governor had reassured lawmakers and the public that he and his staff are hard at work developing alternative plans and creative approaches to help Marylanders who might lose health insurance or their federal jobs en masse.

Instead, Hogan pretends the threat from Washington doesn’t exist.

That’s not leadership; that’s pretending the problem doesn’t exist. His speech lacked transparency and honesty. Hogan gave listeners political Pablum.

Dark, threatening storm clouds are on the horizon, heading toward the Annapolis State House from the southwest.

Yet Hogan keeps telling us it’s a sunny day and everything is copasetic.

Maybe it’s time for the governor to adopt the Boy Scout motto, “Be Prepared,” and get the state and its people ready for what could be a tumultuous and unsettling time.

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Will Hogan’s Slimmed-Down Budget Implode?

By Barry Rascovar

Jan. 30, 2017 – Through no fault of his own, Maryland Gov. Larry Hogan’s slimmed-down, $43.5 billion budget could implode at any moment, depending on actions in Washington by President Trump and a Republican-controlled Congress intent on slashing federal domestic spending.

Just one example: Trump wants immediate repeal of the Affordable Care Act – the hated Obamacare he pilloried in the campaign. Tea party Republicans in Congress are marching rapidly down that same path.

It sounds wonderful to Trump’s followers and foes of the ACA.

But the loss of ACA funds would blow an immediate $1.26 billion hole in Hogan’s balanced budget – and would add up to a stunning $7.7 billion loss for Maryland over the next five years.

That’s just the tip of Maryland’s deficit iceberg if Trump and his Republican majority on the Hill start chopping with their budget axes.

Maryland’s Budget Plight

Losing ACA funds would cost Maryland $100 million in savings from drug rebates that Hogan is counting on in his budget, $62 million in child health matching money, $16 million for home care and $225 million in federal support that subsidizes health insurance for 60,000 moderate- or low-income Marylanders.

Then there’s Trump’s federal job freeze, with Virginia and Maryland most at risk of seeing large declines in its federal work force.

Think what it would mean for the Free State’s economy – and tax collections – if Trump and Congress slash the workforce at the Centers for Medicare and Medicaid Services, the Social Security Administration, the Food and Drug Administration and the National Institutes of Health – all centered in Maryland.

There’s nothing in Hogan’s budget to cushion the state from a Trumpian-sized downsizing of the federal government. Instead, his fiscal blueprint ignores that approaching whirlwind and focuses instead on ratcheting downing spending without destroying existing social programs.Hogan's Slimmed-Down Budget

Clearly, the governor is trying to make it past the next election using smart spending hold-downs and a hoped-for upward bump in revenue collections.

He certainly wasn’t considering the anti-spending mood in Washington or the state’s precarious long-term budget outlook. Hogan just wants to get through 2018.

But legislative budget analysts noted last week there are very large deficits looming that Hogan hasn’t addressed.

Budget Quicksand

Those potential pools of red ink leave “the state vulnerable to expected federal cost containment actions” that include personnel cuts, greatly reduced agency budgets and repeal of the ACA without a viable replacement.

As it stands, Hogan’s budget could run into big trouble with Maryland’s Medicaid program this coming fiscal year. Legislative analysts politely wrote that the governor’s budget “contains optimistic assumptions” about slower Medicaid enrollment and the state’s ability to recoup drug rebates from pharmaceutical companies.

If Hogan’s number are wrong, his Medicaid allocation could be in deficit territory by hundreds of millions of dollars.

Some of the governor’s budget-balancing tricks aren’t likely to work, either.

For instance, he figures he can save nearly $100 million if the legislature repeals spending mandates lawmakers approved last year. Don’t count on Democratic lawmakers giving the Republican governor what he wants.

Additionally, Hogan wants to increase the budget deficit in future years by handing out tax cuts to military retirees, police and firefighters, tax savings to those with student loans, and tax breaks to small business owners offering sick leave to workers.

The cost? $106 million in the first year and $488 million over the next five years.

Deficits Return

Hogan says he wiped out the state’s structural deficit with this budget – but only because he grabbed $170 million from the state’s Rainy Day Fund.

Even worse, analysts say Hogan’s financial plan does little to prevent a widening structural deficit in future years, growing to $432 million a year from now and $1.2 billion four years later – and that doesn’t even take into account the worsening fiscal situation if Obamacare is repealed.

The Department of Legislative Services also points to deeply troubling trends in the Maryland Department of Transportation’s six-year capital spending plan. MDOT can’t build all the projects it is promising due to a tightening revenue picture.

Maryland’s gas tax receipts are far less than expected, debt service costs are rising and MDOT operating expenses are galloping ahead of projections.

On top of that, Hogan has set aside $747 million in MDOT cash to greatly increase highway-construction aid to Maryland counties. That move would require a sharp cutback in bonds issued by MDOT, which means reducing the number of promised transportation projects over the next six year.

MDOT’s Growing Budget Hole

All told, MDOT is $1.7 billion short of the money it needs to complete projects on its list. Moreover, analysts say the department is underestimating its own operating expenses by $585 million in future years.

There could be tough questioning and resistance to Hogan’s transportation program when his minions try to explain this disturbing situation to the General Assembly’s budget panels.

Yet the MDOT quagmire could rapidly become a secondary concern if the White House and Congress go on a budget-cutting rampage this spring, creating “carnage” in state capitals.

On its own, Hogan’s budget appears to be a sensible, Republican-styled attempt to slowly diminish spending in ways that begin to align appropriations with the state’s annual revenue flow.

He resorts to a number of gimmicks to balance this year’s fiscal package, but what governor doesn’t?

There are almost certain to be fireworks over Hogan’s more questionable budget proposals in the next few months—especially if the man in the White House turns off much of Maryland’s fiscal pipeline from Washington.

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Hogan’s Holiday Hoax

By Barry Rascovar

Dec. 19, 2016 – You’ve got to hand it to Gov. Larry Hogan, Jr. What a prankster he is!

He’s pulled off one of the great holiday hoaxes of recent times in Maryland.

He’s got everyone convinced he is willing to kill 66 major highway projects in Maryland in order to get the legislature to repeal a law requiring a transparent advisory evaluation and ranking of big road, bridge and transit proposals.

Hogan's Holiday Hoax

Maryland Gov. Larry Hogan, Jr.

He’s worked himself into a lather about what, for political purposes, he niftily calls “the road kill bill” saying it will “wreak havoc on our entire transportation system.”

Anyone who disagrees with Hogan’s the-world-is-ending interpretation “is ignorant of the facts.”

This repeal-law effort, he says with a straight face, is his No. 1 priority in the coming General Assembly session.

That’s pretty strong stuff.

It’s got to be a holiday hoax. After all, virtually nothing Hogan is saying is based on a truthful, fact-based assessment of the situation.

He’s made the whole thing up – hopefully to give us a good laugh this joyful season (ho, ho ho!).

Darth Vader in Annapolis

Under Hogan’s alternative-universe scenario, the law passed by Democrats in the legislature ties his hands and requires him to kill road projects in all but a handful of urban jurisdictions – even though that’s not even close to what the statute says.

The state’s highest-ranking legal officer, the attorney general, says Hogan’s “Rogue One” interpretation of the law is pure science fiction. But for some reason Hogan wants to play Darth Vader in this reality show.

If you read the law, HB 1013, you’ll conclude it’s pretty meek: A toothless attempt to force more transparency in the state’s transportation funding process.

The law has no enforcement provision.

There is no penalty if Hogan ignores the statute.

It merely calls for a quality analysis, and ranking, of proposed transportation projects. After that list is compiled, Hogan & Co. are free to disregard the results – without any negative consequences.

Free Rein for Hogan

To drive home the point that the new law gives Hogan carte blanche to do as he pleases, lawmakers added this concluding sentence: “[N]othing in this Act may be constructed to prohibit or prevent the funding of the capital transportation priorities in each jurisdiction.”

In other words, Hogan can fund whichever road, bridge and transit projects he wants regardless of the score it receives.

All he’s gotta do is give “a rational basis for the decision. . . in writing.”

Like, “it will make the road safer.” Or “it will reduce traffic congestion.” Or “it will help economic development.”

Sounds easy for Hogan to abide by this law while he continues to dole out transportation dollars any way he wants.

Not according to the governor and his transportation boss, Pete Rahn. Indeed, Rahn has put forth four pages of regulations that ensure a fiery head-on collision in which dozens of road projects will be denied state funds.

As one witness put it at a Nov. 18 hearing on Rahn’s convoluted regulations, Hogan & Co. “are determined to not make this work.”

Transportation Funding Shortfall

Why would they do that?

One reason could be Hogan doesn’t have the funds to pay for all the road projects he’s promised the counties, according to the Department of Legislative Services.

DLS calculates Hogan will have to cut $315 million next year from his previous transportation proposals (and $1.6 billion over six years) to stay within the department’s debt ratio.

It seems that the six-year forecast for gas-tax receipts is falling far short of Hogan’s estimates and that the governor is overspending on transportation operations.

Something’s got to give. So naturally the politician in Hogan wants to shift blame to those evil Democrats in the legislature.

Suddenly a law that is unenforceable and totally advisory gets transformed by Hogan into Maryland’s “Nightmare on Elm Street.”

Political Posture

Hogan is likely to continue beating this bogus “road kill” issue to death as the 2018 election approaches.

He won’t get much help, though, from Democrats in the legislature.

It was clear at the Nov. 18 hearing that lawmakers want to work out a compromise in which the law is tweaked in ways that make it even more explicit Hogan remains fully in charge of deciding which transportation projects get funded and which do not.

Democrats aren’t going to cave in to Hogan’s illogical repeal demand. That is rightly seen as a politically inspired subterfuge.

Indeed, Hogan’s holiday hoax could backfire.

If, as expected, lawmakers amend the law so most everyone – except the governor – is happy with the outcome, Hogan no longer will be able to blame Democrats for killing road projects.

The governor remains the only person who can put forth funds for state transportation projects.

If he fails to deliver on his earlier road-improvement promises, he’ll have to man up to the fact that it was his decision.

That’s not the posture he wants as his reelection campaign draws near, which seems to be the most likely explanation for the governor’s bizarre “road kill” holiday hoax.

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Trump & Hogan Agree: Corporate Welfare Works

By Barry Rascovar

Dec. 5, 2016 – Maryland Gov. Larry Hogan, Jr. may not have supported or voted for President-elect Donald Trump but they agree on one thing: Corporate welfare works.

Throwing money and tax breaks at Northrop Grumman, Marriott International and United Technologies did the trick this past week – along with a good deal of loud, Trumpian threats in the case of UT’s subsidiary, Carrier Corp., in Indiana.

Trump, Hogan Agree

President-elect Trump celebrating deal to keep Carrier manufacturing plant open in Indiana.

To prevent Carrier from moving 1,400 jobs to Mexico, Trump used heavy-handed insinuation of future punishment to deliver a largely symbolic message that he’ll stop at nothing to save American manufacturing jobs.

Hogan’s task was somewhat different and involved persuasion rather than threats – backed by wads of cash.

A $57.5 million five-year package of “loans” and tax credits eventually persuaded Northrop Grumman to keep its 10,280 employees in Maryland – including the 6,800 who work at the massive former Westinghouse electronics complex near BWI Airport in Linthicum.

Meanwhile, a state-county incentive package of some $60 million was needed to keep Marriott’s headquarters in Montgomery County instead of shifting to Northern Virginia.

The bonus here is that Marriott intends to erect a $600 million complex in downtown Bethesda for its 3,500 HQ employees. That number should expand due to Marriott’s recent $13 billion acquisition of Starwood International.

Democratic Roadblock

The two Maryland deals have been in limbo for months due to high-risk brinkmanship by legislative leaders. The idea was to squeeze money out of Republican Hogan for other purposes dear to the hearts of Democrats in exchange for approval of the Northrop Grumman package.Trump, Hogan Agree

That gambit, which was poorly conceived from the get-go, fell apart when the state’s tax collections underperformed, leaving a gaping hole in Hogan’s budget.

Hogan had always balked at legislators’ extortion effort to hold the Northrop Grumman package hostage until local school funds and other goodies were released.

Lawmakers didn’t seemed to care that reneging on the business deal would have sent a terrible message about Maryland’s business climate to corporations thinking about relocating operations.

But the weak revenue figures this fall put an end to this embarrassing folly. There was no money to make the lawmakers’ strong-arm deal work.

Miller-Hogan Find Middle Ground

Hogan, though, still needed to gain the support of legislative leaders not only on the Northrop Grumman economic-development package but also the Marriott headquarters proposal.Trump,Hogan Agree

He and Senate President Thomas V. Mike Miller finally came up with a workable compromise involving $20 million in school pension funds for localities in next year’s budget.

Now it is up to Miller and House Speaker Mike Busch to complete their end of the bargain by winning approval for the two business-assistance packages from a legislative panel they control.

There’s plenty of irony here.

Had a Democrat been in the governor’s office, there’s no question Busch and Miller would have rushed to support these economic-development packages, just as they did under former Gov. Martin O’Malley.

But with a Republican in the governor’s mansion, Busch and Miller suddenly found problems with these deals.

Demands to Stay In-State

Liberal Democrats, in particular, blanch at the thought of giving away millions in business-retention packages, labeling it “corporate welfare.”

It’s become customary for large companies to demand payments from local and state governments if those governments want to prevent these businesses from moving elsewhere. Democrats fear that more companies will use the same tactic to pry millions from the state, money Democrats want spent on social programs.

Rigidly ideological Republican conservatives also rail against giveaways to corporations, complaining about government interference with the free-market system. (Over the weekend, former Alaska Gov. Sarah Palin called the Carrier deal “crony capitalism.”)

The thinking goes that if Carrier wants to move its furnace plant to Mexico or to another state to cut costs, the company should have the freedom to do so. That’s how the free market works, fiscal conservatives say.

Yet Trump intervened to make political hay and win cheers from Carrier workers in Indiana.

At the same time, he did nothing to stop United Technologies from closing another Indiana plant, costing 700 workers their jobs.

Nor did he lift a finger to halt Rexnord from shuttering a factory just a mile away from the Carrier building. The job loss there is 300. Rexnord is moving its manufacturing business to Mexico.

A third company, CTS, is also shutting down an electronics manufacturing facility in Indiana, creating unemployment for 200 more workers.

On top of that Carrier is continuing with plans to downsize its Indiana plant, laying off 600 union workers at the furnace factory. Also, despite Trump’s plea Carrier is moving its fan coil-making business to Monterrey, Mexico.

So while Trump can crow about the one plant he pressured to remain open, saving by his count 1,000 U.S. jobs (the actual jobs preserved: 730), he hasn’t done a thing about the other 1,800 manufacturing jobs being lost in Indiana.

Choosing Winners

The downside of corporate bailouts (Carrier is getting $7 million in tax breaks from Indiana to remain there) is that these small triumphs fail to address the larger problem:  U.S. manufacturing plants increasingly find they are unable to compete against low-cost overseas competitions.

Here’s a hint why moving production abroad is happening: The average salary for a unionized Carrier plant worker in Indiana is $30.90 an hour.

Choosing winners and losers, as Trump did in Indiana, solves little and provides job solace for just a fraction of the manufacturing workforce at risk of losing their source of income. A more comprehensive approach is needed.

Since the beginning of 2015, 1,600 American companies have shifted production overseas. In November alone, the U.S. lost 10,000 manufacturing jobs.

Clearly, Trump has a gargantuan task ahead of him in which a partial victory at Carrier’s Indiana plant doesn’t put a dent in the problem.

At the same time, Hogan is having more success keeping large corporations content with their Maryland digs. All it takes is persistent negotiations, expressions of good will and a basketful of state and county tax breaks, job-training grants and forgivable loans.

It’s worked most of the time for both Democratic and Republican governors in Maryland.

Hogan’s job is far easier because he’s only competing against other U.S. states, not Third World, low-wage countries.

Trump has a much more difficult field to plough.

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Maryland Budget Myths

By Barry Rascovar

Oct. 3, 2016 – Maryland is dealing with another revenue shortfall and a budget that must be trimmed to make the state’s books balance.

Yet to hear Gov. Larry Hogan, Jr. tell it there’s no revenue problem –only “a spending problem” caused by Democrats in the General Assembly.

Let’s get the facts straight on this one: If there’s a problem with spending the buck stops on Hogan’s gubernatorial desk.Maryland Budget Myths

He’s the one who puts together the state’s annual budget. He’s the only one who can increase spending.

The legislature, by law, cannot raise the governor’s budget request. All lawmakers in Annapolis can do is cut the budget.

Who’s Responsible?

Hogan, like Republican presidential nominee Donald Trump, wants to create his own version of the truth.

He refuses to admit he is responsible for submitting a budget earlier this year that is out of balance by some $783 million over a two-year cycle due to a faulty estimate of future revenues.

Democrats share partial responsibility for not cutting more deeply into Hogan’s budget last April. They, too, misjudged the state’s plodding economic rebound from the Great Recession.

It’s no surprise that liberal Democrats are reluctant to reduce spending on social programs.

The irony is that Maryland’s conservative Republican governor failed to clamp down harder on spending in the face of slow-growth revenue numbers.

Hogan’s attempt to turn around and blame Democratic lawmakers for his own budget mistakes doesn’t hold water. He draws up the state’s massive spending plan, not the legislature.

Myth No. 2

The other budget myth Hogan has been spreading is that he can solve the state’s financial woes if only Democratic legislators eliminate spending mandates that lock up over 70 percent of the state’s budget.

Were that to happen, Hogan would have unrestrained power to cut deeply into education and health care programs as well as environmental and social service programs.

It would mean a loss of historic checks and balances between the legislature and executive in favor of an all-powerful governor. No wonder Democratic lawmakers refuse to budge.

Yet Hogan persists in blaming the state’s budget shortfalls on the spending mandates. It’s as though the governor had nothing to do with submitting a budget that failed to exercise sufficient caution.

Plea for Caution

Maryland Comptroller Peter Franchot has repeatedly urged a conservative approach to budgeting in light of an exceptionally slow recovery. Maryland is gaining jobs but not high-paying jobs.

Hogan may proclaim “Maryland is open for business” but he seems not to have noticed a shift in the job market is occurring which requires a conservative governor to take a more cautious approach at budget time.

In putting together next year’s budget, the governor now must reduce earlier spending targets by about 2 percent due to the predicted revenue shortfall. That is eminently do-able.

Judicious reductions and reallocations of program funds could close much of the budget gap.

Hogan has on his staff one of the most creative budget minds in Annapolis – former state Sen. Bobby Neall – tasked to find thoughtful ways to reduce spending while improving efficiency. His suggestions will come in handy over the next three months.

Two Options

Yet deeper cuts will not come about if Hogan continues to blast the legislature for refusing to give him near-dictatorial powers over the state budget.

Fortunately, a middle road exists for the governor to work with lawmakers to make changes in spending mandates that could eliminate Maryland’s long-term structural deficit.

But that calls for Hogan to work cooperatively with the legislative branch – a reversal of form. He knows that criticizing free-spending Democrats wins him votes, even if it makes it nearly impossible to gain General Assembly support for his programs.

Is he willing to alter his approach?

Good governance requires compromise and negotiation between a Republican governor and a Democratic legislature, especially on passage of the state budget. So far, Hogan has fallen short in that area.

He gets another crack at changing his tune early next year.

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Good Larry, Bad Larry

By Barry Rascovar

  March 14, 2016–From day to day, lawmakers in Annapolis don’t know what to expect from Gov. Larry Hogan, Jr.
  Will it be “Good Larry” who moderates his comments, works to find middle ground and comes out making everyone happy?
  Or will it be “Bad Larry” who uses heated political rhetoric; sounds false warnings of doom to energize his conservative base, and alienates the very legislators he needs to accomplish things?
Good Larry, Bad Larry

Gov. Larry Hogan, Jr., with Lt. Gov. Boyd Rutherford, at press conference denouncing spending mandates.

   Perhaps someday Gov. Larry Hogan Jr. will learn how to govern and deal with Maryland’s co-equal branch, the General Assembly. So far, though, it hasn’t happened.
  Most of the time Hogan stays in partisan campaign mode, pretending he can have what he wants simply by reminding legislators of his popularity in polls.

Two to Tango

  Then he bumps up against the hard reality of American politics: Without support from the legislative branch, no state’s chief executive can make headway toward his goals.
  The “Good Larry/Bad Larry” dichotomy was on full display last week in the State House.
On Tuesday, “Bad Larry” went ballistic because Democratic lawmakers aren’t about to gift-wrap for him new budget powers so he can make deeper cuts in spending.
  Yet on Thursday, “Good Larry” mollified those same legislators by adding construction dollars for historically black colleges, by accelerating construction of a biomedical sciences building on the University System of Maryland’s Shady Grove campus, and by giving Baltimore City schools funds to partially offset falling student enrollment.
  It was a bravura Thursday performance after an embarrassing Tuesday display of staged anger.

Hogan’s Dilemma

  The Republican governor can’t decide whether he wants to govern or campaign.
  Governing requires that he be practical and pragmatic, compromising with Democrats so he can achieve partial victories.
  Campaigning requires that he abandon any chance of winning over lawmakers and instead launch a continuous barrage of verbal assaults on Democratic legislators in preparation for the 2018 elections – still two-and-a-half years away.
  Usually, Hogan has chosen to stay in campaign mode.

Distorting the Facts

  On Tuesday, he condemned Democrats for not taking seriously his bill to eliminate many of the spending mandates established by legislators over the years. Asking any legislature to cede budget power to the governor is a non-starter – unless the governor can provide some persuasive reasons.
  Hogan failed to do so.
  Instead, he blamed it on “eight years of financial mismanagement” under the prior (Democratic) governor and Maryland’s current “precarious fiscal situation” on the (Democratic-dominated) legislature.
  Neither statement is true.
  The state’s past fiscal woes stemmed mainly from the deep and long Great Recession. As for that “precarious fiscal situation,” it doesn’t exist at the moment – not when Hogan is sitting on a $300 million budget surplus and $1 billion in a “rainy day” account.

Powerful Governor

  It’s campaign hyperbole, as was the chart Hogan continually pointed to at his Wednesday press conference, the one claiming Democrats seek to impose on Marylanders $3.7 billion in spending mandates this session.
  Hogan already has more budget power than any other governor in the country. He doesn’t need extra authority to short-circuit spending mandates in troubled economic times.
  Why? Because he already can make drastic cuts in two different ways – with approval from the Board of Public Works, or with the cooperation of state lawmakers through a budget reconciliation bill.
  Thus, Hogan’s “mandates reform” is a bogus issue put forward mainly for partisan political purposes.

‘Power Grab’ or Transparency?

  The same is true of his earlier wailing over Democratic bills forcing Hogan to explain the rationale for building roads and bridges that appear to be low-priority items.
  Hogan claimed in almost hysterical terms how this was a “reckless power grab” and a “thinly veiled power grab.”
  It is neither.
  The package of bills doesn’t stop Hogan for doing whatever he wants in selecting the state’s transportation projects. The bills simply force him to explain why he’s picked road project F over road project A on the state’s priority list.
  Senate President Mike Miller clearly explained that these bills remove “the mystery of how, why and where roads get built.” The measures encourage government transparency while leaving intact the governor’s road-selection powers.
  What’s wrong with that?

Good Republicans, Evil Democrats

  Hogan and his second-floor Republican ideologues are good at promoting phantom crises they blame on Democrats. They’re applying national GOP tactics to Maryland: Make this a fight between good Republicans and evil Democrats and point an accusing finger at the party of evil.
  No wonder Hogan has won few legislative victories in a Democratic-dominated General Assembly. At the moment, it looks like he’s headed for a large basketful of defeats this session, too.
  That’s why Thursday’s supplemental budget from Hogan is so intriguing. The governor negotiated deals with Democrats on a host of issues and wound up getting praised by his opponents for working out win-win compromises.
  That victory could set the stage for more moments of Hogan playing the role of Great Conciliator as the General Assembly moves rapidly toward its conclusion.
  But he won’t get very far in that direction if he continues to alienate and infuriate key lawmakers with his “Good Larry/Bad Larry” routine.
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