By Barry Rascovar
March 7, 2016 – Putting a wolf in charge of the hen house would be terribly irresponsible. Yet that’s what trustees at Mount St. Mary’s University in rural Emmitsburg did – with horrific results.
After an earlier, failed search to find a replacement for President Thomas Powell, trustees of the Mount – a 200-year-old, highly respected Catholic school – surprisingly named Simon Newman as the university’s leader last year.
Newman’s experience in higher education? None.
He was a wolf of Wall Street, a venture capitalist and hard-nosed business turnaround specialist.
The notion that Newman would re-direct the Mount’s successful education formula in an effort to boost donations, rankings and student enrollment turned out to be specious and destructive.
Newman resigned last month after humiliating the deeply Catholic school with his tough corporate mindset and disregard for the Mount’s cherished culture of “liberal learning in the pursuit of truth.”
It’s a classic case of poor judgment by college trustees and a lesson for other Maryland higher education institutions eager to run their campuses more like a business and less like an academic citadel.
The General Assembly is grappling partially with this issue in considering a consolidation of the University of Maryland’s College Park and Baltimore campuses. Supporters seek to accelerate discoveries and business spin-offs in Baltimore through joint research projects.
It’s all about turning UMCP and UMB into potent economic development engines. There’s less emphasis on preserving and enriching the traditional learning experience.
A two-campus solution may work exceptionally well for an enlarged UM in its quest to spur university-generated innovations and job-creating companies in today’s knowledge-based economy. These are research-rich institutions seeking promising synergies — more joint professorships, enhanced funding and spin-off commercial ventures.
But what about other colleges and universities in Maryland that are not nationally ranked research campuses?
Should those institutions be run more like businesses, cut corners to improve rankings and think more in terms of the bottom line than “learning in the pursuit of truth”?
Mount St. Mary’s train-wreck experience should serve as a warning.
Corporate Takeover Culture
Simon Newman was a bull in a china shop. He tried to bring the rough-and-tumble culture of business takeover artists to the Mount.
He bullied faculty and administrators, demanded absolute obeisance and embarked on a campaign to artificially inflate the Mount’s rankings by “culling” at-risk students even before they had been on campus six weeks.
Appalled faculty and administrators rebelled at what was called an “unethical” attempt to sacrifice students on the altar of enhanced rankings. One termed Newman’s actions “a heartless application of business procedures.”
The school’s provost was forced to resign. Two professors (one tenured) were fired for disloyalty.
On Wall Street, Newman’s stern leadership wouldn’t seem unusual. You take over a company, you “cull” less productive employees, you fire anyone voicing concerns about your new corporate direction, you eliminate low-profit divisions – and you do it all in a cold, cost-efficient manner.
Yet on a college campus, where shared governance with faculty reigns supreme and arguments over a school’s vision and actions are part of the landscape, such behavior is unacceptable. Newman’s corporate-style presidency left the Mount in shambles.
National education groups loudly condemned Newman. Finding a first-rate replacement could prove exceedingly difficulty. Recruiting quality faculty and students could be even more challenging.
Non-Traditional College Presidents
A few other Maryland colleges and universities have chosen non-traditional presidents, but they have avoided the Mount’s horror story.
In 2002, the University of Baltimore hired a pharmaceutical executive, Robert Bogomolny, as president. But Bogmolny also had been a law professor. It turned out to be an inspired choice (through he stoked tensions with the law school’s dean over a diversion of tuition money).
Under Bogomolny, UB was transformed into a more traditional college campus with a student union building, residential housing and an eye-catching law school building. Bogomolny’s corporate background took a back seat to his respect for academic traditions.
His successor, Kurt Schmoke, also had a non-traditional background – a lawyer turned mayor turned law school dean. His selection proved quite popular.
In 1995, Hood College had great success hiring a former Internal Revenue Service Commissioner and Justice Department lawyer, Shirley Peterson, as its president.
Goucher College turned to a former director of the Voice of America and a respected journalist, Sanford Ungar, as its president – but he also had been dean of the School of Communications at American University.
Washington College last year chose a former chair of the Federal Deposit Insurance Corporation, Sheila Bair, as its new president. An expert on financial regulatory reforms, she had taught that subject at the University of Massachusetts Amherst.
The Chestertown school previously was led by Mitchell Reiss, a veteran State Department diplomat who had cut his teeth in academia as a government and law professor and vice provost at William and Mary’s law school.
In none of these instances did university trustees select a president ignorant of the unique culture of academia. And in no other instance did the trustees seek to bring more of the corporate culture to campus.
There’s certain to be plenty of soul-searching at the Mount over what went wrong and how to return the institution to its historic mission of providing students with a warm and welcoming learning environment steeped in Catholic values.
Using rough-hewn business tactics on college campuses doesn’t work. Trustees with years of experience as corporate executives need to keep that in mind before they make the same mistake as the Mount.
By Barry Rascovar
Feb. 29, 2016 – Mixing politics and education can be lethal. They are best kept far apart.
That’s why Maryland, for 100 years, has isolated the governor and state lawmakers from the process of choosing the State Superintendent of Schools.
Liberal Democrats in the General Assembly, though, sought to change that.
They worry that Republican Gov. Larry Hogan, Jr. might fill the State Board of Education with conservative-leaning members who would name a superintendent with a staunchly right-wing education agenda.
So they floated a bill giving the Senate in Annapolis veto power over the selection of a state schools leader.
That was a very bad idea.
Hogan’s office called it “complete and utter rubbish” and a malevolent attempt to politicize public education. He stood firm and the bill thankfully died.
Imagine 47 politicians with the ability to manipulate this appointment to serve their own partisan objectives.
Wherever politicians impose their will on educators, bad things can happen in the classroom.
Back in 1914, a study by Abraham Flexner, a noted American educator, concluded Maryland’s public schools were “infested with the vicissitudes of partisan politics.” Two years later, the governor and lawmakers built a dividing wall in which the appointed state board members would, on their own, choose a state school chief for a four-year term.
It’s been that way ever since – and it has worked exceedingly well.
O’Malley vs. Grasmick
When former Democratic Gov. Martin O’Malley took office in 2008, he tried to fire Nancy Grasmick as state school superintendent for political reasons. He soon learned he didn’t have the power and that even his appointees to the state education board backed Grasmick.
O’Malley was thinking only as a politician, trying to oust a school chief beloved by his Republican predecessor, Bob Ehrlich, and by another O’Malley foe, former Gov. William Donald Schaefer.
He ignored the fact that under Grasmick’s two-decade reign, Maryland consistently ranked at the top of state school systems offering an excellent public education.
Yet politicians’ urge to intervene and impose their ideological will on schooling remains strong.
Look at the situation in Baltimore City, a troubled city with a troubled school system.
Costly School Reforms
The last superintendent, Andres Alonzo, reenergized city schooling and turned much of the system on its head. But after he suddenly left, the city belatedly discovered Alonzo’s grand plans had been costly, leaving the new superintendent $105 million in the hole.
Indeed, the current city school boss, Gregory Thornton, was brought in largely to make difficult down-sizing choices, which pleased no one. He hasn’t won many fans among community and education activists or with the wannabe power brokers in Baltimore politics.
They are demanding that Thornton be canned. They insist he’s had 18 months to work a miracle and he still hasn’t done it.
Mayoral candidates are promising a takeover of city schools, placing education decisions firmly in the hands of the next mayor and City Council. That will fix everything, right?
Appeasing the Multitude
Decisions on education policies are best left to skilled, experienced education managers, overseen by a school board of non-partisan, concerned citizens dedicated to improving the learning environment for children.
Thornton is no neophyte, either, having had considerable success as school chief in Milwaukee in uplifting minority classroom performance and closing a big budget gap.
He may not have Alonzo’s charisma or the ability to appease the multitude of factions vying to control education decisions in Baltimore, but he’s made headway in the face of enormous urban challenges.
His problems could multiply in coming months unless the very same politicians seeking Thornton’s head find a way to persuade the governor to help city schools fend off a new $25 million budget hole caused by declining enrollment.
Hogan has budgeted funds to help three other counties facing that same predicament, but so far he’s shown no willingness to plug in extra money to deal with Baltimore’s far larger enrollment drop.
It was the governor’s adamant opposition to politicizing the state school superintendent’s appointment that forced legislators to abandon their power grab this year. That’s a huge victory for public school children in Maryland.
Following up with added funds to bolster education efforts in Baltimore would be icing on the cake.
Barry Rascovar’s blog is www.politicalmaryland.com. His email address is email@example.com
By Barry Rascovar
One Really Bad Day
Capital Priorities Questioned
Barry Rascovar’s blog is www.politicalmaryland.com. He can be contacted at firstname.lastname@example.org.
By Barry Rascovar
Feb. 15, 2016 – First, the good news: Gov. Larry Hogan, Jr. last week created a 19-member commission to come up with ways to fix Maryland’s maddeningly inefficient system for purchasing $7 billion worth of goods and services each year.
Here comes the bad news: This group may wind up trying to re-invent the wheel because state legislators appear ready to pass legislation, based on three years of study, that could dramatically change state purchasing practices.
There’s no doubt Maryland’s now-antiquated and creaky procurement system needs an overhaul.
What once was a national model in the 1980s for sensible and effective state purchasing practices is now a costly embarrassment.
Practically every month, the Board of Public Works hears another horror story of botched bids, favoritism by state agencies in awarding contracts and an arcane set of practices and procedures that ties the bureaucracy in knots and delays major contracts for months and sometimes years.
It’s a procurement lawyer’s dream and a nightmare that costs the state dearly.
Hogan was right to call Maryland’s system “a patchwork of archaic laws and processes that are inefficient, ineffective and results in wasted taxpayer dollars.”
Comptroller Peter Franchot has been on the warpath for years complaining about this “increasingly unworkable” and “broken” purchasing system “in dire need of reform.”
Lawmakers, especially Del. Dan Morhaim of Baltimore County, have been pushing for procurement reforms, too.
So why are the executive and legislative branches unable to synchronize their reform efforts?
Hogan, on his part, appears to want full credit for any changes. He’s hesitant to work with legislators and seems to have ignored the extensive work already completed on procurement reform.
There’s a lingering sense Republican Hogan wants nothing to do with anything initiated by Democratic Gov. Martin O’Malley, whom the current governor has indirectly criticized time and again while announcing his own reforms.
Yet it was O’Malley who first took steps to revamp Maryland’s procurement system.
Back in 2012 O’Malley asked the Board of Public Works “to bring someone in to kick the tires” of the purchasing system. “We need to pull this apart and put it back together.”
The board contracted with Treya Partners for a thorough study of Maryland’s procurement activities.
The consultant found fragmented oversight of procurement bidding and the ultimate awards, with multiple state agencies setting their own standards and procedures; conflicting and inconsistent interpretations of procurement practice;, lax contract management, and poor relationships with state vendors.
In other words, the system is pretty much out of control.
Treya made 11 recommendations. After studying these proposals in 2014 and examining procurement laws in other states, the Department of Legislative Services backed many of Treya’s suggestions and added some of its own.
Among the main recommendations to lawmakers: Create a Chief Procurement Officer (CPO) under the Board of Public Works and consolidate most procurement officials spread throughout state government under the CPO.
State purchasing would be centralized, uniform processes would be followed consistently and one official would be accountable for ensuring that Maryland gets the best deal and the best quality for dollars spent on services and supplies.
It turns out Maryland is one of only a handful of states lacking a Chief Procurement Officer. The Free State is way behind the curve.
None of this is reflected in Hogan’s announcement. Nor is there any recognition that Democratic lawmakers are ready to turn into law many of these procurement recommendations.
It’s as though the governor doesn’t want to give credit to the hard work already done on procurement reform one floor below him.
Two Ships in the Night
Even before Hogan’s procurement commission gets off the ground the panel’s work may be rendered meaningless. It’s another indication that in the Maryland State House, Hogan and Democratic lawmakers continue to steer in different directions.
Still, the governor can salvage the situation – but only if he teams up with Del. Peter Hammen of Baltimore City, who chairs the House committee that is likely to pass the DLS procurement reform package (HB 353) that gets a hearing this Wednesday.
That would mean sharing credit with Democratic legislators, which Hogan has not wanted to do previously.
It would mean altering the mandate of the governor’s procurement commission so its main purpose becomes assessing the effectiveness of any new procurement law enacted this session and then recommending how to make the new process more efficient, more transparent and more effective in giving Maryland the best value on every contract.
On its own, Hogan’s procurement commission cannot change Maryland’s purchasing laws. Legislators can do that and they seem ready to act.
Hogan can avoid an embarrassment and come out looking like a true reformer by joining forces with like-minded legislators – regardless of their political party – who want a better procurement system for Maryland,
By Barry Rascovar
Feb. 8, 2016 – Though lacking flair and imagination, Gov. Larry Hogan, Jr.’s second State of the State address proved a solid effort with just the right theme: conciliation and compromise.
That leaves unanswered the key question: Will these promising words be followed by matching deeds?
The governor called his speech “A Middle Temperament,” taking a page from Robert J. Brugger’s definitive state history – “Maryland A Middle Temperament 1634—1980” and from Captain John Smith’s written description of the Chesapeake’s munificent bounties in the early 1600s.
Hogan heaped ample praise on himself in the speech, taking credit for everything that went right over the past 12 months in Maryland – even if he had nothing to do with it.
For instance, he raved about Maryland’s job growth and his big budget surplus – both the result of national macro-economic factors in which any governor plays virtually no role.
He boasted about his record spending on education – though that’s the result of mandated increases in Maryland’s education aid formula. Hogan didn’t lift a finger to make that happen.
He even claimed credit for being the first governor to fully fund a program giving extra education aid to higher-cost counties. This, despite the fact he cut that aid in half last year and only fully funded the program in his new budget because infuriated lawmakers made it a legal requirement.
Hogan also sounded alarm bells about Maryland’s ballooning borrowing costs. Yet the governor did little in his budget to sharply rein in borrowing over the next fiscal year.
Actions, not words, will tell us if Hogan is serious about working with Democratic lawmakers on that and other serious problems the governor discussed in his annual address.
Legislative leaders have plenty of reasons to doubt whether Hogan will follow through on his pledge to “seek middle ground where we can all stand together.”
In his early dealings with lawmakers, the Republican governor struck a partisan tone. He refused to meet them halfway. He has continued to shut them out of policy development and rarely keeps them informed about his plans before he makes a splashy PR announcement. He’s been the opposite of inclusive.
He also has lacked consistency.
Last fall, out of the blue, he announced extra education aid for three Republican counties to help them deal with falling student enrollment. Yet Democratic Baltimore City, facing a far larger and more costly enrollment plunge, got nothing.
Then last week, Hogan finally caved to demands from legislative leaders to ante up money promised by the O’Malley administration to support Prince George’s Hospital Center until a new regional medical complex is built.
Hogan did so only after the House speaker and Senate president announced they’d push through a bill forcing Hogan to put up these funds in future years.
Yet Hogan praised his action, asserting such an arrangement was long overdue – as though the O’Malley administration had dropped the ball. It was a transparent re-writing of history.
Missing Demolition Funds
In December, Hogan suddenly announced plans to pour $700 million over a number of years into Baltimore City’s housing demolition program. Yet when Hogan’s budget arrived, the first installment of demolition money wasn’t there, nor an explanation of where all that $700 million would come from.
Hogan blamed Baltimore City for this gap in his budget. He claimed the city had failed to sign a memorandum of understanding (MOU) that had been in negotiation for months.
But wait a minute: There’s no signed MOU for the Prince George’s hospital, either. Yet that didn’t stop Hogan from putting supplemental funds into his budget last week.
Where’s the consistency?
“There is so much we can find agreement on,” Hogan said in his speech. Indeed there is. But it will take more give than take from the governor – a reversal of his style from his first legislative session.
t also will take less partisan one-upmanship, less headline-grabbing announcements that blindside legislative leaders.
The opportunity is there, though, for Hogan to put together a winning legislative record this year. That will mean not only saying the right things about “finding the middle ground” but making the right moves to make compromise possible.
That may not prove popular with his hard-core conservative base, but if Hogan is serious about avoiding a rough road for his priorities and avoiding hyper-partisan gridlock in Annapolis, he’s the one who must take the initiative by backing up his conciliatory words with conciliatory deeds.
By Barry Rascovar
Feb. 2, 2016 — ITEM: Now that Martin O’Malley is an ex-presidential candidate, he still has time to file for the Democratic mayoral primary in Baltimore.
Why not? None of the current candidates for mayor is catching fire in the polls, O’Malley loved the job when he had it, and he was a successful mayor. Even the New York Times liked his performance in Baltimore.
And he still lives in a big house in Homeland.
ITEM: Three out of four Iowa Republican caucus-goers voted for someone other than Donald Trump.
Yet you’d never have guessed that listening to the unprecedented media hype given The Donald.
ITEM: Someone ought to remind Florida Sen. Marco Rubio that finishing a third still means you lost to two other candidates.
ITEM: As for retired Hopkins neurosurgeon Ben Carson, he did worse in Iowa than the 2015 Orioles in the American League East. The Os disappointed fans by barely finishing third. Carson disappointed his supporters by finishing a distant fourth.
ITEM: Carson’s efforts gained him 17,395 votes — about half the size of an Orioles-Yankees crowd at Camden Yards.
ITEM: Is winning the Iowa Republican caucus a jinx?
Is it the bad-luck equivalent of a team pictured on the pre-season cover of Sports Illustrated to win the World Series or Super Bowl?
It sure was for Mike Huckabee (2008) and Rick Santorum (2012). Et tu, Ted Cruz?
ITEM: When the media proclaims a “record” turnout in Iowa for the caucuses, better take that with a grain of salt. The GOP turnout was under 30 percent and the Democratic total made it just over the 30 percent mark.
ITEM: If you thought O’Malley got wiped out in Iowa (not a single delegate), what about former Virginia Gov. Jim Gilmore? A grand total of 12 Republicans voted for him in Iowa.
ITEM: Bernie Sanders’ big day is coming!
He came so-o-o close in Iowa, but he should romp in New Hampshire, the Vermont senator’s New England neighbor. He’s leading big-time in nearly every poll over Hillary Clinton.
But then reality starts to sink in. The next two primaries are in Clinton Country — Nevada and South Carolina, states with large minority voting blocs that adore the Clintons. Those states could be momentum shifters.
By Barry Rascovar
Feb. 1, 2016 — Here’s the good news for former Maryland Gov. Martin O’Malley: Iowa is not America in miniature. Neither is New Hampshire. Each state has an abysmal record for picking the next president.
Getting humiliated in the first two primary states – which seems highly likely for O’Malley starting tonight—may not signal the demise of his 2016 quest. His carefully packaged liberal message is pegged to appeal to the broad Democratic Party base, which is not well represented in either Iowa or New Hampshire.
On the other hand, miracles can happen in these early primaries. Long-odds challengers have emerged victorious more often than not. Indeed, two times out of three, the Iowa winner is usually the underdog. It happens even more often in New Hampshire.
That’s a positive for O’Malley, though he’s so far back in the polls it is difficult to see him emerging out front.
No Bump in Recent Polls
The Des Moines Register-Bloomberg poll on Sunday gave O’Malley 3 percent of the Iowa vote. Other recent polls gave him 5 percent and 7 percent. Meanwhile, O’Malley is polling 2 percent in New Hampshire. In the next primary state, South Carolina, O’Malley also is running at 2 percent.
Even in neighboring Pennsylvania, where the ex-Maryland governor should be better known and respected by Democratic voters, he’s getting just 2 percent in a recent poll.
O’Malley can take modest comfort from a New York Times editorial endorsing Hillary Clinton for the Iowa primary caucus. In the editorial, the Time editors call him “a personable and reasonable liberal.”
Unfortunately, the rest of that sentence indicates how far he has to go to be taken seriously on the national stage. The Times editorial concludes O’Malley “seems more suited for the jobs he has already had – governor of Maryland and mayor of Baltimore – than for president.”
Translation: Martin O’Malley isn’t even close to being ready for nationwide, prime time politics.
Polls and Endorsements
Newspaper endorsements and polls can be misleading, though.
An editorial-page backing doesn’t carry the weight with voters it once did.
And polls can prove highly deceptive in a caucus state like Iowa.
Voter sentiment in a telephone poll becomes meaningless in Iowa unless the voter is determined enough to attend one of 1,681 precinct caucuses this evening that could last for hours.
In Iowa, it will be candidates with the most hard-core followers who have the best shot at pulling a surprise. Precinct-level organizing is absolutely essential, too. The Iowa event is long, drawn-out and a test on voters’ patience and commitment to a candidate.
That’s why Hillary Clinton may have a decided edge over Bernie Sanders and O’Malley. The depth of Sanders’ enthusiastic support among college-age students and disenchanted Democrats is one of the great unknowns.
Grass-roots organizing and caucus-level attendance could be key on the Republican side, too. That’s where Sen. Ted Cruz of Texas could surprise front-runner billionaire Donald Trump.
The same holds for Sen. Marco Rubio of Florida, whose organizational strength and quiet determination to challenge Cruz among Iowa’s large bloc of evangelical Republicans could lead to a larger-than-expected showing.
As for retired Hopkins pediatric neurosurgeon Ben Carson, his meteoric rise in the polls has been eclipsed by his meteoric fall. His off-point remarks in the last Republican debate in Iowa emphasized how unready he is to live in the White House. Voters in polls seem to sense that, too.
Regardless of the outcome, losing candidates can take solace from the fact that Iowa and New Hampshire are hardly indicators of the eventual outcome.
If those two state primaries were true stepping stones to 1600 Pennsylvania Avenue, the list of presidents by now would include Iowa and New Hampshire winners such as Rick Santorum, Mike Huckabee, Paul Tsongas, Gary Hart, Tom Harkin and Richard Gephardt.
The media has made a BIG DEAL of these two early primary states. Inflating the importance of Iowa and New Hampshire has been great for TV ratings and created a surprise bonanza of advertising dollars.
Yet the truth is that this is deceptive reporting by the media. Television commentators are vastly overstating the role the two states play in the nominating process.
In the larger presidential election picture, Iowa and New Hampshire are minor starting points. We’ve got a long way to go.
By Barry Rascovar
Jan. 25, 2016 – At first glance there is lots to like about Gov. Larry Hogan, Jr.’s new budget. It’s largely a status quo blueprint that keeping spending under expected revenue growth without harming on-going programs.There’s a bit of sunshine for just about every group – liberals, conservatives, environmentalists, law-and-order types, urban dweller, rural residents and suburbanites.
Yet there’s a yin and a yang to Hogan’s financial plan for Maryland. The Republican governor seems to be pushing the state in different directions simultaneously.
While he is keeping a lid on state spending, as would any conservative politician, Hogan also wants to cut taxes – a move that would reignite Maryland’s structural deficit Hogan has pledged to eliminate.
It doesn’t add up.
First, let’s deal with some of the good news.
- Due to a positive economic outlook, the governor doesn’t have to engage in fiscal tricks to balance his budget. He doesn’t have to ask the legislature to suspend spending mandates for a year so he can shift funds to balance the state’s operating budget.
- He also has a large surplus that allows him to clean up past fiscal finagling by former Gov. Martin O’Malley during the Great Recession, pay off unpaid bills and put the state’s books in order.
- Hogan is pulling back ever so slightly on building up state debt. It isn’t much of a reduction but it could save the state considerably over the next eight years.
- There’s a substantial boost in spending to clean up the Chesapeake Bay, restore funding to retain open spaces and support environmental programs.
- He’s adding extra funds, $150 million, to the state’s annual pension contribution to help underfunded state retirement programs. It’s a small step in a system that is $19 billion short of full funding, but a symbolic one.
- He’s growing the state’s contribution to community colleges by six percent – one of the wisest investments he could make.
- He’s putting new emphasis on spending for prisons improvements, rehabilitation and treatment programs as part of his effort to keep minor offenders out of jail and cut recidivism. Included in this category is $35 million to demolish and design a new Baltimore City Detention Center. He’s also boosting local police aid nearly 10 percent.
- The Republican governor is leaving Maryland’s Obamacare program alone at a time when the program is signing up a record number of low-income individuals for health care coverage. That’s a common-sense, non-partisan move that will save money for the state and for hospitals in the long run.
On the Other Hand
Now for some of the bad news.
- Hogan’s budget already is out of date, thanks to the continuing swoon on Wall Street and a lack of robust consumer spending. This is likely to throw revenue estimates off by hundreds of millions of dollars.
- Hogan’s large budget surplus announced last week could largely evaporate by the time new revenue forecasts are put out in March.
- This, in turn, makes it unlikely Hogan will get the tax cuts he’s seeking this legislative session.
- With Maryland’s weak economic rebound now facing a costly dig-out from the Blizzard of 2016 and possibly more bad weather to come, this isn’t the best time to press for action that shrinks state revenue.
- Hogan’s capital budget puts too much emphasis on highway construction and not enough on the Port of Baltimore and mass transit. More alarming is his long-range plan to cut nearly $1 billion from transportation spending in 2021 – an unrealistic and dangerous move.
- Hogan is claiming credit, as does every governor, for funding education at record levels. In fact, he’s mandated by law to do so. He’s even taking credit for fully funding a program that helps high-cost counties run their schools – a program he cut in half last year. Angry lawmakers then required Hogan to put the full $137 million in his budget this year.
- Hogan added $5.6 million to his budget to help three Republican counties cope with falling school enrollments. Yet he refused to help Baltimore City’s school system, which faces a loss of $21 million partly due to its own declining enrollment. This funding inequity won’t be permitted by Democratic lawmakers.
- Hogan fails to give battered and struggling Baltimore City much relief. It’s the only large subdivision that doesn’t get a big boost in state aid — $3.1 million for the city versus $24.7 million for Baltimore County, $26.7 million for Anne Arundel County, $44.3 million for Montgomery County and $83.4 million for Prince George’s County. On a percentage basis Baltimore City gets less of an aid increase – 0.3 percent – than any other Maryland subdivision.
- Hogan’s budget documents focus on the state’s continuing gap between ongoing spending and tax revenues. Yet the governor wants to diminish state revenue through tax cuts, which will worsen the situation. Hogan complains about this key fiscal gap but doesn’t fully address it in his budget proposal.
We’ll learn much more about the governor’s blueprint when the legislature’s fiscal advisers start their round of budget briefings after the snow dig-out. Their analysis will pinpoint further weaknesses and oversights in Hogan’s plan as well as its strengths.
Given the uncertain economic outlook, a go-slow approach might be the best possible outcome.
By Barry Rascovar
Jan. 18, 2016 – Tumbling oil prices, a bear market for stock and 401(k) investors and a sharp economic pullback in China and other developing countries could wreak havoc in Maryland as Gov. Larry Hogan, Jr. prepares to release his budget for the coming fiscal year.
Even before lawmakers get a chance to analyze what’s in Hogan’s conservative spending plan, the state’s revenue assumptions for the next 18 months could be out of date.Budget projections made by the state’s Board of Revenue Estimates just a month ago have been eclipsed by the worst-ever start-of-the-year results on Wall Street, historic drops in oil prices and stock market losses totaling a staggering $2.5 trillion in just two weeks.
This bad news comes at a terrible time for Hogan. His budget already has gone to the printers. It’s too late to make adjustments. His fiscal blueprint could be out of sync with January’s realities.
Indeed, if this worldwide gloom persists, the modest economic growth anticipated by Hogan might prove optimistic. The governor’s spending and tax-cut proposals might have to be drastically reduced – even with a large surplus in the bank.
Maryland’s economy is tied to what happens nationally and internationally.
A sharp slowdown in China’s trade hurts the Port of Baltimore and BWI Airport. Ditto for the laggard economic activity in Europe and in emerging countries.
Too Much Oil
The oil glut is leading to 250,000 layoffs in the energy sector, which will mean less work for contractors, subcontractors and suppliers throughout the country, including Maryland.
Maryland’s income tax receipts will be hurt by the plunge in stock prices. Alarmed consumers, already unnerved by talk of terrorist attacks, could continue to rein in their spending, which hurts sales tax collections.
Economists aren’t yet predicting that international woes will lead to a second Great Recession.
But weak growth could make it exceedingly difficult for Hogan to carry out his pledge to cut taxes.
While the Republican governor will propose over $400 million in tax cuts in his address to the Maryland General Assembly this week, Democratic lawmakers aren’t likely to support them if economic conditions make those tax cuts unsupportable.
The best news for Hogan would be if the current batch of bad news is replaced by a sharp and lengthy bounce-back on Wall Street and an uptick in consumer spending. The U.S. economy, after all, is in far better shape than the rest of the world.
Still, we live in an era of instant international linkage. What happens in China or France or Iran or Russia affects the U.S. economy. As journalist Thomas Friedman famously wrote, “The world is flat.”
Hogan has little, if any, control over Maryland’s overall economic well-being. He can’t stop the panicked selling on China’s stock exchange, or Iran dumping more oil exports on an oversaturated world petroleum market or a Republican Congress ratcheting down federal aid to the states.
Lower gas prices were supposed to stimulate consumer spending as drivers fill up their vehicles far more cheaply. Yet so far no such bump has occurred.
Low or No Growth
Shaun Driscoll, who manages T. Rowe Price’s New Era Fund, predicts low gasoline prices could persist for the next six months and the oversupply of petroleum might linger for a couple of years.
The U.S. could find itself in a sustained period of low growth or no growth. For Hogan, that would make tax cuts problematic not only this year but in the immediate future, too.
“Risks abound,” the state’s Board of Revenue Estimates warned last month, noting the nation’s economic outlook was “subdued.”
Those observations came before the history-making plunge on Wall Street and disappointing economic news from China.
Volatility around the globe and at home makes it tough for elected officials to accurately predict the future. Extreme caution may become the watchword as budget deliberations begin in Annapolis.
Barry Rascovar’s blog is www.politicalmaryland.com. He can be contacted at email@example.com.