Caret Comes Home

By Barry Rascovar

Dec. 18, 2014 — Hooray for Jim Shea and the rest of the University of Maryland Board of Regents for making a common-sense choice in choosing Bob Caret as the new chancellor of Maryland’s state university system.

U. Mass President Bob Caret

New USM Chancellor Bob Caret

In an Oct. 2 column, I listed Caret as one of the best candidates with in-state higher education experience. He’s got the right personality to keep 12 competing academic institutions on the same page.

After all, he’s “been there, done that” — as president of Towson University. He’s seen what works and doesn’t work in drawing all of USM’s presidents into collaboration. (He also spent nine years running the 28,000-student San Jose State University campus to rave reviews.)

Strong Local Roots

Caret understands what it takes to coordinate a sprawling university system with multiple power centers and geographic locations. He’s done that with a great degree of success as president of the 70,000-student, five-campus University of Massachusetts since 2011.

Though he’s a New Englander, Caret’s academic career (29 years on the Towson faculty) give him strong Maryland roots. He’ll start as chancellor knowing the key players in Annapolis and in state higher education.

The regents wisely picked someone whose path parallels the career track of the outgoing chancellor of the 153,000-student University System of Maryland, the legendary Brit Kirwan (45 years on the College Park faculty).

University System of Maryland Chancellor Brit Kirwan

USM Chancellor Brit Kirwan

Both men spent decades in the teaching trenches (Kirwan’s PhD. is in mathematics, Caret’s is in organic chemistry), then moved up the administrative ladder to become chief academic officer, Kirwan at College Park, Caret at Towson.

Each man gained on-the-ground experience running a university campus within a larger system — Kirwan at College Park for 10 years, Caret for 18 years split between San Jose State and Towson.

The two men also had served in major CEO roles running large, state university systems, Kirwan at Ohio State, Caret at U.Mass.

And both returned to their true higher education home, Maryland.

Mid-Year Transition

In some ways it will be an awkward transition, though that Kirwan and Caret have known each other and worked cooperatively for over three decades.

Caret’s appointment is effective next July 1. That means Kirwan, not Caret, must handle the budget retrenchment now taking place within USM’s $1.1 billion fiscal blueprint.

“Downsizing” and “right-sizing” are the operative words under Gov.-elect Larry Hogan Jr. and that will mean painful shrinkage on state university campuses.

Larry Hogan Jr.

Gov.-elect Larry Hogan Jr.

Caret must live with budget decisions made months before he arrives. He won’t be able to put his full imprint on fiscal plans until the budget for 2016 is drawn up.

That will be the key budget year for both Caret and Hogan. By then, both will be in their new jobs long enough to formulate a broader, long-range vision that will be incorporated into the state’s budget (and the university system’s budget) a year from now.

Caret is well aware of the dramatic message Maryland voters sent government leaders: Spending is spinning out of control, as are taxes; yet government isn’t doing enough to encourage job-creation.

The Maine native struck the right notes in his initial comments, saying he’ll focus on two academic priorities — making quality college education affordable and building “a research-based economic engine.”

He’s already singing Hogan’s song!

USM logo

While many USM institutions are thriving and rising in prestige, Caret faces a tough task improving the performance of the bottom-rung schools — Coppin and the University of Maryland Eastern Shore.

UMES’ collaboration with nearby Salisbury University is beginning to pay academic dividends, but Coppin’s sorry status remains deeply troubling. There’s a sharp disconnect between the abysmal performance of Coppin compared with the rest of the USM campuses.

Uninformed Comments

That disconnect was acutely illustrated in comments by a Coppin professor in responding to Caret’s appointment.

Virletta Bryant, who chairs USM’s faculty council, displayed stunning ignorance in stating that the USM faculty didn’t know enough about Caret to offer an opinion.

Heck, he’s only been a faculty member in the system for three decades!

Then Bryant went on to display an appalling lack of knowledge of how USM actually conducts its business by criticizing the secretiveness of the regent’s search for Kirwan’s successor.

Hasn’t she read the law that mandates the chancellor search, and vote, must be kept secret?

If that’s the best a Coppin professor heading the system’s faculty council has to offer, no wonder Coppin students are getting such a poor education.

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MD’s Easy Budget Fix

By Barry Rascovar

Dec. 15, 2014 — Maryland governments are awash in budget deficits.

Yet it need not be quite so bad.

In Annapolis, state officials are looking at a $900 million shortfall over the next 18 months — and that number will likely grow when updated revenue estimates come out today.

Budget balancing

In Howard County, the current-year gap is estimated at $14 million.

In Baltimore City, the mayor is looking at an expected $15 million shortage for this fiscal year.

In Prince George’s County, the budget gap is $59 million.

In Montgomery County, local budgeteers say the county might find itself with a $250 million shortfall.

All those projections are likely to rise in the months ahead.

Reverberations from Washington

When bad economic news hits the U.S., state and local governments feel the reverberations as tax collections contract.

When the federal government cuts spending under Republican mandates, Virginia and Maryland feel the impact most as residents can’t find jobs in Washington; consultants and contractors lay off employees due to reduced workloads.

When the real estate market continues to lag, governments get less than expected from the property tax.

But there’s another insidious factor at work: a badly skewed budget calendar that leads to highly inaccurate revenue estimates.

Right now, Gov.-elect Larry Hogan is basing his slimmed-down budget plans on projected tax collections for the next 18 months — through June of 2016.

Think about that for a moment.

Wild Guesses

Economic models cannot give Hogan more than a wild guess on what energy prices will be in the spring of 2016. The same holds for food prices and construction costs a year and a half from now.

Will housing sales be up, down or in the doldrums in early 2016? How about employment and jobless claims a year-plus from today?

A tarot card reader might prove more useful than an economist in determining how much revenue will come the state’s way far into the future.

Mathematical models developed by economists cannot account for the vagaries of political decision-making, either.

With Republicans taking full control of Congress, will that lead to a massive reduction in aid to the states? If so, by how much? And what will next October’s federal aid package look like?

Government Spending

No wonder state and local officials often find themselves behind the eight-ball. They are basing their budget decisions on best guesses of the government’s tax collections far down the road.

It’s an absurd situation.

There’s a better way: Change Maryland’s fiscal budget year so it runs from January to December. Then, base the state’s budget on the prior year’s revenue numbers.

That’s a far more cautious approach.

It comes with a huge benefit — 100 percent accuracy in the state’s revenue numbers in the next budget.

Certainty in Budgeting

Instead of beating their heads against an economic brick wall trying to fathom what tax receipts will be like two springs from now, state leaders could build a budget with a large degree of certainty, knowing that the money will be there.

Next year’s budget thus would be based on the exact amount of lottery and casino revenue generated in 2014. We’d know the amount to the penny. The same would be true for income tax and sales tax receipts.

We’d also know with precision the scope of federal appropriations to the state and localities for most of 2015. That’s because Washington operates on an October-to-September fiscal calendar. We’d have an exact picture of federal largesse for three-quarters of the next year.

All this would take much of the guess-work out of Maryland’s budget process.

Reforming the state’s budget laws would give localities earlier certainty, too. There would be less chance of giant shortfalls.

Yes, we’d still experience spending gaps, such as for police overtime or emergency repairs or catastrophic occurrences, but a calendar-year budget would eliminate much of the angst that now consumes officials at this time of the year.

The downside: State leaders would have to craft more conservative budgets. In boom years this could result in very large surpluses. But it also would lead to far smaller deficits when the next recession hits.

Adjustments to the state’s calendar-year budget could be made in June or July, with a supplemental request from the governor to the legislature, which could hold a brief special session to examine the new spending requests.

The advantages of putting together a budget containing concrete revenue numbers are immense. Such a proposal is well worth considering — especially by a newly elected governor facing a giant budget crisis.

A Rational Approach

Maryland’s spending and taxing habits need close examination. But so does the budget process itself.

Why not make budgeting in Annapolis more rational?

Next year’s spending numbers should be based on tax collections from the prior calendar year — not ballpark guesses of how future events might impact state revenue more than a dozen months from now.

Compared with tax reform and downsizing government programs, changes to Maryland’s budget procedures would be fairly easy and straight-forward. It’s not a partisan issue, either.

Hogan ought to follow the advice of a former governor, William Donald Schaefer, and “do it now.”

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State Center Questions

By Barry Rascovar

Dec. 11, 2014 — Next week, lame-duck Gov. Martin O’Malley may decide to bring the matter of the $1.5 billion State Center project before a divided Board of Public Works.

It would be a controversial move.

State Center with new building

State Center with new building

Readers responded to my previous column on this topic with some interesting thoughts. Their conclusion: There are far better ways to redevelop this space and provide decent offices for state workers in Baltimore.

University Center?

Steve, who is a Baltimore-area developer, writes:

In my opinion the universities and hospitals are the glue that holds this City together once you get away from the Inner Harbor. 

“How about they move the government uses down to the [Central Business District] as [Peter]Angelos suggests and then make the State Center parcel available to the [University of Baltimore] and/or [the Maryland Institute, College of Art] so that they can expand their campuses, while incorporating into the project some retail and other amenities that would benefit neighboring communities? 

“[A win] for the CBD, win for the universities, win for the neighboring communities.  Maybe that makes too much sense for it to happen.”

Hurting ‘Older Downtown’

Hugh, a long-time financial industry executive, writes:

“It was an ill-conceived idea from the start. There is so much B [office] space in the Central Business District available suitable for state workers at much better rates/rents.

“Additionally, [the State Center project] would take current state workers [out of] ‘older downtown.’ [This] would hurt vacancy rates even more.”

Ideal Arena Site

Owen, a longtime development pro, believes the State Center site is ideal for a new city arena.

The current plan, he writes, suffers from its “wayward scope, negative financial profile and appealing alternatives.”

Relocating the arena there makes sense, he believes:

“While the previously contemplated office project appears permanently stalled, the site adjacent to the O’Conor office building is large enough to accommodate a new arena and would certainly bring new life to the neighborhood.”

The area has lots of public transit and the Lyric and Meyerhoff performance centers. Owen adds an arena at that site would create “a more dense critical mass of entertainment related uses.” This, he feels, would lead to “more amenities for those patrons and create a rising tide for all to benefit.” 

‘No Longer Affordable’

A few days ago, Comptroller Peter Franchot chimed in as well. Not surprisingly, he’s against the amended plan, just as he opposed older versions of the State Center proposal.

Franchot says, “This is really a very questionable project. . . . When you look at the deal right now, unlike a few years ago, it’s no longer affordable. The commercial real estate market really hasn’t fully rebounded in Baltimore. We’re going to be paying a lot in rent.”

Then there’s the question of endangering Maryland’s triple-A bond rating.

State legislators are concerned State Center subsidies might put Maryland over its capital bond cap. Even if that’s not the case, the costly lease agreement will put a crimp in the state’s operating expenses for decades to come.

DLS Analysis

It’s also worth noting some of the points made in the Department of Legislative Services analysis of the revised State Center proposal.

State Center plan

State Center Plan

First, the plan now is based on the state taking an additional 115,000 square feet of office space — for a total of 515,000 square feet. That means yanking more state agencies out of the downtown business district, which already is hurting badly from high vacancy rates.

Second, these sky-high leases — $35.85 a square foot, plus a 15 percent inflation factor every five years — “would not be subject to appropriations in the State budget.” It is the only such project that is exempt from legislative oversight and review.

Third, the now-shrunken underground garage still would cost the state $28.3 million, leading to an annual debt service of $2.5 million for the state and an annual loss to the transportation trust fund of $2 million per year.

Fourth, the 500 spaces reserved for state employees will cost each of those workers $600 a year, versus the free parking on surface lots employees now use. (There are 3,500 workers in the State Center complex, meaning the new replacement building will not come close to accommodating all those who drive to work.)

Fifth, moving expenses alone will cost the state $2.4 million. Then the state will mothball the existing buildings. That adds another $5.8 million per year in expenses.

Sixth, DLS questions whether a private charter school is best situated in a state-leased office building. That’s the latest plan from the developers.

DLS also wonders if it is realistic for developers to anticipate a supermarket will open in the Firth Regiment Armory building, with its high walls and enormous heating and air-conditioning bills.

“It is unclear if any of these changes make sense,” DLS concludes.

The agency’s analysis lists four options:

  • Do nothing, which will require costly annual patch-ups to the 50-year-old structures.
  • Renovate or replace the current state buildings, at a cost of $215 million. (Given the state’s over-extended capital bond program, this is a non-starter.)
  • Sell the State Center buildings now in use and rent space elsewhere. Downtown office rents are cheap and there’s oodles of quality space available.
  • Buy out the developer and re-bid the project — but this time limit the RFP to one new privately owned office building for state workers.

DLS raises significant and substantive issues that cry out for careful scrutiny.

Changing Times

Since the State Center plan was first unveiled to great fanfare in 2005, times have certainly changed.

What is now under examination may not be economically feasible.

There may be far better uses for the site.

There are far less expensive ways to find better office space for state employees.

Perhaps most telling, the state no longer has the financial strength to give such a generous subsidy to a private developer for a project that is, at best, marginally viable.

There are plenty of reasons to take a “go-slow” approach on the State Center proposal. 

We could learn next week if O’Malley agrees.

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State Center Boondoggle

By Barry Rascovar

Dec. 8, 2014 — As Gov. Martin O’Malley winds down his second and final term as Maryland chief executive, he owes it to his successor — and to his legacy — not to push for approval of a new plan for developing State Center in mid-town Baltimore.

It’s a boondoggle in both its current form and in its amended form.

State Center vision

State Center vision

With the state facing dire budget deficits for years to come, it makes no sense for O’Malley to saddle the next governor with an inflated lease that will cost an extra $18.5 million per year — rising by another 15 percent every five years — to house agencies already working in lease-free buildings at State Center.

The only winners in this proposal are the developers, who just happen to include a number of friends and allies of the governor.

One-Sided Deal

Going forward with this shell game of a $1.5 billion plan would seriously tarnish O’Malley’s reputation. It would be unfair to pawn such a one-sided deal off on Gov.-elect Larry Hogan and Maryland taxpayers.

The governor should do the wise thing and put the amended State Center plan on hold  until Hogan is inaugurated.

Bringing this matter before the Board of Public Works could set off needless fireworks and disputes over an ambitious development that the Department of Legislative Services has repeatedly called into question.

From the beginning, the State Center plan that O’Malley has backed made little sense.

It was an idea that emerged during boom times and depends on the largesse of the city and state governments.

Ambitious Plan

The developers want the state and Baltimore City to underwrite much of the cost for constructing a new building on state land near the existing, aging state office complex.

Then state agencies will move from the state-owned buildings to the new, privately owned office structure — with the developers charging exorbitant rent equivalent to harbor-view rates.

The developers then will gut the 15-story State Office Building and turn it into market-rate apartments. More office buildings and residential units will follow on land leased from the state — with all the profits benefiting the developers.

None of this was realistic, even during good economic times.

The site is not in an appealing location, since it abuts a crime-ridden housing project and an under-achieving hospital. The site is about a mile from the central downtown business district, overlooking a forlorn section of Howard Street.

Appealing Alternatives

It would be far cheaper for the state to move agencies into inexpensive, modern office space downtown — either permanently or temporarily while the State Office Building and Herbert R. O’Conor Building are renovated. Or the state might move the agencies into the million-square-foot former Social Security annex near Lexington Market through a private-public partnership arrangement.

State Center complex

State Office Building (right) and O’Conor Building (left)

The most expensive way to give state workers better office space would be to proceed with the private development of State Center.

Even the developers’ parking arrangement for the office building seems unrealistic.

The state would be stuck with the tab for the expensive underground garage, but there wouldn’t be enough spaces to handle all the workers’ cars — and there would be few parking spaces for people conducting business at state agencies or shopping at the building’s ground-level retail stores.

The initial plan, devised before the Great Recession and championed by Republican Gov. Bob Ehrlich, was overly optimistic at the time. It envisioned State Center as a great transit hub (Metro, light rail and buses) that would be a natural magnet for new city residents and offices.

It hasn’t turned out that way.

Angelos Vindicated

Baltimore attorney Peter G. Angelos sued the state over the plan, claiming it would be far less costly and far better for Baltimore City if state agencies moved into  vacant space in the central downtown business district.

Angelos won his argument in circuit court but lost on appeal. Time, though, has proved Angelos right.

O’Malley shouldn’t leave office under a cloud.

Citizens owe him a huge debt of gratitude for the way he muscled Maryland through the Great Recession without massive layoffs or harmful cuts to the state’s social safety net.

It would be best if O’Malley left the State Center plan in limbo rather than foist this ill-timed proposal on Hogan.

Given the depressing economic outlook for Maryland’s state government, there’s no way the State Center project should move forward.

It’s a white elephant waiting to happen.

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Abolish MD’s Lt. Gov.

By Barry Rascovar

Dec. 1, 2014—If we learned anything from Anthony Brown’s eight years as Maryland lieutenant governor it’s that the office isn’t worth the taxpayer dollars it consumes.

Indeed, there is no good reason to have a lieutenant governor. There are sound fiscal and management reasons to abolish it.

No Powers

Brown’s mediocre performance was in keeping with others who have held the job since the office was re-established in 1970 by voters after a 102-year lull. The lieutenant governor has no constitutional powers. He or she does whatever the governor dictates.

Sometimes the governor hands out a few assignments, such as coordinating criminal justice issues (Kathleen Kennedy Townsend and J. Joseph Curran Jr.).

Sometimes the governor delegates budget decisions to his No. 2 (Blair Lee III).

At times, the governor may use the lieutenant governor to lobby bills and mediate differences between senators and delegates on important pieces of legislation (Mickey Steinberg).

Sometimes, the office holder is asked to act as a middle-man for local governments (Sam Bogley III and Michael Steele).

But more often than not, the lieutenant governor isn’t allowed to do heavy lifting. During the final terms of Gov. Harry Hughes and Gov. William Donald Schaefer, Bogley and Steinberg were left twiddling their thumbs.

Figurehead Roles

Brown was given a few figurehead roles on commissions – health care is the most glaring example – and he did take the lead on a small number of legislative bills.

But he made a mess of at least two of those.

He allowed lawyers for private developers to seize control of the governor’s public-private partnership bill to the point that lawmakers killed the measure. It passed the following year without the outside interference that had screamed political favoritism and financial windfall.

Brown also shepherded the fatally flawed health exchange bill through the legislature. What he created turned out to be a disaster.

The bill established the Obamacare insurance exchange as an independent agency. There were no oversight or management controls or back-office support from the state health department.

The bill also exempted the exchange from state procurement laws. That led to a horrendous outcome in which an under-qualified bidder won the IT contract by low-balling the price and over-promising its capabilities.

No wonder the health exchange’s IT system crashed on Day One.

That fiasco created an image of Brown in this year’s gubernatorial election as an incompetent and clueless office holder.

Mocking the Office

Composer George Gershwin once mocked the plight of No. 2 placeholders in a Pulitzer Prize winning playing, “Of Thee I Sing,” in which the vice president, Alexander Throttlebottom, has so little to do he spends his days in the park feeding pigeons.

Brown’s life was a bit better than that: He got to fill his calendar with speaking engagements, rushing from one meaningless event to a somewhat meaningless event reading prepared remarks, shaking hands and smiling a lot.

Is that worth $125,000 a year? Is a staff of eight really necessary to support such a pointless office?

The only job given to the lieutenant governor is to fill in if the governor is incapacitated, or to succeed to the top office if the governor dies.

‘Back to the Future’

Governor-elect Larry Hogan Jr. can save a quick million dollars by taking steps that would eventually abolish the office of lieutenant governor, streamline the executive department and establish a more sensible line of succession.

Hogan should go “back to the future” by turning the secretary of state into his No. 2.

In the early 1800s, that was the line of succession. The secretary of state already has designated record-keeping, election and foreign relations duties that are real and substantive. He’s got a staff of 25 and a $2.4 million budget.

Before the lieutenant governor’s office was re-established, Gov. Marvin Mandel named then Sen. Blair Lee III to serve in the official role of secretary of state and the unofficial role of lieutenant governor until voters decided if they wanted this new office.

There’s no reason the two jobs can’t be merged. Many other states do it that way. The secretary of state could step in if the governor is temporarily unable to perform his duties, and to serve as acting governor until a special election is held.

Combining the Jobs

Hogan could simply announce that Boyd Rutherford, his lieutenant governor, will also take over as unofficial secretary of state, with a combined, slimmed-down staff.

The new governor then would ask the General Assembly to approve a constitutional amendment abolishing the position of lieutenant governor, making the secretary of state next in line if something goes wrong and mandating a special election within 90 days of a governor’s death.

Voter then could decide if they approve of this new arrangement in 2016.

It’s pointless to continue the charade that has existed for 45 years.

Highly Paid

Rutherford is ideal for the job because his expertise is government management, not politics. He can contribute to developing a more efficient and cheaper state government.

But he could do the same thing for the governor as secretary of state.

As things now stand, Rutherford will be the seventh highest paid lieutenant governor in the United States ($137,500), and the third highest paid by the end of his term ($150,000).

Yet he has no constitutional powers. None. Zip. Zero. Nada.

Let’s use common sense and get rid of this meaningless office that is wasting a million dollars a year. That’s the kind of practical step voters expect from Hogan.

It would send a powerful message.

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Barry Rascovar’s blog is www.politicalmaryland.com. He can be reached at brascovar@hotmail.com.

 

 

For This They Give Thanks

By Barry Rascovar

Nov. 27, 2014–On this day of the year, we give thanks for our blessings. In political Maryland, here are some folks who have lots to appreciate as the cranberries, sauerkraut and turkey are served:

Governor-elect Larry Hogan Jr. His Thanksgiving blessing will probably be directed toward the state Democratic Party for heavily backing an artificially impressive lieutenant governor for governor.

Lt. Gov. Anthony Brown turned out to be a lightweight who made all the wrong campaign decisions. Hogan knew what he was doing; Brown didn’t.

Comptroller Peter Franchot. Easily re-elected, he is now the most important Democrat in the State House, thanks to the election of a Republican governor.

On the powerful Board of Public Works, Franchot will hold the crucial swing vote. He could lead the Democratic opposition to Hogan or work out middle-ground compromises. Either way, he’s the pivotal player.

Baltimore County Executive Kevin Kamenetz. He should be thankful for the weak Republican opposition he encountered. George Harman of Reisterstown lacked campaign experience and spent almost no money. His campaign was a joke.

Yet he still received nearly 44 percent of the vote. It was a Republican year and Kamenetz might have had a difficult fight on his hands had the GOP recruited a better-known candidate.

Doug Duncan. He’s got to be thankful he lost in the June primary to incumbent Montgomery County Executive Ike Leggett. Instead of getting his old job back, Duncan can continue working for Leadership Greater Washington or even as a member of the new Hogan administration.

Either way, it will be Leggett who must confront what figures to be a four-year budget battle in the county. Montgomery citizens demand a high level of services. Yet tax revenue is likely to continue to decline, federal aid to the counties and states is shrinking and state aid is almost certain to drop. What a mess.

Senate President Mike Miller. He quietly blessed Hogan’s triumph on Nov. 4. Miller knows he can deal with the new Republican governor. The two worked cooperatively years ago in Prince George’s County. Hogan knows Miller is the key go-to legislator.

Miller could not have looked forward to four years of frustration dealing with the remote and detached Brown, especially with a highly protective staff shielding Brown from reality.

Ken Ulman. The outgoing Howard County Executive now has been given a reprieve by voters. Instead of four years of boredom and gritting his teeth as Brown’s powerless lieutenant governor, Ulman gets to spend time with his young children, build a law practice and prepare for his re-entry into elective politics.

Baltimore County Sen. Bobby Zirkin. He’s glad the next attorney general will be Sen. Brian Frosh of Montgomery County. Frosh gave up his chairmanship of the Senate Judicial Proceedings Committee to run for higher office. Now Zirkin is a favorite to be tapped for this leadership slot — but only if he’s willing to follow the lead of Senate President Miller.

Retiring State Sen. Norman Stone. After a half-century in the General Assembly, Stone planned his exit at just the right time. He leaves triumphant instead of being blown out in the Republican sweep of his Dundalk-Middle River district.

Frederick County Commissioner Blaine Young. His Thanksgiving blessing extends to all the old-time practitioners of sleazy, backroom deal-making and “what’s-in-it-for-me” politics.

Having been defeated for the new post of Frederick County Executive, Young turned around and lined up the votes on the lame-duck county commission to get appointed to a five-year term on the county’s important Planning Commission. Developers are cheering.

The residual stench must have made carving the turkey tough to take for the rest of the Young clan.

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McIntosh Bites the Budget Apple

By Barry Rascovar

Nov. 24, 2014 – Until last week, Del. Maggie McIntosh was an important member of the House of Delegates leadership.

Del. Maggie McIntosh

Del. Maggie McIntosh

Now, suddenly, she’s a Very Important Person.

The new chair of the House Appropriations Committee holds the second-most powerful post in the chamber. It even could put her in prime position to succeed House Speaker Mike Busch whenever the Annapolis lawmaker decides to give up his gavel.

McIntosh is no overnight success.

She’s put in 23 long years as a savvy and loyal worker in the legislative vineyards. It paid off when she was named chair of the House Environmental Matters Committee in 2003.

The Baltimore City delegate worked diligently to produce bills that advanced sensible environmental goals without going overboard.  She succeeded in maintaining good relations with both environmentalists and the business community.

Quiet Negotiator

McIntosh always has been a skilled political operative, someone you’d want running your campaign or developing a detailed get-out-the-vote drive.

She doesn’t crave the spotlight. Rather, she prefers quietly working to bring opposing groups together to find common ground.

She’s also highly regarded by her colleagues. She can be firm but always even-tempered. She likes to enliven conversations with a dash of humor.

Her promotion is well deserved, especially after serving as chair of the Environmental Matters Committee for 11 years. She’s also served on three other panels and dozens of joint committees and task forces.

She doesn’t come to Appropriations as a novice. McIntosh spent six years previously on this key budget panel. She got to study under one of the keenest minds to chair Appropriations – the late Del. Howard “Pete” Rawlings.

Democratic Mishaps

Maggie McIntosh was thrust into this new role through a series of mishaps by the Democratic Party.

Redistricting dramatically changed many local political maps and persuaded a slew of House Democratic veterans to retire.

Then Democratic lethargy on Nov. 4 led to the defeat of many well-established members of House leadership, including Appropriations chair Norman Conway of Salisbury.

Del. Norm Conway

Del. Norm Conway

Add to that a number of delegates who decided to run for the state Senate and you have a recipe for a massive loss of leadership on Appropriations.

Eleven of the committee members elected in 2010 aren’t coming back. Most of the panel’s moderate Democrats are among the missing.

No wonder Speaker Busch decided to move McIntosh over to run his most important committee.

Big Cuts Coming

She assumes command at a very difficult time for Democrats, especially those who must grapple with the state’s perplexing budget deficit.

New Republican Gov. Larry Hogan Jr. focused his campaign on sharply cutting state spending, Democratic lawmakers will be in a defensive mode when dealing with budget matters.

Given the large budget hole facing Hogan, he will cut existing spending levels by a substantial amount.

While McIntosh and other progressive Democrats will want to reverse Hogan’s cuts, the state constitution doesn’t allow it: The General Assembly can only reduce the governor’s spending plan. It has no power to increase appropriations – unless it raises taxes.

That last option isn’t going to happen this year. Maryland voters sent a clear message they’ve had it with the dozens of tax increases during the eight-year reign of Gov. Martin O’Malley.

In a Tough Spot

So McIntosh will be in a bind come January.

As a committed urban liberal, she understands the unmet needs in her community. Yet she also recognizes the weak hand she has been dealt. Hogan holds the budget high cards.

What McIntosh can do is quietly negotiate compromises with the new governor’s budget team to soften some of Hogan’s budget blows.

Meanwhile, her committee will be finding its own share of excess spending in the $16 billion general fund budget. Some of those cuts might give her leverage for striking a budget deal with the Republican chief executive.

It’s going to be a tricky few years for McIntosh. She’s proved that she is good when placed in delicate situations. Much will be riding on her succeeding in her new job.

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Barry Rascovar’s political blog is www.politicalmaryland.com. He can be reached at brascovar@hotmail.com.

 

O’Malley Pitches, Hogan Receives, Gansler Swings

By Barry Rascovar

Nov. 19, 2014 — My, how the wheel turns — for Gov. Martin O’Malley, Gov.-elect Larry Hogan Jr. and outgoing Attorney General Doug Gansler.

O’Malley Pitches

The lame-duck governor is in fund-raising mode. He’s all but officially running for president (despite guffaws from the home folks), which takes lots of moola. So it was off to New York to impress prospective donors.

Gov. Martin O'Malley

Gov. Martin O’Malley

Thursday, O’Malley hosts a songfest with musician Steven Stills. It was originally scheduled to be held in a lounge at the Hippodrome Theatre in Baltimore, with tickets ranging up to $10,000 for the O Say Can You See Committee, the front group for O’Malley’s presidential ambitions.

It also was also conceived as a post-election celebration after the sweeping gubernatorial win of Lt. Gov. Anthony Brown.

Oops.

A funny thing happened on the  way to Victory Lane — Brown got clobbered, Republicans in Maryland staged a remarkable recovery and O’Malley drew voters’ ire for an endless string of tax increases and outsized spending.

The Stills event now has been moved to a large tent at the home of major O’Malley supporter Martin Knott.

One longtime Democratic donor was inundated with solicitations. Would he buy a $5,000 ticket? As the event drew closer, he was asked, how about a $1,000 ticket? Days later, the request came down to a $500 ticket. Finally, he was told, “Oh, what the heck. Just come. We’ll let you in.”

Roughly 100 supporters are expected to attend.

The ever-energetic O’Malley also has a fund-raiser planned Friday night at the home of federal lobbyist Terry Lierman. He will be celebrating his daughter’s election to the Maryland House of Delegates from Baltimore as well as toasting O’Malley.

Meanwhile, O’Malley is bolstering his liberal environmental record by cracking down, through tough regulations, on use of phosphorus fertilizers, especially on poultry farms. The cost could be devastating for small farmers, but O’Malley is thinking about his own political future, not the future of Eastern Shore farm families.

He’s also issuing frequent press releases from the governor’s office on such issues as climate change and the Keystone heavy-oil pipeline, siding with the environmentalists he wants to romance nationally.

As for governing Maryland, that’s less of a priority. O’Malley’s thoughts are turning to making national news all the time.

Hogan Receives

While O’Malley is struggling to draw fund-raising crowds, Governor-elect Hogan has no such problem. He held a small soiree for VIP supporters and raised $250,000 for the state GOP. He’s now a very popular guy. He’ll have no trouble wiping out the $500,000 loan he made to his own campaign.

That won’t be the case for the guy Hogan defeated, Anthony Brown. He borrowed $500,000 from a local labor union and failed to raise enough money to pay back the loan on time. Even with this last-minute loan, Brown ran short of funds and failed to keep pounding away with TV commercials in the final days of the campaign.

Now he may be pounding hard to find donors willing to help a defeated candidate pay off this giant IOU before 2018. If he doesn’t, Brown will have to repay the loan himself.

Gansler Swings

Attorney General Gansler didn’t expect to lose the gubernatorial primary to Brown, but he ran into a united front from Democratic Party big shots determined to elevate Brown. He also discovered that a third candidate, Heather Mizeur, chipped away at his liberal support.

Gansler didn’t have a backup plan. For him, failure wasn’t an option — but it happened nonetheless.

Attorney General Doug Gansler

Attorney General Doug Gansler

Faced with having to find a job as a lawyer after 16 years in public service, Gansler was flooded with enticing offers. He chose a relatively new firm that quickly has gained status in legal circles for its work helping businesses, BuckleySandler. It’s a Washington firm with offices in the Big Apple, San Francisco, Chicago and (how nice) London.

Don’t expect Gansler to disappear from the Maryland political scene, though. He’s going to wind up on a slew of non-profit boards and is continuing to work vigorously to grow his inner-city lacrosse league in Baltimore.

With no obvious front-runner among Democrats to take on Hogan in four years, Gansler may make another stab. Once you’ve been bitten by the political bug, it’s hard to let go.

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For more columns, click on www.politicalmaryland.com

 

 

MD’s New Normal

By Barry Rascovar

Nov. 17, 2014–The outlook for the Maryland state government Larry Hogan Jr. starts running in January is grim: A sea of red ink far into the future.

Forget about major tax cuts or other campaign promises. That was a hope more than a firm commitment. Hogan said as much to voters. His first priority then and now: getting Maryland’s financial house in order.

Governor-elect Larry Hogan Jr.

Governor-elect Larry Hogan Jr.

How bad is it?

Spending is running roughly $400 million ahead of revenues this fiscal year – and the same gap is projected for next year and the following 12 months.

Maryland’s estimated structural deficit during that time is nearly $1.2 billion.

Over the next six years, the total structural deficit is projected at close to $4.3 billion.

Whiz Kid

No wonder Hogan announced that fiscal whiz Bobby Neall would be plotting a budget triage plan by year’s end. It will be a Herculean task.

Neall has the credentials.

He sensibly downsized Anne Arundel County government as county executive. He was a strong advocate of cautious, common sense spending as a leader of the House and Senate budget committees. He’s been a voice in the wilderness on the Spending Affordability Committee crying out for far-reaching fiscal reforms – usually rejected by legislative liberals and the “progressive” O’Malley-Brown administration.

Bobby Neall

Fiscal Whiz Bobby Neall

Neall correctly pointed out last week that one of the main trouble spots is the soaring cost of debt payments. Too many state bonds were issued in recent years. The proverbial chickens are coming home to roost.

Unless something is changed, debt service will triple from two years ago — to $268 million. By 2019-2020, debt service will hit $559 million.

Even worse, there’s only one realistic way to curb that rising expense — a step Hogan definitely won’t take: Raise the state property tax rate.

Difficult Cuts

Other big spending-growth areas also will be difficult, if not impossible, to cut.

Education aid to the counties is set to rise by $304 million next year, higher education by $225 million and public safety by $175 million. Most of this is due to mandated increases.

Unexpected expenses related to the expansion of Medical Assistance under Obamacare adds a whopping $410 million next year as well.

The overall problem is easy to identify.

Too much spending by liberal Gov. Martin O’Malley; a weakened state economy that isn’t recovering as expected.

Not enough coming in; too much going out.

Welcome to the New Normal.

False Assumptions

O’Malley and other liberals always assumed that Maryland would rebound strongly from the Great Recession. It never happened.

Job creation has remained uneven. It’s been flat for the past six months. Republicans in Washington have stalled growth in the federal bureaucracy that employs so many Maryland residents. Contractors in Maryland who are dependent on the federal government are seeing a definite slowdown that will continue with the GOP taking full control of Congress.

Adapting to a smaller federal government could be painful for Maryland. Yet that is part of today’s reality.

Budget balancing

The New Normal means Maryland government will have to shrink, too. It means less money flowing back to local governments as well.

Capital spending will be affected. In the past, a small state real estate tax was sufficient to pay debt service on general obligation bonds. But property values took a sharp plunge in 2008 and have yet to recover fully. That trend may persist for the rest of the decade.

This year, O’Malley for the first time dipped into the state’s general funds to pay for debt service. With housing prices stalled, Hogan is facing far larger debt service payments coming from the general fund starting next year.

Diverting Bond Proceeds

The situation was made worse by O’Malley’s decision to pay some on-going budget expenses with proceeds from state bonds. This diversion has taken nearly $2.5 billion out of the state’s construction program and has increased debt service markedly.

It’s an ugly aspect of the New Normal.

On the campaign trail, Hogan made cutting state spending sound easy. It’s not.

For starters, 58 percent of the growth in Maryland’s budget next year is required by law or by legislative mandates enacted in 2014. This is untouchable without assent from the liberal General Assembly.

Local aid will be hard to cut, too. Eight-six percent of that money goes to schools. Touching this ever-growing pot could be next to impossible given the popularity of education among voters.

Why not slash the bureaucracy? Amazingly, the size of the state’s work force is virtually the same as it was in 2002. There might not be as much “fat” on the bone as Hogan indicated during the campaign.

Unpleasant Options

Hogan may have to settle for incremental reductions throughout government. He may have to take some distasteful steps, too, perhaps nudging up the state property tax slightly. He’ll almost surely have to lower aid to the counties – another unpleasant task that won’t win him friends in counties that supported him.

He won’t win fans by shrinking the school construction program, either. But it has to be done to restore a sense of fiscal equilibrium.

What a mess O’Malley is leaving behind. He let spending spin out of control. He ignored clear signs that growth in state revenue was slowing and that federal hiring and contracting were shrinking. These are long-term trends.

Budget issues will dominate Hogan’s first four months in the State House. He will need cooperation from Democratic legislators to get Maryland out of this fiscal bind.

Gridlock is not an option.

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Barry Rascovar’s blog is www.politicalmaryland.com. He can be reached at brascovar@hotmail.com

Missing: Democratic Moderates in MD

By Barry Rascovar

Nov. 14, 2014 — Hardly noticed in the Nov. 4 election that saw Anthony Brown wiped out in an embarrassing avalanche of rejection was the obliteration of the Democratic Party’s moderate-conservative wing in Annapolis.

Missing Democratic Moderate: Sen. Roy Dyson

Defeated Sen. Roy Dyson

Gone is Southern Maryland Sen. Roy Dyson. Gone is half-century veteran Baltimore County Sen. Norman Stone (retirement). Gone is a Howard County fixture, Sen. Jim Robey (retirement).

Also out of luck, conservative Western Maryland Del. Kevin Kelly, moderate Western Maryland Del. John Donoghue, conservative Baltimore County Delegates Mike Weir, Jimmy Malone (retirement), Steve DeBoy (retirement) and Sonny Minnick (retirement), moderate-conservative Del. Emmett Burns of Baltimore County (retirement), Eastern Shore Committee Chairman Del. Norm Conway, Cecil County Del. David Randolph, Southern Maryland Delegates John Bohanan and Johnny Wood (retirement), Harford County Del. Mary-Dulany James, and Frederick County Del. Galen Clagett (retirement).

The Democratic Party’s fulcrum in the State House now is dangerously weighted to the strident left. The party’s center-right legislators have shrunk to a handful.

It’s tough even coming up with who you’d place in that category in the House of Delegates once you get beyond House Speaker Mike Busch.  You can count less than ten moderates still left in the Senate, including President Mike Miller — Charles County’s Mac Middleton, Frederick’s Ron Young, Anne Arundel’s John Astle and Ed DeGrange, Ocean City’s Jim Mathias, Baltimore County’s Jim Brochin and Kathy Klausmeier.

Miller’s Leverage

Miller’s problem is much less severe than Busch’s.

The smaller Senate chamber gives the Senate president extensive leverage to impose moderation on Democrats. Senators there know that if you’re picked for a leadership slot, you’d better follow Miller’s cautious lead.

But in the 141-member House, riding herd on an overwhelmingly liberal Democratic Caucus could prove Mission Impossible.

Simply finding a leadership group willing to move toward the middle might be a challenge for Busch.

Even more daunting may be convincing leftist Democrats to cooperate with the new conservative governor, Republican Larry Hogan Jr.

Larry Hogan Jr.

Governor-elect Larry Hogan Jr.

Already some of the left-wingers are talking ominously about fighting a partisan war rather than smoking a peace pipe with Hogan.

Busch and Miller don’t want a repeat of the dreadful gridlock and bitterness of the Ehrlich years. Neither does Hogan, who lived through that frustrating era as the governor’s appointments secretary.

But what will the two sides compromise on? And will their disagreements wind up poisoning the well of cooperation?

This will be the focus of attention as Hogan starts putting his administration together and formulates a brief agenda for the legislative session that starts in just two months.

Room for Agreement

Busch and Miller signaled in the last General Assembly session their agreement with Hogan that the O’Malley administration had neglected business development. Maryland must become more accommodating to companies. That’s a clear area where partial agreement is possible.

Ironically, Republican gains in the General Assembly could make it more difficult for Hogan to govern effectively.

The dearth of moderate-conservative Democrats in the State House robs him of potential allies. He still needs lots of Democratic votes to pass his agenda. Dealing with a ultra-liberal Democratic corps of lawmakers could prove perilous. It could force the governor-elect to take a go-slow approach in his reform plans.

Many of the newly elected Democrats may choose to join Miller and Busch in playing centrist politics with Hogan. After all, it is the best way to get things done and avoid the thing voters most detest — gridlock.

Yet without a counter-balancing Democratic center-right wing, the party caucuses in Annapolis could keep moving farther and farther to the left, ceding the center that voters admire to Hogan.

That would be foolish politics — but it could happen.

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