Horseshoe Arrives in Baltimore

By Barry Rascovar

Sept. 2, 2014–Baltimore’s first and only casino is open — a decade later than anticipated by city officials.

Horseshoe Baltimore, run by Caesar’s Entertainment, is a bright, cheery and decidedly friendly facility a short walk from Ravens stadium. It’s got a giant parking structure that allows direct access to the casino without venturing on to city streets.

Horseshoe Baltimore

Horseshoe Baltimore

With 2,500 brand-new slot machines, 122 gaming tables and 25 poker tables, the $442-million Horseshoe Baltimore fulfills the wishes of city leaders, though it should have happened years ago.

Former Mayor Kurt Schmoke had a deal with then-Gov. Parris Glendening in the late 1990s to allow a Baltimore casino for a struggling urban city in need of an economic boost.

But Glendening reneged and went on a moralistic anti-slots campaign. It may have been good politics for the governor but Schmoke regarded it as a stab in the back. Baltimore desperately needed the revenue and stimulus.

It still does.

New City Revenue

Granted, Horseshoe isn’t the answer to Baltimore’s woes. But proceeds from the casino will help Mayor Stephanie Rawlings-Blake slowly lower sky-high property taxes, make infrastructure improvements and eventually pour millions it now doesn’t have into community upgrades.

The current squabble over using some of the casino revenue to re-locate a stream pipeline serving downtown Baltimore businesses deflects from the fact that Baltimore should receive more than $10 million in the current fiscal year from Horseshoe operations, $15.5 million or more next year and $22.5 million in fiscal 2017.

That is a gift sorely needed by City Hall to help accelerate the downtown-living renaissance, deal with a serious crime problem and finally start to attack a glut of vacant housing.

For Baltimore, Horseshoe’s arrival is a ringer, a home run, a winner.

Horseshoe Baltimore casino

With 1,700 jobs — many filled by tax-paying city residents — Horseshoe is a new economic engine. Its location near the baseball and football stadiums means huge before-and-after crowds on game days and added revenue both for the casino and for Baltimore.

Under terms of the state casino law, Baltimore will split with Prince George’s and Anne Arundel counties 5.5 percent of the winning proceeds from their three gambling facilities — Horseshoe, Maryland Live! at Arundel Mills and MGM National Harbor now under construction.

This local impact revenue is a godsend for Baltimore.

It is a new, ongoing money source that will allow City Hall to undertake projects on the back burner for years (or decades) and to balance the annual budget without draconian cuts.

It’s no panacea, but it gives city officials breathing room.

Late Entry

Baltimore is late to the casino party, but probably not too late.

Gambling — legal or illegal — always has been popular in Charm City. A single casino will probably do well for years to come, even with a glut of gambling sites in New Jersey and Pennsylvania.

Horseshoe also provides a much-needed boost for local tourism and for Baltimore’s downtown hotels. It gives visitors another reason to extend their stay or to come to Baltimore in the first place. It’s a decided plus for drawing conventions, too.

Part of Horseshoe’s success will come at the expense of David Cordish’s highly profitable Maryland Live! casino.  But Horseshoe will draw a more urban clientele versus the suburbanites flocking to Maryland Live!

Maryland Live

Both casinos, though, will feel the squeeze when MGM National Harbor opens in a couple of years. It will translate into smaller profit margins for both, but  National Harbor’s main draw will be for gambling patrons south of the Potomac River in Virginia.

Six casinos in Maryland seems about the right number — three in rural locations and three in the Baltimore-Washington megalopolis.

Casinos are becoming established, middle-class entertainment options that offer substantial benefits for state and local governments for their relatively stable revenue — as long as the gambling is tightly regulated and the sites are limited in number.

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Needed in MD: Truth-in-Campaigning

By Barry Rascovar

Aug. 25, 2014–Do Maryland’s gubernatorial candidates in the November election take voters for fools?

Do they really think they can con the electorate with promises of vast spending programs (Democrat Anthony Brown) eclipsing $1 billion a year or sweeping tax cuts and givebacks (Republican Larry Hogan Jr.) also topping ten figures?

Larry Hogan Jr. (left) and Anthony Brown

Larry Hogan Jr. (left) and Anthony Brown

What’s lacking from each nominee is truth-in-campaigning.

The only thing in doubt is which nominee is being more deceptive with voters.

At the moment, Hogan has the lead, though Brown isn’t far behind.

The Republican nominee for governor pledged at an event at Charlestown Retirement Community in Catonsville to drop all state income taxes on pensions. (He already had said he’d do the same for police pensions and for veterans.)

Cheers from the seniors.

How’s he going to pay for this?

Silence.

Transportation Promises

A few days earlier, Hogan pledged to county officials meeting in Ocean City he would immediately restore $350 million in transportation funding to subdivisions once in office.

Cheers.

Which transportation programs will be stripped of $350 million to make that happen?

Silence.

Brown, of course, felt he had to match – or come close to – Hogan’s outrageousness at the Ocean City meeting. So he told county officials he’d also restore the lost Highway User Revenue – but it would occur gradually.

No Funding Plan

Does Brown have a plan for stripping state transportation programs of $350 million to pay for this fund transfer or for hiking driving fees?

Silence.

Irresponsible might be the kindest way to describe the performance of these two politicians. They keep promising the impossible, as though voters take what they say as gospel.

Any citizen who believes promises of massive tax cuts or giant new spending is living in a fool’s paradise.

Government Spending

It’s not going to happen.

Seniors already receive big tax breaks from Maryland: Their Social Security checks are free of state taxation (but not federal tax).

They also get an extra $1,000 personal exemption on their state income tax return each year.

And if their Social Security amounts to less than $27,800 a year, their other pension income is exempt up to that level.

Lots of bills have been proposed by Republicans and Democrats in recent years to expand these retirement exemptions, but none has gotten out of committee.

Why? The enormous cost involved.

Pulling It Off

With the state of Maryland facing a minimum of $400 million in revenue shortfalls, how is Hogan going to pull off this prestidigitation?

Well, he’ll cut the shreds out of state spending like any good Republican.

But wait a minute – isn’t the vast bulk of state expenses mandated by statute?

Yes, indeed.

So slashing state taxes by a billion or so isn’t realistic – certainly not for a Republican governor in a state where liberal Democrats have a stranglehold on the Maryland legislature.

Tax Cuts

Nor is Brown’s pledge of a countless new program spending any more realistic.

The lieutenant governor, for instance, claims he can pay for $108 million in affordable housing appropriations through budget cuts suggested by state employees.

Is he serious? A hundred million in savings via the suggestion box?

If he’s lucky, these ideas might lead to savings of one-one-hundredth of that amount. Or maybe an optimist might aim for one-tenth of Brown’s wild-guess of what employee-prompted savings would bring in.

Wonderland

It’s all an adventure in fantasy budgeting.

Let’s call it, “Larry and Anthony in Wonderland.”

If a conservative Republican governor like Bob Ehrlich couldn’t rein in state spending by billions of dollars, how is a more moderate Larry Hogan Jr. going to pull that off in a solidly Democratic state?

Bob Ehrlich (left) and Hogan

Bob Ehrlich (left) and Hogan

And if a liberal Democratic governor like Martin O’Malley couldn’t find the means to launch massive new spending initiatives – despite raising taxes over 40 times – how is Anthony Brown going to carry out a far more ambitious agenda?

Neither candidate is leveling with the Maryland public.

The state’s economic recovery remains uneven. State finances are falling short of projections due to federal spending hold-downs and weak job growth.

Unrealistic?

Both Hogan and Brown are setting up supporters for bitter disappointment. Neither candidate can deliver on their sweeping promises.

At best, the November winner will muddle along pretty much the way Ehrlich and O’Malley did in far more difficult economic times.

Ehrlich moderated state spending growth during his term and left a fat surplus,  but he failed to achieve permanent government downsizing.

O’Malley will leave office in January having raised lots of taxes and raided a variety of funding sources to keep social programs intact during the worst recession in 80 years. He failed, though, to dramatically expand government social services affecting working families.

Brown (left) and Martin O'Malley

Brown (left) and Martin O’Malley

Neither governor proved a miracle worker.

Brown and Hogan aren’t political magicians, either.

It’s time for them to start speaking the truth to Maryland’s electorate.

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MD GOP Nightmare

By Barry Rascovar

August 18, 2014 — Just what the Maryland Republican Party didn’t need — a theocratic, paleo-conservative candidate who has renounced the General Assembly as ungodly and is deeply involved in a group advocating a white, Christian nation of the South.

Worst of all for the Maryland GOP, this 61-year-old, Bible-spouting secessionist with a bizarre view of government is the favorite to win the November election in Anne Arundel County’s Broadneck Peninsula-Severna Park-Arnold councilmanic district.

His name is Michael Peroutka, a smooth-talking, debt-collector attorney. He ran for president of the United States in 2004 on the Constitution Party ballot line. He got 150,000 votes out of 122,000,000 cast (0.1 percent).

Constitution Party logo

Yet in June, he shocked the GOP establishment by winning Anne Arundel’s District 5 council primary by a razor-thin 38 votes.

The Republican nominee for governor, Larry Hogan Jr., disassociated himself from Peroutka. So did the GOP’s nominee for county executive, Del. Steve Schuh. Annapolis Del. Herb McMillan isn’t supporting Peroutka, either, because his views “are the exact opposite of the Republican Party.”

Like the slick lawyer he is, Peroutka is trying to sweet-talk District 5 voters into believing he’s an ordinary conservative who rails against the misnamed “rain tax,” abhors all taxes and demands drastically limited government.

It’s a con.

Peroutka didn’t even belong to the Republican Party until this year.

Peroutka button 2004

He and a Christian Reconstructionist cohort, David Whitney, tried to hijack the District 5 election by seeking to win both the Republican and Democratic primaries.

That would have guaranteed a seat on the County Council for this oddball alliance, which centers around Peroutka’s extreme Christian Institute on the Constitution, which he runs out of his law office in a strip shopping center along Ritchie Highway.

Peroutka is out to re-create the Anne Arundel Republican Party, and eventually the Maryland GOP, in his image. His pseudo-conservative rhetoric masks a deep hatred for the Republican Party of Lincoln, Ronald Reagan and George W. Bush.

Here’s what he said last October about the GOP:

“Anyone, including those who identify with the ‘Tea Party,’ who loves America and desires real reform, would do well to disengage themselves from the Republican Party and their brand of worthless, Godless, unprincipled conservatism.”

Fifth-Column Action

Peroutka isn’t even following his own advice. Instead, he’s infiltrated the “Godless, unprincipled” GOP.

This fifth-column action is part of his campaign to turn the Republican Party into a Christian party that follows Peroutka’s “biblical view of law and government.”

To him, “the function of civil government is to obey God and to enforce God’s law — PERIOD.”

Any other government actions — what he calls “pretended laws” —  are heretical and should be ignored or resisted. No wonder he spoke at a radical Second American Revolution rally last November in Washington. He’s out to dismantle the entire American system of government.

Peroutka at Second American Revolution rally

Peroutka at Second American Revolution rally

How wacky is Peroutka?

He said last year the Maryland General Assemby is “no longer a valid legislative body” and its actions should be disregarded because they violate God’s law.

Of course, Peroutka is the one who decides what’s legitimate and what is “Godless.”

According to him, “It is not the role of civil government to house, feed, clothe, educate or give health care to . . . ANYBODY.” Government, Peroutka says, has no authority to take any role in education or alleviating poverty. Government must enforce only the word of God spelled out in the Bible.

Misleading Appearance

Peroutka doesn’t come across as a madman. He’s got a distinguished mane of white hair, a grandfatherly look and a soothing voice. How could someone so sincere and seemingly erudite promote such nonsense?

Peroutka is a board member of the League of the South, an Alabama group that openly advocates Southern secession and establishment of a white, Christian Reconstructionist society.

According to its website, the League of the South is “a Southern Nationalist organization whose ultimate goal is a free and independent Southern republic.”

At this group’s meeting last fall, Peroutka called “Dixie” the country’s national anthem.

Should Michael Peroutka win in November, he’s sure to use County Council sessions as a platform for bringing his theocratic notions of government into the proceedings. It will be his launching pad for an internal Republican Party revolution.

Just what the Maryland GOP didn’t need.

It already is struggling for relevancy in the state’s largest jurisdictions. Peroutka’s ravings as an elected Republican leader could be the nail in the coffin for the Republican Party’s hopes of winning over independents and conservative-leaning Democrats.

Can He Lose?

Stopping him will be difficult, but not impossible.

District 5 hasn’t elected a Democratic councilman in 24 years. It’s a wealthy, conservative part of the county stretching from Severna Park to the Broadneck Peninsula that ends at the Chesapeake Bay Bridge.

Yet there’s hope in the voter registration numbers: 25,800 Republicans live in the district against 21,100 Democrats and 11,600 independents. Given the GOP leadership defections already announced, Peroutka’s election isn’t a sure thing.

He’s got millions of his own money he can funnel into his campaign, though.

Democratic Foe

He’s also running against a political youngster, Patrick Armstrong, a 31-year-old retail store manager who entered the Democratic primary to prevent Peroutka’s theocratic collaborator, David Whitney, from furtively gaining the nomination.

Armstrong did better than okay in the primary. He trounced Whitney, gaining nearly two-thirds of the Democratic votes in June.

He’s also not, as he put it, “a liberal boogie man. I’m a reasonable person” who grew up in District 5, graduated from Anne Arundel Community College in the district, and lives with his parents in Cape St. Claire.

He’s smart enough to run in this district with a pledge to never vote for a new tax or fee increase but instead “come up with creative ways to find solutions to our problems.”

Being Responsible

Yet he’s also wise enough to recognize that opposing the “rain tax” isn’t going to win over district voters who care deeply about the well-being of the Chesapeake Bay and its tributaries, including the Magothy and Severn rivers that define District 5’s boundaries.

He calls the stormwater-runoff fee “the responsible thing to do.”

With strong backing from state Democratic leaders, Armstrong might give Peroutka all he can handle. But he’s got to get the word out about Peroutka’s dangerous views of government and the U.S. Constitution.

After all, Peroutka is advocating the dismemberment of the United States and turning what’s left into a society ruled by Biblical law.

The problem is that even if Peroutka’s Republican charade is unmasked in time and he loses in November, he will remain the Maryland GOP’s nightmare: In June, he also won for himself a seat on the Anne Arundel Republican Central Committee.

That gives him an opportunity to use the county’s GOP Central Committee as a launching pad for converting Republican governing bodies into advocates for Christian government.

As a central committee member, Peroutka also will attend statewide GOP meetings, where he can poison the well with radical resolutions and speeches meant to Christianize the state party. He’s leading God’s crusade against the Republican infidels.

Ignoring Godless Laws

On top of that, another Peroutka theocratic soulmate, Joe Delimater, was the lone GOP candidate to file for county sheriff.

Delimater will be on the November ballot against the incumbent sheriff, Democrat Ron Bateman, hoping to win the right to wreak havoc on Anne Arundel’s court and criminal justice system by ignoring laws and government orders he believes are Godless.

What a mess for the GOP.

Peroutka & Co. pose a serious challenge to the viability and future of the Maryland Republican Party.

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Sharfstein’s Scarlet Letter

By Barry Rascovar

August 11, 2014 — For a 44-year-old, Josh Sharfstein has accomplished much: Baltimore City health commissioner, Maryland health secretary and chief deputy commissioner at the Federal Drug Administration.

Josh Sharfstein

MD Health Chief Joshua Sharfstein

Yet when Sharfstein leaves his state post at year’s end, his many achievements will be eclipsed by one giant failure: Maryland’s terribly botched health insurance exchange rollout.

This glitch-plagued rollout — the costliest debacle in Maryland state history — was a monumental disaster that should have been foreseen.

There were plenty of warning signs in the year leading up to the Oct. 1, 2013 enrollment opening. The exchange’s computer software immediately crashed — and remained dysfunctional for months.

Standing Tall

To his credit, Sharfstein shouldered the public blame for this immense fiasco. The other chief culprits, Gov. Martin O’Malley and Lt. Gov. Anthony Brown, deflected criticism to protect their political futures.

Even worse, they connived with legislative leaders to cover up the true story by avoiding an in-depth accounting of what went wrong until mid-2015. This intentional lack of transparency and accountability will remain an indelible blot on the O’Malley-Brown administration. It will haunt both of them in the years ahead.

Sharfstein took the fall at legislative hearings. He was the only one connected with this ill-fated project to apologize and take responsibility for a truly screwed-up rollout.

It is ironic this happened on Sharfstein’s watch because he’s known as a hands-on micro-manager who drives underlings crazy with his detail-oriented obsessions.

Loss of Control

This time, though, Sharfstein ran afoul of a bone-headed decision by O’Malley and Brown to set up the new Maryland health exchange as a separate, independent agency — instead of wrapping it neatly into Sharfstein’s health department.

That twist meant huge additional expenses — a separate set of backroom jobs had to be created and filled that could easily have been tacked onto existing services within the health department.

The biggest problem in giving the exchange its independence was loss of control.

MD Healthcare Connection

Sharfstein never gained direct authority over the health exchange because O’Malley set up the new agency outside the health secretary’s purview.

Yes, he co-chaired the oversight board with Brown, but that group served as a rubber-stamp for whatever Rebecca Pearce, the insurance executive hired to run the exchange, suggested. The panel didn’t challenge her assessments — a serious mistake.

Even worse, there were no traditional checks and balances to make sure the pivotal choice of technology contractors didn’t veer off-course (sadly, it did).

Nor were the health department’s seasoned computer experts in position to monitor the exchange’s faltering software development.

The department was left on the outside with no authority to intercede or blow the whistle on the prime contractor’s inept performance and failure to meet deadlines.

Righting the Ship

Sharfstein, a pediatrician whose entire career has been in government and public health, was ill-prepared to act as overseer of a highly complex information-technology project.

But as an experienced manager, and with a wealth of IT expertise available in his department, he probably could have avoided the computer crash that proved so costly.

To his credit, Sharfstein accepted responsibility for the disaster. He worked tirelessly to find a work-around and a fix (the first succeeded, the second didn’t). Now the old exchange system is being junked and a new one that is functioning well in Connecticut is being superimposed — at an enormous cost.

The health secretary will stay on to see if this latest stab at building a health insurance exchange works. He wants to walk away without leaving a health exchange headache on his successor’s desk.

That determination says a lot about Sharfstein’s commitment to righting the ship.

He can take pride in the fact that despite horrendous obstacles, over 400,000 people (mostly Medicaid recipients) signed up for health insurance through the exchange. If the Connecticut software system works in Maryland, that number should grow in Year Two.

Moving to Hopkins

We haven’t heard the last of Josh Sharfstein.

He’ll take up residency at Johns’ Hopkins’ Bloomberg School of Public Health as an associate dean with a full workload, but the urge to serve the public could lure him back, especially during a Hillary Clinton presidency.

If that’s the case, he’ll still have to explain what went wrong that led to Maryland’s costly health exchange snafu. It’s a scarlet letter he will wear, whether deserved or not.

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Uber and Out in MD

By Barry Rascovar

August 14, 2014 — Maryland’s Public Service Commission struck a blow for the rule of law this week when it declared the popular app-based, ride-sharing company Uber Technologies isn’t exempt from regulations other companies must follow if they want to transport paying customers.

It is “clear and unambiguous” that Uber is a passenger-carrying, for-profit, public transportation service, according to the PSC.

Uber logo

As such, Uber is not free to make its own rules and ignore Maryland law.

Just because Uber is using innovative Internet technologies to reinvent the taxicab industry doesn’t mean it can arrogantly write its own dictum and thumb its nose at statutes that govern the way other common carriers operate.

Companies like Uber seem to believe that because they are Internet-based, they can run their kingdoms according to their edicts and decrees.

Isn’t the Internet all about unfettered communication and freedom?

Brave, New World

Doesn’t a business based on Internet technologies have the right to do what it pleases, regardless of the consequences or existing statutes?

To follow that logic is to abandon all governance in favor of a libertarian society stripped of legal restraints.

Thankfully, the PSC wasn’t buying Uber’s scary vision of a brave, new fee-for-transport world. If we live in a country ruled by laws, then the laws must be applied across the board.

There’s no doubt Uber offers customers a good deal.

Uber smart phone app

Uber Smart Phone App

But huge dangers lurk as well.

Because Uber doesn’t want to play by the PSC’s rules, it sets its own customer charges. Unlike other cab companies, it applies higher “surge pricing” during busy times. It hasn’t bothered to apply for a common carrier license from the PSC, either.

Uber’s drivers don’t have Maryland passenger-for-hire licenses, which means its drivers haven’t undergone state criminal background checks or driver record checks.

Uber drivers don’t have passenger-for-hire vehicle insurance: If there’s an accident, the driver’s personal auto insurance won’t pay the passenger’s medical bills, or for damages.

No Safety Net?

(Uber claims on its website it has a “commercial insurance policy for rideshare drivers.” But it also claims “all UberBLACK, UberSUV, or uberTAXI rides are provided by commercially licensed and insured partners and drivers. Those transportation providers are covered by commercial insurance policies, in accordance with local and state requirements” — a statement that isn’t true in Maryland.)

Without a government-imposed safety net, passengers take their lives in their hands when they travel with Uber.

“Technology is not a substitute for regulatory oversight,” says Paula Carmody, the Maryland People’s Council, who usually is critical of PSC actions. This time, the official whose job is to look out for consumers applauded the regulatory commissioners. They “got it right.”

Paula Carmody, People's Counsel

Paula Carmody, People’s Counsel

The commissioners also recognized that the Internet riding-sharing revolution is transforming the passenger-for-hire industry. They directed their staff to come up with new regulations within 90 days reflecting evolutionary changes in transport services.

The staff will propose ways to make sure Uber-type companies and drivers have sufficient insurance; that their vehicles are safe and inspected; that drivers are qualified, and that new technologies affecting rates and pick-ups can be applied to all of the state’s taxi-style companies.

Uber, though, continues to act like a spoiled child caught trying to empty the cookie jar.

PSC logo

It railed against the “PSC’s attempt to take choice and competition away from Maryland residents.”

Uber said it will “continue to defend the rights of riders and drivers to have access to the safest, most reliable transportation alternatives on the road.”

“Safest”? Hardly.

The notion that Uber cannot compete if it plays by the state’s rules is buncombe.

What Uber really wants is a built-in advantage over traditional cab and sedan companies. That can only be accomplished by operating outside Maryland law that governs the cab industry.

Level Playing Field

Uber has opened the door for other companies to benefit from technology innovations it has brought to passenger-for-hire car service. That’s what the PSC wants to see in its new regulations.

In other states, Uber is getting its way. It can continue its outlaw-status with minimal state interference.

Not in Maryland, where Uber is being asked to recognize the importance of regulatory laws designed to ensure public safety.

That’s what government is supposed to do — even in an anarchic Internet Age.

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No MD Pension Panic This Year

By Barry Rascovar

August 4, 2014–Good news from the Maryland state retirement agency: investment earnings over the past year ending June 30 rose a strong 14.37 percent.

Maryland retirement agency logo

Don’t get too excited: The agency is still digging out of a deep financial hole caused by the Great Recession, poor decisions by former governors and legislators and poor advice from the agency’s consultant.

The retirement fund’s health, though, is showing solid improvement.

Positive Signs

Since the depths of the Great Recession, the value of its assets have risen over one-third, now topping $45.4 billion — a boost of over $5 billion in the past year alone.

Equally important, reforms to the system have kicked in: Increased employee payments, tighter eligibility rules, contributions from counties for teacher pensions and phasing out the ill-conceived Corridor Funding Methodology that let politicians reduce state payments while ignoring the retirement fund’s deterioration.

Combined, all this has kept the retirement fund on track to return to 80 percent of full funding by 2025 as planned. The corner may have been turned.

Index Fund Debate

Critics, especially conservatives and Republicans, continue to complain about fees paid to money managers — $273.8 million in fiscal year 2013 — rather than dumping all the state’s stock and bond investments into passive, low-fee index funds.

But the state agency recouped its payments to professional financial advisers many times over during the past two years with total gains of nearly 25 percent.

Moreover, fund managers already have shifted more of their assets into index funds: 63 percent of domestic equity investments are in these passive accounts; 47 percent of international equities are held in index funds, too.

Recent strong returns could well persist in upcoming annual reports as the nation’s economy finally starts to gain steam and enters a robust growth phase. It’s a good time to be a pension fund manager.

Two-Way Economic Cycle

But there will be dips and plunges along the way. There always are. Economic cycles flow in two directions — up some years, down in others.

To prepare for the down years and slower long-term growth, the state’s pension fund managers continue to re-channel investments into safer, less volatile financial instruments. The goal is long-term, stable growth, not flashy, short-term gains (or losses).

Some states get a bigger annual investment return than Maryland by placing riskier bets. But they are using retirement fund money for these gambles, which in some cases have backfired quite badly.

Long-Term Results Count

Still, we shouldn’t place too much importance in these annual profit-or-loss statements from government pension funds.

Everyone with stock portfolios knows the short-term picture can look terribly bleak (for example, last Thursday’s and Friday’s steep plunge in the Dow-Jones Average). But over the long haul — a decade or more — historic patterns are quite positive.

That’s what counts — the long-range results for pension funds. Harsh critiques of a fund’s 12-month performance can be misleading.

False Assumptions

Placing too much emphasis on the unfunded actuarial liability also can lead to false conclusions.

Yes, Maryland’s unfunded IOUs topped $19 billion as of last year. But there’s plenty of money in the retirement plan to write pension checks to 132,000 retirees and beneficiaries for years and decades to come.

Meanwhile, reforms taken over the past three years will continue narrowing the gap between what goes into the fund and what is drawn out to pay pensioners each year.

Eliminating the Deficit

The saving grace is that Maryland only pays out a fraction of the pension fund’s assets each year. Most of the 192,000 active participants in the program won’t start collecting retirement checks for another 20 or 30 years.

There’s plenty of time to gradually eliminate the unfunded liability.

That’s the stated objective of the retirement agency’s trustees.

They’ve made substantial progress in the last few years. If the nation’s economy continues on an upward trend, the agency’s financial picture could brighten faster than expected.

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

Child Immigration and MD — II

Sometimes an opinion article hits a nerve.

In this case, my column on Maryland Republican officials, child immigration from Central America, and what to do locally about these children, sent a number of the GOP faithful into conniptions.Contemplated immigration site in Westminster

Dan Bongino, the GOP candidate for Congress in the Montgomery County-Western Maryland district, called the column a “hate-filled, ignorant, one-sided piece. . .. so full of vitriol and emotion. . . . [it] should have never been published. There is already a movement growing, among a large group of grassroots activists, to respond.”

They did – along with many others.

Len Lazarick, who publishes MarylandReporter.com, an essential aggregator of news and commentary on Maryland politics and government, ran my column and later ran responses from Republican Congressman Andy Harris and Republican Del. Pat McDonough, among others.

MarylandReporter.com

Len also ran a lengthy defense of Republican immigration policy and a frontal attack on the Democrats’ immigration policy (and my “slanderous, outrageous” column) signed by Diana Waterman, chair of the state GOP.

Another former elected official sent me this response:

“Barry,

“This has got to be the most outrageously partisan[,] myopic, and uninformed column you have ever spewed out. I might try to respond but it would not be worth my time.

“Disgusted,

“Ellen Sauerbrey”

What follows are some of the other reactions.

From Billy Earl:

“Brilliant piece, spot on. . .”

From Jeff:

“[Y]ou were right when you said this: ‘The best way to stop this unwanted influx is to become involved in helping Honduras, El Salvador and Guatemala crack down on criminal activity, to bolster health and education opportunities and to encourage business development.’

“How could anyone disagree with this? It is shameful that Mr. Bongino called for your firing for an opinion piece. I am a life-long Republican and I have never found his presence comfortable. . . .

“I do not support the Governor’s actions or those who have spoken up on this issue because I find that both sides are just reading polls and trying to get attention. I find it classless all the way around.”

From Diane:

“Personally, I think [Rascovar is] full of s**t on this issue, but I am glad you posted it, and hope you keep it online, so people can form their own judgments on the issue and on Rascovar’s opinions. . . .”

“If the column reduces Rascovar’s readership or influence, or lowers public opinion of his value, so be it–he’s entitled to say what he thinks and we are entitled to draw whatever conclusions we wish about him. My personal opinion of him has taken a major hit.”

From Sarah:

“Yeah, I know you and Len took a lot of flak for it, and maybe you did paint with a broad brush, but I appreciated your opinion piece. . . . Someone had to say it.”

From AB:

“I’m a registered Republican and I thank you for this column.  Your courage and insight are appreciated always, at least by [my] family.”

 From Margaret:

“I’m not familiar with you or your column. . . . [P]eople want something for nothing and there are politicians in this country who are spreading the rumor in [C]entral and [S]outh American countries that they can get it here. Unfortunately WE Americans are sick to death of paying for the problems of non-residents. . .  It is not the American way.”

From Pete:

“That piece is really beneath you, filled with ad hominem vitriol. You have to ask yourself why nothing has been done on Immigration reform, and why these children are causing such a ruckus. For years, the ‘gentlemen’s agreement’ between the two sides of the aisle has been that the Democrats don’t do anything substantive about halting the flood of illegals since they generally partake of Democrat social programs, and so vote Democrat. Since they’re illegal, they get paid under the table, so Republican business interests can pay them as little as they like. So far, so good. Now, kids are coming in, whom the Democrats like, but who won’t be working for Republicans anytime soon. Oops.”

From Jack:

“I appreciate you trying to be a reporter of sorts but I would get your facts straight before posting. People will appreciate your views much better.”

“I didn’t bother reading all of your article because nothing seemed factual . . .

“Keep reporting Barry but at least research. Most of what I read isn’t true.”

From Mark:

“Usually your columns are very insightful. Not today. I suppose everyone deserves a vacation once in a while.

“First and foremost, you conflate legal and illegal immigration. . . .

“Second, since when is appropriate [to] use graffiti to characterize a political party’s position? . . .

“Third, you mischaracterize the historic position of the Republican Party on immigration. . .

“Finally, is there a more eloquent articulation of pro-immigration position than in Ronald Reagan’s Farewell Address? . . .”

 Jeff’s response:

“I suggest you pull this article immediately. It is so full of lies and misinformation and fabrications, that you better hope that you don’t get sued by the GOP.

“Pull it immediately until you have factual information.  And you know I can call you out on it being a blogger myself.  It’s horse**** ”

Finally, from Jerry:

“Wow!  What do you really think about the child immigrants? And our neo-Know Nothings in the Republican Party?  Well said!!”

*     *     *     *     *

One of the goals of column-writing is to stimulate discourse and discussion.

The column I wrote focused almost exclusively on how certain state Republican officials have reacted to the recent wave of child immigration. I avoided getting into the broader immigration issue that has tied national Republicans and Democrats in knots.

The central point of the column was this:

As Americans, we have an obligation to humanely care and shelter these children until their cases are resolved. Maryland Republican officials mentioned in the column opposed the “helping hand” approach proposed by local religious and government leaders.

I found that misguided, and that’s what it wrote.

Little, if any, of the responses from Maryland Republicans have offered sensible suggestions on how to humanely care for these children locally while they await their fate.

That’s unfortunate.

Maybe the next round of missives will return to that pivotal question and give us some thoughtful answers.

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Primary Differences: Women & Turnout

By Barry Rascovar

July 21, 2014 – In a primary election wrap-up message e-mailed to his supporters, former state Sen. Art Helton of Harford County listed reasons why he lost his latest effort to re-gain his seat in the General Assembly.

Art Helton

Art Helton

Poor turnout, especially among African American voters, he wrote, hurt him in his race against fellow Democrat Mary-Dulany James. (The Senate seat is now held by Republican Nancy Jacobs, who is retiring.)

The results: James, 4,705 votes (61 percent); Helton, 2,997 votes (39 percent).

Mary-Dulany James

Mary-Dulany James

The other reason Helton gave for his loss:  the dominance of female candidates in Democratic primaries.

He listed 10 female Harford Democrats who were victorious in the June 24 primary.

“[N]ot one woman lost unless challenged by another woman,” he wrote.

“The percentage of women voting in the Democratic [p]rimary was 63.4%. You can view the results and draw your own conclusions.”

Making a Difference

Women indeed are becoming a pivotal force in local and state elections in Maryland. They are more likely to go to the polls than men. Given the right candidate, it can make a difference.

Baltimore City ousted its incumbent state’s attorney and replaced him with a woman. After November, three of the four citywide elected offices in Baltimore will be held by women, all African Americans.

Also after the general election, four of the city’s six state senators will be women.

Women in the Senate

Half of Montgomery County’s eight state senators will be female, too.

As many as six new women could take seats in the Maryland Senate in January – Gail Bates of Howard County, Susan Lee and Cheryl Kagan of Montgomery County, Addie Eckardt from the Eastern Shore, Shirley Nathan-Pulliam from a joint Baltimore city-county district, and James from Harford County.

Susan Lee

Susan Lee

They aren’t neophyte politicians, either.

Combined, they have served 88 years in the General Assembly. They will enter the Senate as highly seasoned lawmakers.

Bates and Lee are concluding their third four-year terms in the House, James is finishing her fourth term. Eckardt and Nathan-Pulliam are 20-year legislative veterans. Kagan previously served two terms in the House.

Addie Eckardt

Addie Eckardt

Yet the “women are dominating Maryland politics” theme shouldn’t be oversold.

Only 11 of 47 state senators today are women. After the November election, the number may rise a tad in the Senate to 13.

Cheryl Kagan

Cheryl Kagan

Many counties have few women in elective offices.

Overall, the fair sex remains under-represented in elective positions, but not as voters.

*     *     *     *     *

Turnout in Maryland’s primary election was, as predicted, abysmal.

It proved an embarrassment to leaders in Annapolis who devised the early June 24 primary schedule.

Voting booths

Only 20.7 of the state’s nearly 3.4 million registered voters cast an early, absentee or election-day ballot: 561,030 registered Marylanders voted; 2,831,570 didn’t.

Turnout proved truly terrible in the Washington suburbs – 18 percent in Prince George’s County, despite the fact the leading Democratic candidate for governor came from P.G.

In neighboring Montgomery County, total turnout was just 16 percent, even though two of the three Democratic gubernatorial hopefuls were local residents.

Best Turnouts

Baltimore County led the list of large jurisdictions with a turnout of just under 25 percent – still a terrible showing in a representative democracy.

The best results came from small, rural counties, such as Kent County (30.6 percent) and Garrett County (26.6 percent). Voting poster The highest vote totals came from Montgomery (84,100) and Baltimore County (82,900), followed by Prince George’s (69,800), Baltimore City (54,600) and Anne Arundel County (50,500).

Democrats far out-voted Republicans in the larger jurisdictions – a hint of what will follow in November.

One-Sided Figures

In Montgomery, 68,179 Democrats voted vs. 12,516 Republicans.

In Prince George’s, 64,982 Democrats cast ballots vs. 4,167 Republicans.

Baltimore County saw 59,980 Democrats vote vs. 22,906 Republicans.

In Baltimore City, the imbalance was far worse: 51,730 Democratic voters vs. 2,894 Republicans. Voting sign Howard County, once a toss-up jurisdiction, saw 19,193 Democrats cast ballots, vs. 8,967 Republicans.

The primary vote totals were close in Harford County – 11,795 Democrats vs. 14,935 Republicans.

In Anne Arundel County, voting numbers were almost even – 24,655 Democrats and 25,806 Republicans.

That could lead to a tight race for county executive in the fall between Republican state Del. Steve Schuh and the county’s former sheriff, Democrat George Johnson.

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Immigration Quandary

By Barry Rascovar

July 28, 2014 — Are Republicans poor spellers?

They might be, judging from the graffiti (“NO ILLEAGLES HERE”) spray painted on a former Carroll County military building. It briefly was under consideration as housing for immigrant children fleeing violence in Central America.

Contemplated immigration site in Westminster

Contemplated immigration site in Westminster

Or is it just that Republicans are narrow-minded bigots?

It seems they don’t want people entering this country unless immigrants are Anglo-Saxon Christians who believe the “G” in GOP stands for God.

Republican History

Hostility toward immigrants is in the Grand Old Party’s DNA.

The Republican Party started as a coalition of anti-slavery groups and the Know-Nothing Party (formally known in states as the American Party or the Native American Party).

The Know-Nothings’ near-hysterical hostility toward Irish-Catholics and Germans later turned into anti-Chinese venom.

Keeping “them” out of the U.S. of A. has morphed into today’s sweeping condemnation of 57,000 children from non-English-speaking, heavily Catholic nations in Central America who have crossed the border.

‘Combat Zone’

Frederick County’s arch-enemy of immigrants, Sheriff Chuck Jenkins, recently toured part of the Texas-Mexico border, declared it a “combat zone” and called for full militarization.

Sheriff Chuck Jenkins of Frederick County

Sheriff Chuck Jenkins of Frederick County

Fortress America, here we come!

“We’re being invaded by drug cartels, drug smugglers, human traffickers,” the sheriff railed.

Huh?

Unaccompanied children are crossing the border, not gun-toting thugs and narco terrorists.

And in Baltimore County. . .

You’d never know that by listening to Del. Wade Kach or Councilman Todd Huff of Baltimore County.

The two Republicans have joined the anti-immigrant mob.

They’re upset Catholic Charities wants to house 50 children from Central America at its secluded St. Vincent’s Villa that tends to children with severe emotional and behavioral problems — and which originally opened 174 years ago as an orphanage for immigrant children.

Meanwhile, Republican Baltimore County Del. Pat McDonough, who never misses a shot at outrageous publicity, is calling for the erection of tent cities along the border and immediate deportation of “them.”

Congressional Intervention

Then there’s the irrepressible Republican naysayer, Congressman Andy Harris.

He was quick to announce his bombastic opposition to Central American kids living temporarily at a former Army Reserve building in Westminster – a locale that is not in his district.

Harris, an anesthesiologist, cited among other reasons “the potential health risks to the community” — as though these kids were carrying the Bubonic Plague.

He wants the 57,000 children deported to their home country “and get back in line.”

Discrimination is alive and well in the Republican Party’s Maryland branch.

Christian Response

Catholic Charities’ proposal, thankfully, does not follow Republican Party dicta.

Instead, it follows Christian teachings that most Republicans ostensibly say they follow.

This is, as Pope Francis pointed out, a “humanitarian emergency” involving unaccompanied children in a foreign land. We must first protect and care for these children, the pope said.

Pope Francis

Pope Francis

Catholic Charities is extending the good work it does by undertaking this new mission at St. Vincent’s Villa in Timonium.

It’s not a permanent solution but rather a helping hand for 50 kids while their situations are sorted out. What’s wrong with that?

Governor’s Response

How does Maryland suffer from a local charity assisting some of the needy, regardless of their place of origin?

Gov. Martin O’Malley understands.

Gov. Martin O'Malley

Gov. Martin O’Malley

He first complained to the White House about placing kids at a Westminster facility lacking security or running water – not to mention the seething animus in Carroll County toward outsiders (especially Spanish-speaking “illeagals” who might pollute Carroll’s idyllic surroundings).

He was right to tell the White House it was a ridiculous idea.

There are far better ways to assist these kids — such as finding compatible settings near Washington, where there are large Hispanic communities (and proximity to Central American embassies) or in Baltimore City, with its own Spanish-speaking enclave and ample support services.

NIMBY Republicans

The Republican line is that this crisis is “a federal problem” created by the hated Obama administration, which should handle this matter itself.

Republican NIMBYism is alive and well: Let someone else care for these desperate kids, all 57,000 of them.

Just make sure the federal refugee camps are “not in my back yard.”

What’s confronting the United States is a major human dilemma. It won’t be solved solely by the White House. It will take a combined effort by sympathetic states, non-profit groups and the federal government.

Republicans, though, don’t want any part of extending charity to these kids.

The best way to stop this unwanted influx is to help Honduras, El Salvador and Guatemala curb criminal activity, bolster health and education opportunities and encourage business development that translates into jobs.

Republicans will have none of that.

They don’t want immigrants coming to this country and they don’t want to help other countries stem the tide, either.

Their only answer is stationing armed troops on our southern border.

Baltimore Archbishop William Lori calls this problem “a test of the moral character of our nation. This is not a time for political posturing. . .”

Sadly, Republicans aren’t listening.

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Casino-nomics: The Good, the Bad

By Barry Rascovar

July 17, 2014 — Once upon a time, casinos looked like the salvation of Atlantic City, a famed but dilapidated resort town on the Jersey shore.

Historic Atlantic City

For well over a quarter-century, New Jersey’s gamble worked.

Unfortunately, state and local politicians failed to reinvest the taxes flowing from a dozen casinos into Atlantic City. It remained a depressing, down-on-its-luck town of impoverished minorities surrounded by glitzy hotel-casinos.

Now the bubble has burst.

Out of State Competition

Pennsylvania, Delaware and New York gambling casinos have set Atlantic City on its heels.

Maryland’s initial entries — at Perryville and outside Ocean City — were too small and poorly run to create a problem for the Jersey resort.

But when David Cordish’s huge Maryland Live! Casino opened, Atlantic City took a big hit.

Maryland Live!

Maryland Live!

The growing number of casinos in the Northeastern U.S. is delivering staggering blows to the former Queen of the Atlantic Resorts.

The jobs of 7,000 Atlantic City casino workers could disappear by Labor Day — a stunning number for a community of 40,000.

One casino, the Atlantic Club (formerly the Hilton and before that the Golden Nugget), went out of business in January.

Atlantic Club

Shuttered Atlantic Club

Two more casinos are definitely shutting after August — Trump Plaza and Showboat, owned by Caesars Entertainment.

Showboat Casino closes in September

Showboat Casino closes in September

A fourth hotel-casino along the boardwalk, the spectacular and expensive ($2.4 billion) Revel high-rise, is in bankruptcy for the second time. It will be shuttered in mid-September unless a buyer surfaces.

 

Revel Hotel and Casino

Revel Hotel and Casino

More closings are possible.

Caesars Entertainment, for instance, is wallowing in a sea of debt and must increase the profitability of its three remaining Atlantic City properties.

Others, like Resorts International, can’t overcome aging buildings and lack of drawing power in the winter months.

Resorts International

Resorts International

It was bound to happen.

Atlantic City eagerly let too many casinos open their doors. Now the town is over-saturated with giant gambling hotels. A contraction was inevitable.

City and state officials  never planned for the day when competing casinos would surface in nearby states, thus shrinking Atlantic City’s gambling market. They placed all their economic bets on the gaming industry.

Now town officials are belatedly scrambling to rejuvenate Atlantic City and bring in other attractions before blight and despair set in around the hulking, abandoned gaming halls and hotels.

Success at Maryland Live!

Maryland, meanwhile, is profiting handsomely from its long-delayed entry into casino-nomics.

Cordish has shown the way, outmaneuvering racetrack owners and creating a mecca for lovers of casinos.

Maryland Live! is now the most profitable full-service gambling site on the East Coast.

In June, Maryland Live! raked in $56.5 million, $8 million more than Atlantic City’s Vegas-like casino, Borgata, situated several miles from the resort’s boardwalk.

Borgata complex

Borgata complex

Business is booming on Maryland Live!’s casino floor and restaurants. Locating the facility in one of the East Coast’s most popular shopping malls, Arundel Mills, proved a huge asset.

Yet those halcyon days are coming to an end for Cordish.

In late August, Caesar’s will open its Horseshoe Baltimore casino near Ravens Stadium.

It will cut into Maryland Live!’s gambling revenue by as much as one-third.

There’s more bad news coming: Completion of the MGM National Harbor casino overlooking the Potomac River and the Capital Beltway in late 2016.

MGM National Harbor

MGM National Harbor

This will be the most elegant and trendy gambling joint in the region, ideally situated to draw customers from Washington, D.C., Virginia, the Carolinas and Prince George’s County.

Still, Cordish’s complex — on the lower floor of a parking garage — will remain quite profitable.

That’s because Maryland capped the number of in-state casinos at six.

Moreover, the chances of Virginia joining the casino craze are highly unlikely.

Meanwhile, Maryland’s future Big Three — in Baltimore, National Harbor and Arundel Mills — will compete for gambling customers without fear of other entrants diluting the market.

Rural Casinos in Maryland

Maryland’s three smaller casinos are surviving, though at a lesser level of success.

Penn National’s poorly conceived and poorly run Perryville casino in Cecil County should be thriving given its location directly off an I-95 exit.

Hollywood Perryville

Hollywood Perryville

But Penn National threw up a bland, warehouse-like structure in an out-of-sight valley. It has failed to offer gamblers much in the way of entertainment, excitement or value.

Yet Hollywood Perryville took in $7 million in June. Not bad, but it hardly taps the site’s potential.

Harness Racing and Slots

Bill Rickman’s Ocean Downs casino and race track near Ocean City stubbornly refuses to offer table games.

Still, its 800 slot machines do exceptionally well in the summer months, taking in $4.8 million in June — an average of $200 per day per machine.

Rickman, whose main money-maker is the Delaware Park casino and race track near Wilmington, has an added advantage at Ocean Downs: He gets a slice of slots revenue from other Maryland casinos to boost racing purses and make track improvements at his Ocean Downs harness oval.

It’s a great package deal.

Western Maryland Casino

Maryland’s other small casino, at Rocky Gap Lodge near Cumberland, is still in its developmental stage.

Yet it took in $3.7 million in gambling revenue in June from 577 slot machines ($186 from each device per day) and 16 gaming tables.

Rocky Gap near Cumberland

Rocky Gap near Cumberland

With savvy management and marketing by Lakes Entertainment, Rocky Gap could evolve into a popular resort destination offering far more than gambling — a championship golf course, a comedy club, 215 hotel rooms, a convention center and a lakeside location in a state park.

Lakes Entertainment benefits from the fact it bought Rocky Gap on the cheap from the state, which was desperate to reinvigorate the picturesque lodge built with state funds.

It paid the state just $6.8 million and has poured another $25 million or so into upgrades. Gambling revenue will help make the resort much more viable.

Rocky Gap

Rocky Gap

Unlike Atlantic City, Maryland never viewed gambling as an economic development savior.

It’s a pleasant economic bonus for Maryland’s education coffers and a generator of lots of decent-paying jobs for the state.

Casinos can’t be viewed as a long-term growth industry, though. More likely, the six casinos will turn into steady generators of state tax revenue, much like the state lottery.

slots

With no back-up plan, the end of the casino boom is a calamity for Atlantic City.

In Maryland, legalized gambling at a limited number of locations has a far better chance of becoming a long-term survivor.

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