Tag Archives: Bob Ehrlich

Hogan’s Unmistakable Popularity

By Barry Rascovar

October 19, 2015 – Make no mistake: Republican Gov. Larry Hogan, Jr. is an anomaly in today’s “hate everything” society: He’s a popular public official.

Unmistakable Popularity

Maryland Gov. Larry Hogan, Jr.

Hogan tops out at 58 percent approval in a Goucher College poll and gets a 61 percent rating in the Washington Post poll.

Good for him.

He has carefully avoided most hot-button political issues and sought to minimize controversy during his initial year in office.

Sympathy for Hogan

Yet a substantial part of Hogan’s high ratings in a heavily Democratic state stems from his health problems – non-Hodgkin’s lymphoma.

Hogan has been transparent and open with Marylanders about his illness and has become a strong advocate for those with cancer.

His obvious courage and heartfelt effort to boost the spirits of his fellow cancer patients naturally won widespread applause from all corners.

At the same time, Hogan’s aides haven’t missed a beat in pulling on voters heartstrings and reminding everyone of Hogan’s arduous and courageous trips through chemotherapy treatment.

That skews the poll results. By how much we will never know.

Honeymoon Phase

Hogan most likely still would have polled well at this early stage in his administration without coming down with such a serious medical condition.

It’s interesting to compare Hogan’s numbers with Bob Ehrlich’s and Martin O’Malley’s at similar points in their administrations.

Ehrlich encountered huge, unexpected problems with the General Assembly in his first year in office yet managed approval ratings almost identical to Hogan’s.

O’Malley, faced with a huge deficit and joblessness caused by the Great Recession, took immediate and unpopular steps to right Maryland’s fiscal ship of state. That partly explains why his first-year approval rating came in at 52 percent.

But Hogan should take note: This pretty much was the high water mark for his predecessors in polls. The first year in office traditionally is viewed by citizens as a honeymoon period for the governor. He really hasn’t done much to stir anger in his initial months in Annapolis.

Hogan has followed that script closely.

Popular Moves

He’s made some moves he knew would be popular with most Marylanders – cutting highway and bridge tolls, killing an expensive subway project, closing a decrepit jail in Baltimore and coming to the aid of the mayor when rioting broke out in Charm City.

No wonder Hogan did so well in these polls.

But by this time next year, thing might be quite different.

Hogan’s team only now is getting a true handle on the inner workings of state agencies so it can cut spending and shrink the bureaucracy. They’re putting together next year’s budget, which could stun Democratic legislators with the size of cuts to some programs that matter deeply to lawmakers.

The governor also is likely to push hard for conservative initiatives, such heavily promoting charter schools, doing away with common core education standards, loosening business and environmental regulations and reducing the scope of some social services for the poor and near-poor.

Any of these steps could become flashpoints for loud, angry opposition – the sort of controversies that hurt a politician’s poll numbers.

So enjoy the high approval marks while you can, governor. The tough part of your job lies ahead.

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Furniture, Iran & Mandel

By Barry Rascovar

Sept. 11, 2015 — Odds and ends covering Government House furniture, the Iran odd couple and Marvin Mandel miscellany:

‘Junk’ Mansion Furniture

How quickly they forget!

Gov. Larry Hogan Jr.’s criticism of the bargain-basement deal outgoing Gov. Martin O’Malley got on distressed Government House furniture (beds, lamps, mirrors, chairs, desks, a couch) is a great political sound-bite but distorts the facts — and ignores history.

Furniture, Iran & Mandel

Government House, Annapolis

Hogan’s minions penned words for him about O’Malley’s unseemly stripping from the governor’s mansion of “expensive, beautifully used furniture.”

The stuff cost $62,000 new and after being appraised and declared “excess property” and “distressed” by a veteran Department of General Services employee, it was bought by O’Malley for $9,638.

Hogan thought that was an outrageously cheap grab of mansion furniture he could have used in his private quarters.

Fair enough.

But the check the state got from the ex-governor represents 15 percent of the furnishings’ original value.

My wife, who has done interior decorating and interior design for a living, tells me the going rate for furniture drops dramatically once it leaves the showroom. She says used furniture sells for about 10 percent of its original value, especially if it has some age on it.

Most of the O’Malley pieces were eight years old.

So maybe the state actually got a good deal.

It’s also worth remembering — which Hogan didn’t for obvious political reasons — that when fellow Republican Gov. Bob Ehrlich left the mansion, he purchased nearly $10,000 worth of furniture for a mere $992 — 10 percent of the original price.

That’s still a fair deal for the state, but not nearly as good a deal as the state got from O’Malley.

Mansion furniture

One of the used pieces of furniture the O’Malleys purchased from the governor’s mansion.

Funny, but Hogan never saw it that way.

Either transaction pales compared with the biggest mansion furniture heist — the emptying of private-quarters furnishings by the late Marvin Mandel.

It was engineered by his second wife, Jeanne, and included removal of 57 items (including two wing chairs, a dresser, a leather sofa, a roll-top desk, Waterford lamps, Chippendale chairs, Lenox china, Waterford crystal champagne glasses, 350 liquor and wine bottles and $489 worth of dog food).

Here’s how the son and namesake of Mandel’s temporary successor, Acting Gov. Blair Lee III, recently described the appearance of the mansion’s private quarters after Marvin and Jeanne departed — “our family moved into the Governor’s Mansion and found it stripped bare. . .  the Mandels even took the frozen food and the fire wood!”

After the 1978 elections, Mandel tried to make amends with a check for $3,187, but Gov. Harry Hughes refused to accept it. A five-year legal battle ensued with Attorney General Stephen H. Sachs writing a 327-page report on Mandel’s moving-van loot.

Eventually, Marvin and Jeanne Mandel forked over $10,000 — more than triple what he had originally offered to pay.

According to O’Malley, though, two historic door panels taken by the Mandels remain missing.

Is any of this kosher? That’s the key question.

Technically, the sales violate government policy about not giving state employees preferential treatment.

But the Ehrlichs, the O’Malleys and the Mandels were just barely government officials at the time they paid for state furnishings their family had used in the mansion.

For instance, the appraisal of furniture O’Malley wanted to purchase was made the day the family moved out of the mansion and just six days before O’Malley became a private citizen. Mandel had been convicted and legally removed from office when his moving van pulled away from the mansion.

It’s a grey area in need of clarification.

The State Ethics Commission might provide Hogan with some guidance, but departing governors don’t easily fit under regulations covering state employees. For one thing, they are constitutionally elected officers and exempt from ethics commission rulings.

At the least, common courtesy should have been in play.

O’Malley needed to ask Hogan if it would be OK to buy items in the mansion’s private quarters. Ehrlich should have done the same with O’Malley. Mandel should have requested approval from Acting Governor Lee.

It’s a minor brouhaha reporters are exploiting as though it were an armored-car heist.

The Board of Public Works should establish a new policy: If about-to-become ex-governors wish to buy used private-quarters furniture, the stuff must be appraised by private-sector professionals and the incoming governor must formally approve.

That would clarify matters and set in place a procedure for future ex-governors, which one day will include Hogan.

Iran Odd Couple

Who would have guessed that in the Maryland congressional delegation, just two members would come out in opposition to the president’s Iran nuclear deal, and that they would be polar opposites.

Liberal Democratic Sen. Ben Cardin has linked arms with ultra-conservative Republican Rep. Andy Harris to say “no” to the president’s negotiated agreement to slow, if not block, Iran’s development of nuclear weapons.

It may be the first and last time this odd couple sings from the same hymn book on a major, highly politicized issue.

Harris’ opposition was expected. He’s a knee-jerk, anti-Obama, anti-Democratic politician. If the president says the sky is blue, Harris sees grey skies.

Cardin, though, is a left-leaning Democratic loyalist. This time, he was under enormous pressure from Jewish lobbying groups in Maryland, especially within his own synagogue. He’s also up for reelection soon, which played into his thinking.

It also helped that his vote wasn’t needed to ensure that Democrats blocked Congress from rejecting the Iran accord.

Still, it’s rare when Harris and Cardin have something in common. Voters on both extremes of the political spectrum might find this Iran union hard to stomach.

Mandel Miscellany

Readers responded mainly with positive reviews of the two-part assessment of the late Governor Mandel. Here is a sampling:

Gov. Marvin Mandel

Former Maryland Gov. Marvin Mandel

Blair Lee IV (now a resident of Hilton Head, S.C.): “a wonderful trip down memory lane.”

Former Baltimore Sun reporter Bob Erlandson:  “That’s as good a concise exposition of the Mandel case as there could be. It’s been so long that I’ve forgotten many of the details you wrote. Very well done!!”

Attorney and former Assistant Attorney General Tom Lingan: “Congratulations on finally setting the record straight. I believe you captured well the ambiguity of Governor Mandel which was lost in the deification following his passing. There are still a few of us around who remember.  Thanks for not giving him a pass.”

Attorney and Lobbyist Bruce Bereano: “You really should be ashamed of yourself that at Governor Mandel’s passing you wrote such an unnecessary, nasty and despicable piece in your Part 2 of the Mandel legacy. The sad thing is that you have no shame and you have no [conscience] about this.”

Former Sun reporter and Care First executive Jeff Valentine: “This was the best explanation of that convoluted transaction that I ever read. For the first time, I understand what happened.”

Former environmental lobbyist Ajax Eastman: “You really covered the essence of the man, the good and the bad in depth. Thanks.”

Former Sun reporter Skip Isaacs: “The two Mandel columns were terrific. I knew him much better as speaker than governor, but the contradictions you describe sound exactly right to me.”

Former television reporter Patrick McGrath: “Mandel’s extraordinary achievements that you reminded us of in the first piece, contrasted with the details of his downfall in the second piece  . . . paint a truly balanced picture of the complicated man.”

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Hogan’s Health and Harsh Words

By Barry Rascovar

Aug. 4, 2015 — Complaints and harsh words have poured in about my Aug. 3 column, for daring to raise the possibility that Gov. Larry Hogan’s health may have played a role in his turn toward nastiness.

Let’s be clear: The governor’s treatment for late Stage 3 non-Hodgkins lymphoma cannot be ignored.

Everyone wishes Hogan a speedy return to good health. Doctors I’ve spoken to have been optimistic about his recovery chances given today’s advancements in chemotherapy.

But the situation — and its ramifications for governing Maryland — cannot be swept under the rug.

Gov. Hogan and Corrections Secretary Moyer at jail announcement. Hogan's Health and Harsh Words.

Gov. Larry Hogan Jr. and Corrections Secretary Stephen Moyer at Baltimore jail announcement.

Could the governor’s unseemly swipes at Democratic leaders be partly related to how he’s feeling during and after his intense medical treatments?

It is a possibility. You don’t have to agree, but it’s a thought worth considering — which is why it was raised ever so briefly (17 words) in my previous column.

Governor’s Response

Hogan’s spinmeisters used my column to reject the notion he has turned from Mr. Nice to Mr. Nasty. In a Facebook posting, Hogan asserted:

“In spite of 10 days of 24 hour chemo I haven’t become mean and nasty, I’m still the same nice guy I have always been, and we are still accomplishing great things for Maryland.”

He also defended his failure to notify Democratic legislators before announcing the closing of the Baltimore City Detention Center. Why? Because he didn’t want to tip off the gangs about what was about to happen.

Fair enough.

Gangs and the City Jail

For the record, here’s what Mr. Nice Guy had to say in blaming the disgraceful gang problems of the city jail on former Gov. Martin O’Malley:

“When the first indictments came down the previous governor called the case ‘a positive achievement in the fight against gangs.’ It was just phony political spin on a prison culture created by an utter failure of leadership.”

The facts tell a slightly different story that Hogan conveniently ignored in his spiteful comments.

It was O’Malley’s corrections secretary, Gary Maynard, who uncovered the deplorable Black Guerilla gang control of the city jail and called in the FBI. Maynard wanted to act immediately to end the gang’s stranglehold on the detention center and prosecute the guards involved, but the FBI insisted on months and months of further investigation.

This long delay was a huge, inexcusable mistake, but that failure of leadership should not be blamed on O’Malley. Hogan needed to point an accusing figure at the FBI.

Attacking the Opposition

It was easier and more useful politically to demonize the opposition party leadership.

Thus, Hogan politicized the jail-closing announcement in terms that pilloried both O’Malley and the Democratic legislature.

Such “smack-down” rhetoric doesn’t further cooperative governance.

Two of the most level-headed Democratic lawmakers, Sen. Ed De Grange of Anne Arundel County and Sen. Guy Guzzone of Howard County, co-chaired a commission that studied the city jail situation and developed a long-term, bi-partisan solution.

Hogan not only disregarded their work, he bragged about the fact he had “never even looked at” this plan.

Legislative Response

Is it any wonder the co-chairs accused Hogan of having “circumvented the Legislature” and of  “making decisions behind closed doors”?

That last accusation has surfaced on other Hogan decisions, too. He doesn’t seem to believe in listening to a wide-range of divergent views before making up his mind. That approach is not always helpful.

Closing the Baltimore jail was absolutely the right decision. Hooray for Hogan.

He is correct it should have happened long ago — perhaps even under the governorship of the last Republican chief executive, Bob Ehrlich.

But there was no reason to turn the announcement into a political tongue-lashing.

It only exacerbates the growing gulf between the governor and Democratic lawmakers, the very people he needs if he hopes to make headway in achieving his large-scale goals for Maryland.

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Hogan Keeps It Simple — and Low-key

By Barry Rascovar

May 11, 2015 — Larry Hogan Jr. is proving to be an unusual governor for Maryland, in many ways the polar opposite of his predecessors, Martin O’Malley and Bob Ehrlich.

Gov. Larry Hogan Jr.

Gov. Larry Hogan Jr.

Both Democrat O’Malley and Republican Ehrlich love publicity and making a PR splash. They craved the spotlight, issued a tidal wave of propaganda pitches and tried to dominate the daily news coverage.

Republican Hogan wants none of the above. He’s such a modest, low-key governor that he brings to mind the gubernatorial years of an equally low-key Maryland chief executive, Harry Hughes.

But there’s a difference. Hughes came to Maryland’s top office steeped in state government and political expertise. Hogan, in contrast, was a novice who had never held an elective post.

During his campaign last year, Hogan followed a disciplined KISS strategy — “keep it simple, stupid.” His themes purposely avoided divisive social issues and stuck to a few key promises — cut the state budget and then cut taxes.

Narrow Legislative Focus

Hogan followed a similar KISS approach in his first legislative session. His one and only focus: developing a slimmed-down budget that came close to wiping out Maryland’s chronic structural deficit.

The rest of his so-called “agenda” consisted of leftovers from the campaign trail — unrealistic Republican proposals that stood no chance in a heavily Democratic General Assembly.

During those 90 days in Annapolis, Hogan held few press conferences, issued few press releases and remained pretty much in the background.

By session’s end, he had won much of the budget battles, setting the stage for a similar push next year to make room for tax cuts.

He gave us a preview of his intentions last week by announcing reduced tolls on Maryland’s roads and bridges.

Bay Bridge toll cut

While this puts a giant crimp in Maryland’s efforts to replace aging bridges and improve interstate roads, the symbolism of Hogan’s toll-cutting action is what counted for the governor.

Even when dealing with the volatile protests and unrest in Baltimore, the new governor kept his participation low-key — and simple.

His actions were few but decisive — calling in the National Guard when requested, moving his office to Baltimore and delivering daily updates in which he basically introduced law-enforcement leaders to brief the media.

Hogan in Baltimore unrest

When cornered by reporters, Hogan refused to blame the mayor for what had occurred and refused to discuss details of events. He sounded a one-note response: “We are here to keep the peace.”

Compared with the frenetic, 24/7 campaign styles O’Malley and Ehrlich brought to the governor’s mansion, Hogan’s modest and even shy approach is a refreshing change.

His eternal optimism, concern and ready smile serve him well with Marylanders.

Next Big Test

That widespread popularity soon could be tested when Hogan decides what to do about two costly but critical mass-transit projects — Baltimore’s Red Line and the suburban Washington Purple Line.

He called them unaffordable during the campaign, but rejecting either project will create deep antagonisms and hostility toward the Republican governor that could dog him in the legislature for the rest of his term.

So far, Hogan has avoided these kinds of flash points, knowing that a Republican governor can ill afford alienating a large chunk of the legislature’s majority party.

How he navigates between his campaign statements and strong public sentiment for the Red and Purple Lines in three of Maryland’s largest and most politically influential jurisdictions will tell us much about Hogan’s ability to navigate his way through perilous political situations.

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Barry Rascovar’s blog is www.politicalmaryland.com. Contact him at brascovar@hotmail.com.

Hogan Wins Round 1

By Barry Rascovar

April 6, 2015 — Even before the final votes are taken the verdict is in: The winner of Maryland’s 2015 budget fight, by a wide margin, is Republican Gov. Larry Hogan Jr.

Actually, Hogan was playing with a stacked-deck.

Maryland governors almost always win these budget fights because they’re the only ones who can add money to programs and priorities; the legislature has the power to subtract, period.

Gov. Larry Hogan Jr.

Gov. Larry Hogan Jr.

But remember where Hogan started: He was handed a wildly out of balance budget by outgoing Democratic Gov. Martin O’Malley, who had neglected to take strong steps to stem the growing deluge of red ink on the state’s books.

Even worse, projections called for far wider deficits in future years. O’Malley wasn’t up to the task of pulling back hard on the spending reins because he was preparing to leave office and run for president as a darling of the Democratic liberal left.

So O’Malley passed the baton and dropped the budget mess he had created in Republican Hogan’s lap.

Judicious Budget-Cutting

Thanks to the work of career budget analysts and former state Sen. Bobby Neall, Hogan whipped up a budget-balancing plan in about six weeks. It was a tough but judiciously pared-down financial blueprint that went nearly all the way toward eliminating Maryland’s chronic and widening structural gap between revenues and spending.

Hogan also called for long-term steps to ratchet down future spending growth in costly education and health programs.

Democratic legislators didn’t bite on that last Hogan proposal. Yet there is nothing they can do to stop the governor from shrinking budget increases for state and local aid programs in each year of his administration.

The result is a half-loaf victory for Hogan, which is impressive for a Republican in a heavily Democratic state. If he persists over the next three years, he’ll almost certainly pick up the other half of the loaf — and more.Government Spending

Hogan came into office promising to squeeze excesses from the state budget so he can lower taxes.

He’s started down the first path with considerable success. The tax-cut pledge will be infinitely harder to fulfill, as Democrats have shown in this legislative session.

In office, Hogan has proved to be a realist. He recognized that without a truly balanced budget that slowed spending, there is no hope of gaining meaningful tax reductions.

He’ll have to keep shaving Maryland’s expenditures — and especially the state’s overly ambitious and costly capital spending program. Ever-rising health and education costs remain enormous challenges, too.

Power-Sharing

Still, the direction of future Hogan budgets is now transparent to both conservative Republicans and liberal Democrats.

To the relief of Democratic legislators, the new governor isn’t a scorched-earth program cutter. He understands the importance of the social safety net, of education advancements and offering improved health care options.

He also understands the dynamics of Annapolis.

Hogan knows he must share power with the heavily Democratic legislature. He must find common ground and avoid the mistake of the last Republican governor, Bob Ehrlich, who proved too partisan and confrontational.

So far, Hogan is succeeding.

Fiscal Turnaround

He’s won this year’s budget battle, regardless of the final negotiations over legislative demands for restoration of funds for public schools and health care.

The new governor has turned around Maryland’s bleak fiscal forecasts in a matter of months, not years.

Once legislative adjournment comes on April 13, Hogan will have the rest of  the year to implement spending hold-down ideas, analyze where downsizing makes sense, educate lawmakers on sensible ways to shrink the cost of state government and start eliminating excessive and harmful business regulations.

Not bad for a guy given almost no chance of winning the governorship a year ago — or of working constructively and peacefully with legislative leaders of the opposite party.

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A Republican MD Senator?

By Barry Rascovar

March 16, 2015 — Did Republican Larry Hogan Jr.’s surprisingly large victory for governor last year blaze the path for a GOP upset in next year’s open seat for the U.S. Senate?

Gov. Larry Hogan Jr.

Gov. Larry Hogan Jr.

Probably not. Then again, politics is a mercurial business. Given the right circumstances, a longshot scenario might come true.

No Hogan Clones

Here’s the problem: The presumptive GOP candidates aren’t following the winning Hogan formula.

They are very much right of center and outspoken in their conservatism. In liberal Maryland, that’s a distinct turn-off for general election voters.

To understand the state GOP’s dilemma, look at the reasons Hogan won:

  • He stuck to a narrow, economic-driven campaign pitch — high taxes, overreaching government and politics as usual — with virtually no details.
  • He ignored bitterly divisive social issues, much to the discomfort of hard-nosed conservatives, and charted a moderate course.
  • He came across as Maryland’s “Happy Warrior” with a winning smile and demeanor.
  • His opponent, Lt. Gov. Anthony Brown, ran a dysfunctional campaign and turned off voters with his arrogance and aura of entitlement. His voters stayed home.

It’s no secret that for a Republican to win statewide in Maryland, the Democrats really have to mess up. Did they ever in 2014.

It is entirely plausible Maryland Democrats once more will eat their own and wind up with a far-left candidate who turns off a large chunk of the state’s moderately liberal electorate.

Right-Wing Believers

That would set the stage for a strong Republican Senate challenge, backed by tens of millions of national GOP donor dollars.

But none of the names being floated are likely to resonate with dissatisfied Democratic voters and independents. They are angry, right-wing true believers who denigrate the kind of middle-road, non-ideological, problem-solving Maryland voters tend to favor.

Consider the individuals being mentioned as possible Senate candidates:

Bob Ehrlich. The former governor would win the primary in a cakewalk, but since he left office he’s moved more and more rightward into knee-jerk, pessimistic anti-Obamaism. His four years as governor disappointed Democrats and Republicans, he lost reelection and his attempt to recapture the office in 2010 proved an embarrassing flop, losing by nearly 15 percentage points. Portraying Ehrlich this time as a moderate Republican would be a stretch.

Andy Harris. The First District congressman is as far right ideologically as you can get and still be elected in Maryland. He can come across as arrogant and stridently sure of himself on just about any issue. A former state senator, Harris’ vocal and energetic conservatism might generate a backlash that results in a heavy Democratic turnout on Election Day. He’s far from an ideal statewide candidate in Maryland. Besides, he’s got a lifetime seat in his House district that he’d have to give up.

Dan Bongino. The almost-congressman nearly upset Democratic Rep. John Delaney in a gerrymandered district that includes Western Maryland and portions of Montgomery County. He lost by less than 3,000 votes. Bongino also ran against U.S. Sen. Ben Cardin in 2012 and got clobbered, winning just a quarter of the votes. He’s charismatic and a former Secret Service agent. But he’s all conservative all the time. He’d have little drawing power outside rural and exurban areas.

Michael Steele. The former lieutenant governor and GOP national chairman doesn’t have much to crow about other than espousing traditional conservative Republican themes. He lost badly when he ran for the Senate in 2006, losing to Cardin by 10 percentage points. He has no base beyond traditional GOP precincts and no credibility in Democratic strongholds.

Kendel Ehrlich. The other half of the Ehrlich team, she considered running for judge in Anne Arundel County and is not bashful about expressing her hard-edged conservative views. She’s never held elective office and has few credentials to promote. She’s much farther to the right in her political thinking than her husband.

That’s hardly an exciting list of GOP contenders. Too many retreads or not-ready-for-prime-time players. None of them fits the winning Hogan mold.

Still, the fate of the GOP primary winner may lie more in the hands of Democratic primary voters. Should Dems select another dud like Anthony Brown last year (or Kathleen Kennedy Townsend in 2002), anything would be possible for Maryland Republicans.

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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 Pension Fund Mystery Unearthed ! !

August 14, 2013

ONWARD WITH historical clarifications — and a new puzzle connected to Maryland’s pension fund mess and how the state stepped in such deep doo-doo.

First, in response to former state Sen. Bobby Neall’s corrective comments on the true birth-fathers of the now-discredited “corridor funding method,” for state pensions, Maryland State Treasurer Nancy Kopp has chimed in.

She emailed her staff and the pension board that Neall’s version as recounted in www.politicalmaryland.com  is “a very fair and accurate description of the origins” of this unorthodox approach that is now being phased out over 10 years.

SRPS_LogoKopp diplomatically describes it as “the legislature’s prudent attempt to constrain [Gov. Parris Glendening’s intentional] underfunding” of the retirement system. (In truth, it was a raid on the pension fund.) She also notes “the Board of Trustees opposed it from the beginning.”

Kopp explains that “regardless of the legislators’ intention, the corridor-based funding level was always subsequently treated in the budget as the required amount, rather than as a floor.” That short-sighted move helped Glendening pay for new social programs and enhance his reputation, but it created massive pension funding gaps that will take a decade to eliminate.

Neall’s “strong voice and incisive leadership” on pension matters might have prevented this terrible misjudgment, Kopp writes, but by then he had left the state Senate. He was “sorely missed” — an understatement if ever there was one.

And Now. . . . The Mystery

Skip forward a few years and the second pension blunder takes place.

Republican Gov. Bob Ehrlich is facing a Hobson’s choice — sign an expensive pension enhancement bill sponsored by the state teachers union (passed unanimously by both houses) — or risk antagonizing that influential union when he runs for reelection in the fall.

Cecilia Januszkiewicz, the governor’s capable budget secretary in 2006, sent me this email in an attempt to elucidate:

“Saw your pension article. Just for the record, the 2006 pension enhancement was introduced by Mary Dulany James in her capacity as Chairman of the Joint Committee on Pensions. It was not an Ehrlich Administration initiative. It passed both [h]ouses unanimously. It became law without the Governor’s signature. You can look it up.”

Sure enough, the ever-alert Department of Legislative Services reports that the governor did not sign the pension bill Januszkiewicz refers to. Yet all news organizations (The Sun, the Post, the Daily Record, the Gazette, Associated Press) report that Ehrlich signed the pension enrichment bill that day.

Even more baffling, Ehrlich, Lt. Gov. Michael Steele and the governor’s press office went to great lengths to praise his signing of the enrichment bill.

What’s going on?

. . . . The Rest of the Story

Here’s the way it happened: The pension enhancement bill, not sponsored by the administration, passed unanimously in both chambers, as Januszkiewicz wrote.

But so did a second pension bill — this one made minor changes to pension practices, simplified language and corrected grammatical errors. The bill had “no fiscal effect.”

It is the second, revenue-neutral pension bill, HB1430, that Ehrlich refused to sign or veto. Why remains shrouded in the mist of time.

The Republican governor did, though, sign HB1737, the expensive pension enhancement bill (total price tag to the state and counties: $2.1 billion). He vetoed the Senate version because it was duplicative.

End of this mini-mystery. It was a mix-up anyone could make. Case closed. Unless, of course, readers of this blog unearth some new pension twist buried deep in the recesses of Maryland’s state archives.

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puzzle in this pension

View From the Pension Fund Ground Floor — Bobby Neall

August 7, 2013

THERE’S ALWAYS ROOM for clarification in this blog, especially when the clarifier was there at the Creation.

Below is an email I received from Bobby Neall, the former Anne Arundel County Executive, state Senator and state Delegate who knows more about fiscal and pension finances than just about anyone in Maryland. Here is his valiant effort (with stylistic editing on my part) to get the facts straight in my July 31 post on the history of Maryland’s pension problems:

“Am enjoying your columns immensely. Your most recent one on the pension system conflicts somewhat with my recollection, however.

“Warren Deschenaux [Director of the MD Department of Legislative Services] and I [then a state Senator] devised the so-called corridor methodology [for funding the state’s annual pension appropriation] as a means to prevent then Governor Glendening from diverting required pension contributions to discretionary spending.

” At the time [Glendening] was using the annual funded status of the systems — a mere snapshot — as the determining factor as to how much the [state’s] annual contribution should be.

“The rationale for the corridor [funding method] was as long as the funded status was between 90-110 percent, an amount equivalent to the [state’s] previous year’s contribution was sufficient.

“Given the legislature’s anemic budgetary powers, this was all we could do to prevent the governor from skipping payments altogether.

” So, while our solution was not without flaws, it prevented the hijacking of money properly intended for the pension system.

” It was meant to be a FLOOR.

“Somehow during the Ehrlich term, it became a CEILING, no doubt because of the tightness of money [in the governor’s budget].

“The situation, as I recall it, was made worse by [the decision of the governor and legislature to improve] pension benefits without [the state] making ample provisions for higher commitments to the system.

“So in summary, the choice we faced was either mandate a specific contribution or risk a Prince George’s County-style pension finance scheme [i.e., contribution holidays].

“Clearly, in the second Glendening term our action was warranted and necessary.”

 Bob Neall  

[A further aside: Today, Neall is President of Priority Partners, the state’s largest Medicaid managed-care organization with over 225,000 members. My thanks to him for placing this matter in its proper context. An earlier editing change in the column for accuracy’s sake is due to the diligence of Major Morris Krome, a longtime trustee of the MD state retirement system.] 

MD State Pension Fund Revives

BY BARRY RASCOVAR / July 31, 2013

A funny thing happened to the Maryland state pension fund on the way to fiscal perdition: It recovered lost ground, reformed itself and came up with a 10-year plan to put its retirement programs on solid, long-term footing.

The pension fund topped $40 billion in assets this summer, regaining all its losses (plus $800 million) since the Great Recession swoon that saw a 20 percent drop in just one year. Since the recession’s trough in 2009, the state fund has added a whopping $11.75 billion in earnings, an average of 10 percent a year.

SRPS_LogoThat won’t please the naysayers and conservatives who have been predicting doom and gloom for the retirement program. Thanks to changes that require more local government and employee contributions, lower annual cost-of-living adjustments and longer years of service to qualify for benefits, the future is beginning to look brighter for Maryland’s fund.

A slowly recovering national economy — and stock market — certainly helped.

In bad times like the Great Recession it is easy to forget that the economic cycle, similar to a roller coaster, eventually ends its gut-wrenching plunge and starts climbing upward once again. Signs now point to a lengthy period of slow growth, which could give the Maryland pension fund a string of good-news stories in the years ahead.

Blame It On Glendening And Ehrlich

Not that everything is rosy. Some wretchedly poor decisions in the early part of this century guaranteed deep pension trouble. The worst move came from former Gov. Parris Glendening, who sacrificed the retirement fund’s future so he could spend more during his final years in office.

When Glendening intentionally underfunded the retirement system, the General Assembly — over the vigorous objections of the pension board and Comptroller William Donald Schaefer — adopted a fatally flawed methodology to shrink required state contributions and thus sanction Glendening’s action. Politics triumphed over sound actuarial policy.

This dubious plan, the “corridor funding method,” worked fine when Wall Street was hitting new highs and the pension fund earned double-digit profits. But the scheme collapsed like a house of cards when the stock market’s “technology bubble” burst and then the Great Recession hit. Each year, it seemed, the pension fund was digging a bigger financial hole.

This was compounded by a terrible political decision from former Gov. Bob Ehrlich to curry favor with state teachers by giving them extra pension benefits. He figured that with a few good years of stock market investments the pension board could afford these political goodies that might help him get reelected.

Neither happened. Teachers didn’t support the governor in 2006 and the more generous pensions dragged the retirement programs deeper into a giant pit of unfunded pension obligations.

At Last, Pension Reforms

That precipitated much-needed legislative reforms, which add more local and employee contributions to the system while slowing the growth in the fund’s annual payouts. Then finally this past legislative session, the General Assembly agreed to phase-out the ill-conceived (and illegitimate) corridor funding method

Combined with surging stock prices, what had been a bleak outlook today is a whole lot brighter.

Of course, debates over the viability of pension funds can distort reality if the funds are held to impossible standards. Those bemoaning the condition of Maryland’s state pension program make it sound as if it’s about to go broke. They want the retirement programs 100 percent fully funded.

While that’s not impossible — Maryland’s pensions were at 106 percent of full funding before Glendening messed things up — insistence on such a high standard can mislead the public.

Even in its lean years, the state’s retirement programs remained in good shape. It’s annual earnings and contributions from 244,000 teachers and state workers (and now local governments) are usually enough to come close to offsetting annual payouts to 132,000 retirees. it all depends on the fund manager’s investment success.

For the pension fund to go broke, it would take decades of poor investment results. History tells us that’s quite unlikely.

In the past quarter-century, even with recessions and bursting financial bubbles, the Maryland state pension fund’s annual  investment return averages around eight percent — in line with historic Wall Street rates.

And while the state spends too much on Wall Street professionals to guide its investments (a whopping $225 million last year), these advisers do earn their pay. The actively managed portion of the state’s portfolio added $800 million more than it would have in passively managed index funds favored by conservatives — even after deducting for the hefty consultant fees.

Taking Out A Mortgage

Ten years from today, Maryland’s pension plans should be nearing 100 percent funding. When that happens, trustees are committed to amortizing the state’s future retirement obligations — taking out a long-term loan similar to a 30-year, fixed-rate mortgage. That would take much of the uncertainty and volatility out of the equation.

Trustees also have agreed to lessen the pension fund’s reliance on the unpredictable stock market. Investments are gradually being shifted to private equity placements, which aren’t affected by the emotions and manipulations of Wall Street, and to other alternative investments that are safer and more diversified income producers.

Of course, the next governor could wreck this carefully constructed approach by promising big retirement raises to state workers and teachers in the gubernatorial campaign. Unexpected market upheavals could mean large equity losses for the fund’s managers, too.

Then again, maybe state leaders have learned some painful lessons. Pension giveaways have long-term, negative consequences. Investing too much of the pension fund’s capital in the stock market is a high-risk step that’s not worth taking.

The state retirement board, led by Treasurer Nancy Kopp, seems rejuvenated and headed in the right direction. It rode out the roughest storm in the retirement system’s history and came away the better for it.

(NOTE: This is a revised version that corrects the historical record on how the corridor funding method was adopted a decade ago.)

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