Tag Archives: Maryland General Assembly

Ceding Power to the Legislature

By Barry Rascovar

April 11, 2016 – It’s been an unusually contentious 90-day Maryland General Assembly session. The Republican governor and Democratic legislature are pulling in starkly different directions.

Gov. Larry Hogan, Jr. has made it clear he’d just as soon do away with those pesky lawmakers and rule by executive fiat.Ceding Power to the Legislature

His propaganda pitch is simple: I’m immensely popular right now and that should be enough to sweep away all opposition to my policy proposals.

Hogan, the most powerful governor in America when it comes to budget-making, wants even more unfettered ability to do as he pleases in cutting mandated aid programs.

He mocked lawmakers repeatedly during the session, even comparing them to college-age pranksters at one point.

Scant Progress for Hogan

In most cases, he refused to let his underlings work with lawmakers behind the scenes to improve the final work product and reach a compromise.

He kept demanding total surrender by Democratic legislators on a host of conservative Republican initiatives.

No wonder Hogan made scant progress on his agenda. It was too ideological, too partisan and too in-your-face bad-mouthing.

Indeed, Hogan’s decision to play Lone Ranger politics rather than work cooperatively with Democrats in the General Assembly has set the stage for what could be a momentous power shift in the Annapolis State House.

Throughout Maryland’s history, legislatures have let the governor take the lead in setting the agenda for the state’s annual General Assembly session. Lawmakers followed the old adage – the governor proposes and the legislature disposes.

But this time Hogan failed to lead. His 13-point initiative was long on Republican talking points featuring lots of tax cuts, fee cuts and tax credits for businesses as well as impossibly idealistic conservative goals such as wiping away state spending mandates and stripping the Democratic legislature of any power over the decennial redistricting process.

It’s no surprise Hogan met failure on the majority of these items.

Filling the Void

What did come as a surprise was legislative leaders’ determination to jump into the policy void created by Hogan.

Where was the comprehensive gubernatorial aid package for riot-torn Baltimore City –the most pressing problem confronting the state?

Where was the gubernatorial package of bills to improve the environment, public schools, state universities or health care?

On these critical issues, Hogan was missing in action.

Instead, House Speaker Mike Busch and Senate President Mike Miller became the initiators, setting their own achievement goals. For the most part, Hogan was left on the sidelines where he shouted nasty criticisms of the players but never offered to join them on the field.

Aggressive Legislators

The legislature’s Baltimore aid package, while far from ideal, offered the first tangible evidence of Democratic lawmakers imposing their will on the governor, not vice versa.

It could be the start of a more aggressive approach by legislative leaders, making demands on the governor or even requiring gubernatorial actions.

In the past, lawmakers were deferential and passive partners in the law-making process, giving the governor the primary role in formulating policy and pushing legislation to fruition.

That has started to change.

Over the next two legislative sessions, Hogan’s influence will wane as the 2018 elections draw near and political reelection becomes the driving force. Democratic lawmakers will be less willing to grant Republican Hogan what he wants if it involves partisan goals and initiatives, as seems likely.

His agenda could be put on the shelf as legislators fashion their own package of priority legislation and steer it through the House and Senate with enough votes to override a Hogan veto.

Who Will Be in Charge?

By the time Hogan finishes his first term, he may have created a legislative monster for future chief executives – a General Assembly more capable of replacing the governor as the initiator of major legislation. Their power could increase; his could diminish.

It is likely Hogan can continue to milk his popularity by belittling Democratic lawmakers, portraying himself as the victim of their misguided actions and positioning himself as the advocate of lower taxes and less intrusive government. It’s worked so far.

Yet at the same time, if the chasm between Hogan and legislative leaders widens the governor may not have much in the way of achievements to show voters. By 2018, a cynical public may not view him so positively.

A more powerful state legislature seems on the horizon, and that’s not good news for any governor – unless he is willing to collaborate and compromise. Hogan has shown a lack of interest in either.

The verdict on the governor is still out. He’s shown he can retain his popularity. But can Hogan get major legislation approved while taking a confrontational approach toward a more assertive General Assembly?

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Baltimore: Opportunity Knocks

By Barry Rascovar

March 21, 2016 –Nearly a year after violence, arson and widespread looting tore apart impoverished portions of Baltimore there still is no comprehensive, long-term plan for reviving and improving Baltimore from the governor’s office.

Nor is there an all-inclusive recovery plan from the mayor’s office.

Leadership is lacking.

Mayor Stephanie Rawlings-Blake at least has the excuse that she’s stepping down as Baltimore’s leader in December. A detailed, long-range recovery program will have to be devised and implemented by her successor.

Her silence, though, is deafening.

Gov. Larry Hogan, Jr. has no such excuse. He’s had a long time to figure out how the state can step in with both feet and assist Baltimore rebound from a devastating blow.

He also had a golden opportunity to lay out his full range of ideas for a Baltimore renaissance in his State of the State Address in January.

It didn’t happen.

Vacant Housing Initiative

To his credit, Hogan announced a large, multi-year plan to demolish and replace blocks and blocks of vacant housing. Yet when his budget was released, not one penny had been allocated for this effort.

Pressed by the legislative black caucus, Hogan included a portion of the demolition funds in a supplemental budget, but not before he generated a good deal of ill will among legislators.

He also agreed to legislative demands to add $12.7 million to help Baltimore schools compensate for declining enrollment.

It was left, though to Senate President Mike Miller and House Speaker Mike Busch to cobble together a multi-pronged package of economic and social initiatives to help Baltimore in its hour of need.

Such a move is not ordinarily the province of the Maryland General Assembly. Large bail-out and economic rebound efforts normally come out of the governor’s office.

But since Republican Hogan failed to formulate a Baltimore recovery agenda (other than the vacant housing plan), state legislators stepped into the void.

Legislative Plan

Their $290 million proposal, spread over five years (thus limiting the fiscal impact on the state) helps not only Baltimore but other parts of the state.

  • It offers Baltimore assurance that Hogan’s housing-demolition and replacement plans will be mandatory in future years, not voluntary.
  • It expands existing scholarship programs for disadvantaged kids throughout Maryland.
  • It adds mentoring and other support for middle-school kids in Baltimore and promises them scholarships if they stay out of trouble and get good grades.
  • It adds money to keep city libraries open longer.
  • It allocates funds for after-school and summer programs for children.
  • It provides grants for community groups to develop blighted city areas.
  • It gives Towson University funds to train Baltimore residents as construction workers.
  • And it provides $16.5 million to improve the city’s important system of public parks.

The Miller-Busch package roared through the House last week. The same thing is likely to occur in the Senate.

Hogan hasn’t said much about this important package of bills. His spokesman supported the good intentions of the legislative initiative but worried about the fiscal impact – even though state funding is limited to five years.

Now is the time for the governor to get off the fence and involve himself in shaping a significant Baltimore recovery effort coming from Annapolis.

The legislative package aims at improving depressed neighborhoods. It focuses on giving youngsters better schooling, more positive activities away from school, involving universities and non-profit groups in reviving communities and making Baltimore a more inviting city for those living there.

Time to Act

This is the moment for both Baltimore and the governor to join hands with the legislature in this ambitious undertaking.

With assistance from the governor’s office, objectionable elements of the bills can be modified, new ideas can be added and city officials can come together with the two branches of government in forming a triad of commitments for making Baltimore better.

Hogan brings to the table a businessman’s eye for how to help Baltimore. Even better, he is a businessman with expertise in private-sector land development. He needs to be involved.

Creating the environment for a phoenix-like bounce-back by Baltimore is important for Maryland. The city remains the state’s economic center as well as its regional population, cultural and education center. Tackling the city’s worst problems and overcoming them will pay handsome dividends for the governor in the long run – and for Maryland.

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Hogan’s Foot-in-Mouth Disease

By Barry Rascovar

  Feb. 22, 2016 — Gov. Larry Hogan, Jr.’s words and hyper-partisan messages caught up with him  last Thursday.
  He got hammered by Democratic legislators, and for good reason.
  The Republican governor forgot that the words he chooses can have consequences, especially when you belittle elected lawmakers and issue statements that are intended to insult and inflame.
Hogan's Foot-in-Mouth Disease

Maryland Gov. Larry Hogan, Jr.

  The Donald Trump approach to politics won’t work in Annapolis. It may make Hogan even more beloved by conservatives but his legislative agenda could go up in flames.
  Walling off Democratic lawmakers from participation in major state policy decisions is coming back to haunt Hogan. He’s out of touch with their thinking on key issues and his proposals could suffer as a result.

One Really Bad Day

  Look what happened Thursday.
  First, Hogan went on a conservative radio talk show and belittled Democratic legislators with a truly insulting and unjustified slap: “It’s like they’re on spring break,” Hogan said. “They come here for a few weeks. They start breaking up the furniture and throwing beer bottles off the balcony.”
  The comparison is without foundation.
  No wonder Sen. Bobby Zirkin of Baltimore County, one of the more moderate Democrats, responded angrily later that morning on the Senate floor and demanded an apology. Not a single Republican rose to defend the governor.
  Hogan is having trouble grasping the role of the General Assembly as a co-equal branch of Maryland government. He thinks his surprise victory in 2014 and his popularity in recent polls should allow him to do what he wants, regardless of what lawmakers think.
  It doesn’t work that way. Unless Hogan takes a more cooperative approach, he’s going to have trouble even getting his appointments approved this session.

Capital Priorities Questioned

  Also on the Thursday morning radio show, Hogan rejected the idea that he had favored a new, expensive jail in Baltimore City over badly needed school buildings on historically black college campuses
.
  Yet that’s exactly what happened when Hogan put together his capital budget. The jail project received top priority and new university buildings – many with business-development implications – were given the back of the hand.
  Black lawmakers were visibly upset at a Wednesday budget hearing after they realized higher education had been sent to the back of the bus so a new jail could arise more quickly in Baltimore.
  That rage boiled over Thursday with a hailstorm of denunciations of Hogan by black legislators for a long list of controversial decisions:
• Killing the east-west connecting Red Line subway through Baltimore.
• Refusing to fully fund education aid for Baltimore City and Prince George’s County, among others, last year.
• Neglecting black Marylanders, who constitute some 30 percent of the state’s population, and shifting state funds and programs to rural, white areas that favor Hogan.
• Not including funds in his initial budget for a new Prince George’s County hospital or for demolition of blocks of blighted houses in Baltimore.
  “There are assaults going on our black communities,” said Del. Curt Anderson of Baltimore. “We are not going to take it anymore. . . . We are not stupid. We know what’s going on, and we are going to retaliate.”
  Of Hogan’s preference for a new jail over new college buildings, Del. Barbara Robinson of Baltimore called it “unconscionable.”
  Black lawmakers indicated that Hogan gave the appearance of favoring a lock’em-up penal philosophy over improved educational and job opportunities.

Hasty Retreat

  By day’s end, the governor threw in the towel.
  He asked legislators to deep-six his jail planning funds and instead use the money for the very higher-education building projects he had put on the back burner.
  It was a humiliating defeat for the governor, and he had no one to blame but himself.
  Had he consulted initially with Democratic lawmakers about his jail project and the trade-off in delaying a half-dozen new college buildings, he would have learned immediately it was a non-starter.
  Instead, Hogan excluded elected Democrats from his jail deliberations and never bothered to test the capital budget waters with legislators.
  His hyper-partisan rhetoric only inflamed the situation with Democratic lawmakers last week.
  Unless Hogan tones down his spokesmen and his Change Maryland broadsides, there could be sharper responses from legislators.
  They have the power not only to get mad but to get even.
  Democratic Senate President Mike Miller tried to put a positive spin on the trials and tribulations of his friend the governor. “Everybody has a bad day and this was not a good day for the governor,” Miller said charitably.
  Unless he changes his approach, Hogan could experience many more bad days over the next six weeks.
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Barry Rascovar’s blog is www.politicalmaryland.com. He can be contacted at www.brascovar@hotmail.com.

Procurement Clash Coming?

By Barry Rascovar

Feb. 15, 2016 – First, the good news: Gov. Larry Hogan, Jr. last week created a 19-member commission to come up with ways to fix Maryland’s maddeningly inefficient system for purchasing $7 billion worth of goods and services each year.

Here comes the bad news: This group may wind up trying to re-invent the wheel because state legislators appear ready to pass legislation, based on three years of study, that could dramatically change state purchasing practices.Procurement Clash Coming?

There’s no doubt Maryland’s now-antiquated and creaky procurement system needs an overhaul.

What once was a national model in the 1980s for sensible and effective state purchasing practices is now a costly embarrassment.

Practically every month, the Board of Public Works hears another horror story of botched bids, favoritism by state agencies in awarding contracts and an arcane set of practices and procedures that ties the bureaucracy in knots and delays major contracts for months and sometimes years.

It’s a procurement lawyer’s dream and a nightmare that costs the state dearly.

Broken System

Hogan was right to call Maryland’s system “a patchwork of archaic laws and processes that are inefficient, ineffective and results in wasted taxpayer dollars.”

Comptroller Peter Franchot has been on the warpath for years complaining about this “increasingly unworkable” and “broken” purchasing system “in dire need of reform.”

Lawmakers, especially Del. Dan Morhaim of Baltimore County, have been pushing for procurement reforms, too.

So why are the executive and legislative branches unable to synchronize their reform efforts?

Hogan, on his part, appears to want full credit for any changes. He’s hesitant to work with legislators and seems to have ignored the extensive work already completed on procurement reform.

O’Malley’s Role

There’s a lingering sense Republican Hogan wants nothing to do with anything initiated by Democratic Gov. Martin O’Malley, whom the current governor has indirectly criticized time and again while announcing his own reforms.

Yet it was O’Malley who first took steps to revamp Maryland’s procurement system.

Back in 2012 O’Malley asked the Board of Public Works “to bring someone in to kick the tires” of the purchasing system. “We need to pull this apart and put it back together.”

The board contracted with Treya Partners for a thorough study of Maryland’s procurement activities.

The consultant found fragmented oversight of procurement bidding and the ultimate awards, with multiple state agencies setting their own standards and procedures; conflicting and inconsistent interpretations of procurement practice;, lax contract management, and poor relationships with state vendors.

In other words, the system is pretty much out of control.

Suggested Changes

Treya made 11 recommendations. After studying these proposals in 2014 and examining procurement laws in other states, the Department of Legislative Services backed many of Treya’s suggestions and added some of its own.

Among the main recommendations to lawmakers: Create a Chief Procurement Officer (CPO) under the Board of Public Works and consolidate most procurement officials spread throughout state government under the CPO.

State purchasing would be centralized, uniform processes would be followed consistently and one official would be accountable for ensuring that Maryland gets the best deal and the best quality for dollars spent on services and supplies.

It turns out Maryland is one of only a handful of states lacking a Chief Procurement Officer. The Free State is way behind the curve.

None of this is reflected in Hogan’s announcement. Nor is there any recognition that Democratic lawmakers are ready to turn into law many of these procurement recommendations.

It’s as though the governor doesn’t want to give credit to the hard work already done on procurement reform one floor below him.

Two Ships in the Night

Even before Hogan’s procurement commission gets off the ground the panel’s work may be rendered meaningless. It’s another indication that in the Maryland State House, Hogan and Democratic lawmakers continue to steer in different directions.

Still, the governor can salvage the situation – but only if he teams up with Del. Peter Hammen of Baltimore City, who chairs the House committee that is likely to pass the DLS procurement reform package (HB 353) that gets a hearing this Wednesday.

That would mean sharing credit with Democratic legislators, which Hogan has not wanted to do previously.

It would mean altering the mandate of the governor’s procurement commission so its main purpose becomes assessing the effectiveness of any new procurement law enacted this session and then recommending how to make the new process more efficient, more transparent and more effective in giving Maryland the best value on every contract.

On its own, Hogan’s procurement commission cannot change Maryland’s purchasing laws. Legislators can do that and they seem ready to act.

Hogan can avoid an embarrassment and come out looking like a true reformer by joining forces with like-minded legislators – regardless of their political party – who want a better procurement system for Maryland,

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Marvin the Manipulator

(Second of two parts)

By Barry Rascovar

Sept. 9, 2015 — Former Maryland Gov. Marvin Mandel died last week at 95 after a life of enormous achievements and puzzling contradictions.

Marvin the Manipulator

Marvin Mandel, House of Delegates portrait

On the surface he could be wise, funny, kind, brilliant and farsighted. Yet there was a darker side behind the implacable façade he showed to the public.

As governor for ten years, he manipulated legislators better than anyone before or since. Victory after victory, reform after reform piled up.

What we didn’t know was that Mandel also had been manipulating his first wife, engaging in a long-running affair with a blonde femme fatale from Southern Maryland. He devised a convoluted cover-up and denial when the public finally got wind, after his government car was involved in a late-night fatal crash on a mysterious return trip from Southern Maryland.

He also manipulated the media, planting favorable stories about his administration as well as unfavorable stories on his enemies. He delighted in playing word games with reporters at his weekly press conferences — until those very words got him in deep trouble with federal prosecutors.

What came out in two high-profile trials, marked by a health scare and jury-tampering, was the extent of Mandel’s venality.

He was the behind-the-scenes puppeteer, using his power as governor to reward close political friends in return for a slew of financial windfalls he desperately needed — especially to pay for an expensive divorce from his first wife and the expensive tastes of his paramour (and second wife).

How It Began

Little did I know my very first day reporting on the Maryland General Assembly in 1972 would reveal a key element of Mandel’s manipulations-for-profit.

By that session’s sine die adjournment 90 days later, it was clear a dark, deep conspiracy was at work — with Marvin Mandel acting as the fulcrum.

Here’s what happened in that fateful General Assembly session.

As set out in the Maryland constitution, vetoed bills were the first order of business. One of those concerned a transfer of 18 racing days from the defunct Hagerstown track to Marlboro, a bedraggled half-mile oval in Prince George’s County.

The previous spring Mandel had rejected the bill, claiming it was unconstitutional on technical grounds.

Yet when lawmakers took up the Marlboro veto in early January a surprising thing happened.

Marvin Mandel, the State House wizard with near-total control of the legislature, didn’t lift a finger to defend his veto.

Independence Day

First the House, then the Senate overrode the governor’s action, thus doubling Marlboro’s racing days in less than two weeks after the track changed hands.

But no one in the legislature knew about this change of ownership.

Reform Democrats and Republicans mistakenly crowed that legislators finally had stood up to Mandel and taught him a lesson. It was Independence Day for the General Assembly.

More cynical minds saw it quite differently. Something didn’t smell right, they said.

One of those doubters was Bentley Orrick, The Baltimore Sun’s always-skeptical bureau chief. He saved me from my fresh-on-the-job naïveté.

My written version of the Marlboro action for the next day’s newspaper bought into the theme of rebellious legislators standing up to a powerful governor.

Orrick, though, had the good sense to re-write my lead paragraph so it said Mandel had “all but ‘publicly’ acquiesced” to the veto override that doubled Marlboro’s racing days. He knew something was going on behind the gubernatorial curtains.

Thank the stars for Ben Orrick.

Big Pay Day

We now know Mandel’s cronies were concocting a whopping bonanza for themselves, thanks to Mandel’s actions and non-actions.

When the governor vetoed the Hagerstown-to-Marlboro transfer in the spring of 1971, it sent the price of Marlboro’s stock tumbling.

Thus on New Year’s Eve, Mandel’s close associates secretly bought the half-mile track at a deeply discounted price.

Two weeks later, thanks to Mandel’s unexpected failure to defend his veto, Marlboro had twice the number of racing days. The governor’s pals had doubled the race track’s worth in a blink of a legislative eye.

Marvin the Manipulator Mandel

Gov. Marvin Mandel and his second wife, Jeanne, leaving the federal courthouse in Baltimore.

Throughout that tumultuous 1972 session Mandel continued playing the role of innocent bystander as his friends worked ceaselessly with gubernatorial aides to multiply their race track fortunes.

Out of the blue came a vast racing consolidation bill. It awarded Marlboro a staggering 94 days — more thoroughbred dates than any track in Maryland had ever run before. It amounted to a 500 percent increase in days of racing for a crumbling, small-time track.

The consolidation bill also called for a state buyout of the one-mile Bowie track, with all of Bowie’s racing days — plus Marlboro’s 94 days — transferred to the far more profitable Pimlico and Laurel one-mile tracks.

Marlboro got to keep its night-time harness racing schedule, too.

What an astounding payoff for Mandel’s friends. In less than four months, they would have increased the worth of their recent purchase by nearly $10 million, or $57 million in today’s dollars.

Bit by bit, though, this nefarious profit-making scheme came into public view, thanks to legislative hearings and filings with the Maryland Racing Commission.

Senate Resistance

By session’s end, Mandel’s crew had dropped all pretense of disinterest. His lobbyists were pressing legislators hard to pass the consolidation bill.

Yet resistance in the Senate remained intense.

Among the most vehement foes: Steny Hoyer, Jack Lapides, Jervis Finney, Vic Crawford and Manny Emanuel — all on the Senate Finance Committee that eliminated the bill’s worst elements and eventually refused to pass the measure (on two tie votes).

The ever-observant Finney predicted what would take place next.

He told his Senate colleagues “on the very last night of the session we’ll be called [by the governor’s lobbyists] and told, ‘you can have your bill’ and ‘you can have your bill’ and ‘you can have [racing] consolidation’ and who do you think is going to be getting all its racing days back – good old Marlboro, coming ’round the track.”

On cue,  with less than a hour to go before sine die adjournment Mandel’s chief Senate mouthpiece, Roy Staten of Dundalk, rose to resurrect the racing bill.

Lapides and others started a mini-filibuster. With just ten minutes left before the legal midnight adjournment, Staten tried again to ram the bill through. He failed. Debate persisted for another 20 minutes with Staten pleading for a final, post-midnight vote.

At that point, Lapides tried diplomacy, asking a wavering Senate President William S. James to do the right thing.

“Mr. President,” Lapides politely intoned, “this bill has been properly defeated. . . . The integrity of the Senate is at stake.”

James realized he had no choice, despite the enormous pressure put on him by Mandel. He ruled further deliberations would be “improper.”

No Endgame

For the first time in his career as governor, Mandel had been denied a prime objective — though he and his cronies found a way around the legislature, thanks to a pliant racing commission that Mandel controlled.

A year later the Marlboro owners got regulatory permission to shift their 36 racing days to the larger Bowie track. They reaped a nifty $2.1 million profit — $12 million in today’s dollars.

These shenanigans were to form the basis of federal corruption charges against Mandel.

His reward from his pals included a $300,000 share in a lucrative federal building lease (today’s value: $1.7 million ); a prime parcel of Eastern Shore land ready for development (today’s value: $200,000); lavish vacation travel and wardrobes, and money to finance his expensive divorce from his first wife and the expensive tastes of his paramour (and later second wife).

The value of these “gifts” from friends, in today’s dollars: nearly $3 million.

Clouded Judgment

Mandel’s deceptions and cover-ups, his steadfast refusal to admit any wrongdoing, have clouded the public’s perception of his unmatched contributions to Maryland government.

Did he cross ethical and moral boundaries?

Did he betray the public’s trust?

Elected officials are supposed to provide the public with honest government and honest policy decisions. Was their faith in Mandel misplaced?

Four decades after the fact, those questions still are debated.

Marvin Mandel could have gone into the history books as Maryland’s best governor, an inductee into the national governors’ Hall of Fame.

Instead, he is remembered for his messy divorce; his lies and deceptions; his secretive scheming to enrich his friends; the financial rewards he received in exchange for his underhanded actions, and his incessant denials.

That is the tragedy of Marvin Mandel.

Greatness was within his grasp, but the temptations of love and an elevated lifestyle proved more alluring.

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State Pension Confusion

By Barry Rascovar

August 10, 2015 — For Maryland’s 388,500 state workers and teachers — active and retired —  interpreting the pension news these days is confusing business.Maryland retirement agency logo

Item: Over the past 12 months, the state’s pension fund gained 2.68 percent on its investments.

Is that good or bad?

On June 30, the fund’s market value stood at $45.8 billion, a gain of $400 million over the prior fiscal year. All well and good.

But the state failed to come close to hitting its investment target of 7.65 percent. That’s not so good.

Mystifying, isn’t it?

Manipulating Numbers

Welcome to the fuzzy world of actuarial pension and retirement funding. Depending on the statistics and the way they are manipulated, your retirement accounts may be in fine shape or in the toilet.

Since the media loves bad news, headlines routinely give prominence to the state’s unfunded pension liabilities of nearly $19 billion.

What’s not headlined is the slow progress being made in reducing that actuarial shortfall or the misleading way that number is bandied about.

What needs to be kept in mind is that pension investing has an extended timeframe. That applies to the state retirement fund as well as folks contributing to their IRAs.

As the retirement board’s manual notes, “The investment strategy is long-term, recognizing that the average age of the System’s liabilities is relatively long.” It also notes that taking a long-term view of pension investments “could result in short-term instability.”

Ups and Downs

Over the past five years, the state’s investment returns have been darned good, raising the market value of its holdings from nearly $32 billion to nearly $46 billion. That’s an annual average rise of 9.4 percent.

Let the good times roll!

Yet good times don’t last forever. And they didn’t in the last fiscal year, with stock markets delivering an uneven performance. That downer has persisted into this year, too.

The moral is not to get caught up in year-to-year market reports and investment reports. As long as returns are heading upward by a decent amount over the decades, things will come out all right in the end.

What worries critics of the state retirement fund is that the program falls far short of being fully funded. That actuarial ratio stood at roughly 69 percent last year (or 72 percent if you look at the fund’s market value).

Ample Reserves, Ample Time

Here’s the catch: The state doesn’t need to be fully funded today. It has ample reserves to write current pension checks to former teachers and state workers. The rest of its IOUs will come due in the years and decades ahead as the fund’s active members start to retire.

Some will do so soon but the bulk of active teachers and state workers will be at their jobs for one, two or three more decades. The retirement fund has plenty of time to accumulate the dollars needed to write those future checks.

Pension reforms instituted belatedly by the General Assembly in 2011 are now kicking in. This means higher contributions from active members, a less generous pension plan for newer workers and an increase in what state government pays into the pension fund each year.

Past and present legislators, though, often tend to play games with the state’s annual contribution to the retirement accounts. Sometimes they re-write the law so they can adjust the state’s payment by $50 million, $100 million or more to bolster a favored program or balance the budget.

Governors over the decades have been known to play that game, too.

Still, the state’s pension board seems on a path to reach 80 percent of full funding within 10 years and 100 percent of full funding within 25 years — regardless of the ups and downs of the stock market and politicians’ tendency to see the state’s mandatory pension payments as “flexible.”

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Hogan’s Hypocrisy

By Barry Rascovar

May 18, 2015 — Gov. Larry Hogan Jr. makes it sound like he’s riding to the rescue of Maryland’s underfunded pension program that has been continually “raided” by evil Democratic legislators in Annapolis.

Gov. Larry Hogan & Lt. Gov. Boyd Rutherford

Gov. Larry Hogan (left) & Lt. Gov. Boyd Rutherford

What a bunch of hogwash. It’s pure Hogan hypocrisy.

Hogan’s stance — torpedoing a $68 million education appropriation to the state’s most populous jurisdictions and shifting some of that money into the state pension fund — is based on politics, not policy.

Indeed, Hogan is a late convert to the cause of pension-fund integrity.

Silent Secretary

When legislative analysts went before House and Senate budget panels and proposed a 50 percent reduction in Hogan’s $150 million supplemental appropriation to the pension fund, the governor’s budget secretary not only failed to object but congratulated lawmakers for their assiduous work in responsibly paring Hogan’s budget request.

Not until it became politically expedient later in the session to slam Democrats for cutting the supplemental appropriation in half did Hogan belatedly turn into a pension-funding hawk.

Since then, he’s continually referred to Democratic lawmakers’ “raid” of pension money.

Another bit of Hogan flummery.

The pension agency got so offended at this misguided gubernatorial propaganda pitch that it issued a press release regarding “the mistaken impression that the pension fund had been ‘raided’ by the General Assembly during the recently-completed session. This is not the case.”

No Dipping Allowed

The agency explained that the dispute centered on how much extra should be spent to help the state more quickly reach full funding to pay for future pension payouts. The state’s required $1.8 billion budget contribution to the retirement account this year remained untouched.

Indeed, it’s illegal for the legislature or the governor to “dip into” the $45.7 billion pension fund. That money can only be used to make pension payouts. No “raids” are permitted. But you’d never know that from listening to the governor’s spiel.

Hogan’s pension purity pursuit was his way of diverting attention from his other action — denying important state dollars to Baltimore City and other high-cost subdivisions to help them avoid layoffs or cuts in school programs.

He said it would be “absolutely irresponsible” to give that money to the schools instead of pouring it into the pension fund.

He’s got his priorities reversed.

The greatest immediate urgency is bolstering education achievement in distressed communities like West Baltimore. That takes money.

Further fortifying the state’s pension program can be done more gradually over the next decade or two.

Harsh Consequences

Especially in light of civil unrest in poor, racially blighted Baltimore neighborhoods, Hogan’s decision to yank $11.6 million away from the city school system seems short-sighted and counter-productive.

The consequences of his action could be quite harsh when the General Assembly meets next January.  This slap in the face to Baltimore schools won’t be forgotten. Nor will legislators from Prince George’s and Montgomery counties forget Hogan’s slight, either. They lost a combined $37 million in school money.

The governor’s next big decision could be the fate of the two mass-transit lines affecting those three major jurisdictions — the east-west Red Line in Baltimore and the Purple Line in the Washington suburbs.

His actions on the two lines could prove pivotal in his dealings with Democratic lawmakers. Deep-sixing either project will prompt an uproar. Yet Hogan is intent on appeasing his conservative base by finding ways to sharply reduce mass-transit costs.

He’s playing with political dynamite.

If he sets off a Democratic explosion over the fate of the Red and Purple lines, the resulting fallout could cripple Hogan’s efforts to constructively deal with the General Assembly over the next three years.

Judging from his rejection of supplemental education aid, this governor seems determined to restrict Maryland’s future spending habits at all costs. His goal is to lower taxes. Everything else is secondary.

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Taming MD’s Structural Deficit

By Barry Rascovar

April 27, 2015 —  Can Republican Gov. Larry Hogan Jr. tame Maryland’s long-standing structural budget deficit? Judging from his first stab at it, he’s more than halfway there.

But high hurdles lie ahead if he is to reach the point where the state’s ongoing revenues far exceed annual spending.

Taming MD's Structural Deficit

Hogan may grumble to appease conservative groups about the remaining $206 million structural imbalance in the budget that’s been approved for the fiscal year starting July 1.

Yet that is a sharp reduction from the deficit anticipated back in November of a $525 million shortfall under Democratic Gov. Martin O’Malley.

Not Too Shabby

The General Assembly’s Department of Legislative Services (DLS) says Hogan is 68 percent of the way toward wiping out the structural imbalance — and if he continues to hold firm in denying state workers a 2 percent pay raise starting July 1, he will reach 82 percent of his goal.

Not too shabby for a Republican governor facing an overwhelmingly Democratic legislature.

Those deficit numbers will grow somewhat if Hogan decides to give Democratic lawmakers some of the $202 million they asked him to restore to various education, health and wage programs.

Still, Hogan begins preparation for his second budget in remarkably good shape.

It’s no secret that the Big Three growth items in Maryland’s budget are: 1) soaring debt service payments; 2) continually rising education aid, and 3) ever-rising health-care costs.

Too Many Bonds

Debt service alone will jump by $167 million next year. Payments on general-obligation bonds has tripled in the last three years. Hogan needs to take a hard look at ways to reduce or slow Maryland’s issuance of those bonds, including the always popular school construction allocations, which in July’s budget hits a record $380 million.

Complicating matters for the governor is Maryland’s too-slow economic recovery from the Great Recession. DLS estimates state revenues in fiscal year 2017 will grow a modest 4 percent. Yet it will take a 5.7 percent growth rate to balance spending with revenue.

More economic development is the key. That’s a long-term proposition, though.

Hogan’s aggressive “Maryland is open for business” theme won’t result in major tax gains for the state any time soon. So the governor will have to continue cutting back on state agency spending while finding areas where deeper cuts can be made without creating a harsh backlash in the legislature.

Ratcheting down the structural imbalance is Hogan’s best course. The problem is that he’s also determined to deliver on his main campaign promise — lower taxes.

Thus, balancing the state’s books isn’t enough. He’s got to go further so he can justify a tax cut that does not create a new structural deficit.

More Daunting Problems

That’s where Hogan’s problems multiply. Aid to local governments is a likely target, until you start to pull the plug on specific spending programs, like money for schools, police, fire-fighting, the poor, libraries and parks.

MD's Structural Deficit

Indeed, almost every area of state government spending affects huge numbers of Maryland citizens. Hogan must take care not to antagonize too many of them. If he does, it could jeopardize his re-election

Looking down the road, Hogan faces even more daunting budget difficulties, Indeed, DLS puts the state’s combined deficit for fiscal years 2019 and 2020 at $1.165 billion .

As bad as this sounds, it is a huge improvement over what O’Malley left behind: a combined estimated deficit for those two years of nearly $2 billion. Hogan reduced that future imbalance by 41 percent in his first budget.

Fundamental spending changes won’t be possible with Maryland’s Democratic legislature acting as a brake on Hogan’s budget-cutting tendencies. That’s why the slow-but-steady approach makes so much sense.

It won’t please Hogan’s absolutist supporters, but gradualism could prove the most practical and politically astute path to follow.

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Minimalist Legislative Session

By Barry Rascovar

April 15, 2014 — Not much was expected from the 2015 Maryland General Assembly session — and we weren’t disappointed.

Minimalist Legislative Session

Think I’m kidding? Then try this one on for size:

(Fill in the Blank)

“The Maryland legislature’s greatest achievements this past session were _______________________,  ___________________________ and  ______________________________.

I couldn’t complete that sentence.

There was no big-league legislation to crow about when the final gavel sounded sine die Monday night.

If you, too, have trouble coming up with truly significant steps forward by the General Assembly this session, you’re not alone.

It got so bad that when the Baltimore Sun spent 24 column inches on legislative achievements, every section detailed the General Assembly’s failures — not successes — on education, transportation, environment, criminal justice and health. Few accomplishments were even mentioned.

Turnover Hurt

This shouldn’t come as a surprise.

High turnover after Assembly districts were re-drawn before last year’s elections meant a large number of freshmen lawmakers spent the 90-day State House gathering learning the ins and outs of lawmaking, how to file their expense accounts, where the bathrooms are located and what it takes in practical terms to get bills enacted.

No wonder this was a minimalist session.

New Gov. Larry Hogan Jr. didn’t help matters. The Republican came into office with zero experience as an elected official, just a handful of campaign promises and no legislative agenda.

The wish list he submitted proved thin and lacking in substance or realism. Few of his bills passed; those that did were given Democratic-friendly face-lifts.

Minimalist Legislative Session

Maryland Gov. Larry Hogan Jr.

Hogan failed to provide the Maryland legislature with strong guidance or leadership — other than his effort to chop  the size of the state budget. He was a no-show on legislative matters for much of the session.

Uber, Divorces & Midwives

When the most newsworthy votes deal with Uber’s taxi service, granting quicker divorces, allowing midwife home-births, higher speed limits and letting ex-felons vote, it signals that Maryland lawmakers knew they weren’t ready to tackle heavy-duty issues.

That’s not necessarily a bad thing.

Who says every General Assembly session must contain blockbuster legislation? Sometimes it’s nice to know state lawmakers are content to tinker around the edges of state law.

That means taking small steps to clarify existing statutes, modernizing antiquated sections of the Maryland code and giving interest groups incremental adjustments instead of sweeping change.

Who Sets the Agenda?

Legislatures are not designed to provide strong leadership on dominant social issues. Too many people are involved — 181 in Maryland’s case. It’s up to the governor to set the agenda each year. He’s the state’s top elected leader after all.

But Hogan wasn’t prepared to lead so soon after his surprising election last November. Next year, though, should be different.

His challenge will be to assess what practical moves can be made to help grow jobs in Maryland, improve education and transportation, protect the environment and public safety while helping the state’s large underclass.

Then he’s got to find ways to reach out to Democrats in the legislature for support.

Failure to do so could make next year’s session an even bigger disappointment.

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Hogan: Strike One

By Barry Rascovar

April 14, 2015 — In his stubbornly conservative and highly politicized approach to governing Annapolis over the past week, Republican Larry Hogan Jr. took a step that may seal his fate as a one-term governor.

Hogan: Strike One

Maryland Gov. Larry Hogan Jr.

Let’s see: In just a few days Hogan managed to alienate and infuriate state workers, public school teachers and education advocates, disability workers, supporters of medical assistance for poor pregnant women and doctors who treat Medicaid patients.

He also left a trail of non-accomplishments.

Hogan’s refusal to follow-through on a final budget accord and instead turn the issue into a political football left Democratic legislators resentful and itching to show they can play hardball, too.

For someone who entered the governor’s mansion as Mr. Nice Guy cooing bipartisanship, Hogan ended his inaugural legislative session as Mr. Tough Guy defiantly declaring great success for what was clearly a disappointing 90-day performance.

Seeds for a Pushback

His flimsy legislative agenda got shredded. He turned victory on the state budget into an easily avoidable defeat.

He sowed the seeds for a strong Democratic pushback that could make Hogan’s legislative life miserable over the next three years.

The Republican governor’s inexperience showed.

He let hard-line ideologues on his staff get their way. Democrats reacted by tying his hands in future years on making budget cuts to education. They blocked him at nearly every turn.

Teacher layoffs that are sure to follow from Hogan’s budget-cutting actions will haunt him. He has awakened a key element of the Democratic Party’s base. Teachers and public school parents in core Democratic jurisdictions will neither forgive nor forget.

Pay Cut Coming

He also made enemies of 80,000 state workers by cutting their paychecks 2 percent, starting in July.

He still has a chance to spend the money set aside by the legislature for those two groups but that would require political accommodations Hogan doesn’t seem willing to make.

The irony is that Hogan had a golden opportunity to negotiate a budget giving him much of what he wanted without enraging large voting groups.

Indeed, Democratic negotiators thought it was a done deal — until Hogan made intentionally unacceptable demands at the last moment.

The new governor showed his naiveté and lack of insight into Maryland’s complex legislative process. His hard-nosed, conservative roots were showing.

His biggest mistake: Failing to accept the divided nature of governance in Maryland. Election as governor does not entitle Republican Hogan to rule the land in an imperial, “I’m the boss” manner.

Democrats firmly control the General Assembly. They are co-rulers. They make the laws, set policy and sit in judgment on the governor’s budget.

Hogan can’t demand obeisance to his legislative wishes. He can’t insist Democrats support a decidedly Republican agenda. Yet that’s what he tried to do in the final week before Monday’s sine die adjournment.

Budget Progress

Picking up the pieces won’t be easy for the governor.

He did, though, take a major step toward truly balancing the state’s budget. Simply by trimming government spending in the next few years, identifying areas where money can be saved without significantly impacting services and keeping expenditures lower than Maryland’s growth rate, Hogan can tame the state’s structural deficit demon.

But don’t expect savings large enough to support major tax cuts. Even if that were to happen, Democrats in Annapolis would write laws that re-direct this surplus in ways more appealing to their constituents in Maryland’s big, Democratic subdivisions.

Hogan gets the next nine months to operate without legislative interference. He’ll have time to assess his next moves and prepare more carefully for the 2016 General Assembly session.

Will he seek to re-build bridges to Democratic lawmakers on issues of mutual concern?

Or will he continue to take the path of political opportunism that makes governing impossibly difficult in the Maryland State House?

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