Tag Archives: Maryland

Betraying State Workers

By Barry Rascovar

March 23, 2015 — Once again, the House of Delegate took the easy way out of its budget bind — and in the process stuck it to future state workers, teachers and taxpayers.

The Senate is on a glide path that follows that same flawed approach.

Instead of facing up to its fiduciary pension obligations, Annapolis delegates opted to play games, placing at risk the safety of state retirement programs.

Budget balancing

In the process, the delegates are leaving the next generation of taxpayers a monster-sized unpaid pension bill totaling in the billions.

If Maryland loses its prestigious triple-A bond rating, you’ll know who to blame.

Thanks to the intellectually dishonest proposal by the Department of Legislative Services, the delegates found a way to save $75 million this year to pay for K-12 education and a salary increase for state employees — if the governor goes along with those suggestions.

How It Started

Back in 2011, the state agreed to supplement its annual pension contribution by $300 million a year. This was the quid pro quo for forcing state employees and teachers to contribute more out of their own paychecks to the pension program.

But lawmakers reneged on the bargain, eventually cutting their supplemental payments to $150 million a year — or to zero when times got tough.

Now the House wants to reduce the state’s supplemental payment to just $75 million each year — a far cry from the original $300 million commitment. Meanwhile, state employees and teachers get no relief in their enlarged pension payments.

A major part of the rationale for this irresponsible move by lawmakers is the fast-rising value of the retirement agency’s stock portfolio. Last June 30, the state pension program topped $45.4 billion — a rise of $5.2 billion in just one year.

Its investment return for the fiscal year was a strong 14.4 percent. Fund managers have exceeded their target of 7.7% growth in four of the past five years.

Roller Coaster Ride

Sounds wonderful, doesn’t it?

It certainly entranced the legislature’s budget analysts, who cited the stock market rise as a key factor in recommending that the state slash its supplement payments by 75 percent.

But a funny thing is happening on Wall Street.

In the first 75 days of 2015, stocks ran out of gas. The long rally stalled. Prices are about where they were on Jan. 1.

If Wall Street’s prices fail to rise, or even fall, for the rest of this year, Maryland’s pension managers won’t come anywhere near their 7.7 percent growth target.

The retirement agency’s unfunded liabilities could jump substantially — and the heat will be on state legislators and the governor next year to make up the difference.

Inevitable Downturn 

That’s why the legislature’s quest for immediate gratification is so misguided. This is not the time to monkey around with reduced pension contributions.

When the bulls rule Wall Street, Maryland politicians start thinking they can cut back on the state’s pension appropriations. But that ignores the inevitability of the economic roller coaster. Prosperity only lasts so long.

If lawmakers don’t prepare for the lean years they will put Maryland’s pension program — already nearly $20 billion in the hole — in an even worse bind.

###

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.

###

Reneging on a Promise – Again

By Barry Rascovar

March 2, 2015 — The legislature’s fiscal leaders, in a truly bizarre move, are considering reneging — once again — on a commitment to state workers and the public by pulling the plug on supplemental state contributions to Maryland’s severely underfunded pension program.

It would save $71 million this year, $179 million next year and $233 million the third year. But, over a 25-year span this action would cost taxpayers a staggering $2.5 billion.

This suggestion from the legislature’s own analysts didn’t come out of the blue. The Department of Legislative Services was told by Democratic leaders in the legislature to find mounds of money that could be cut from the budget for later redistribution to their priorities — education and health care.

‘Deja Vu’

The result is an incredible prostitution of DLS’ fiscal stewardship. It is as though these analysts and legislative leaders learned nothing from the pension debacle of the past decade.

If approved, this proposal would be, as Yogi Berra once said, “Deja vu all over again.”

Solving a short-term budget problem would seriously threaten the state’s long-term fiscal viability — and its triple-AA bond rating.

Legislators would be gambling that a booming stock market continues over the next decade without let-up. This would easily erase the need for supplemental pension payments by the state to help close a whopping $19 billion unfunded liability.

But what if economic good times fade? What if — as is almost inevitable — the stock market suffers setbacks during that time?

Irresponsible Plan

Unfunded liabilities in the state worker and teacher pension accounts would soar, just as they did during the recent Great Recession.

It is a foolish and fiscally irresponsible proposal that never should have been presented to the legislature. It could make a bad situation worse and set off alarm bells at bond-rating agencies.

Interestingly, the Hogan administration considered this proposal and rejected it — even though it would have helped close a $1 billion budget gap.

Budget Secretary David Brinkley

Budget Secretary David Brinkley

David Brinkley, Hogan’s budget chief, said the decision was made to honor the state’s commitment to its employees.

In 2011, lawmakers approved reforms that raised employee payments to the pension system, reduced benefits for new workers and committed the state to increasing its annual payments.

Reneging on that agreement would be a terribly crass and unwise step, a slap in the face to state workers and public school teachers. They still must ante up additional paycheck dollars to fortify the pension system.

Moral Obligation

Why should state legislators walk away from their end of the bargain?

“What duty do we have to employees,” said Del. Tony McConkey of Anne Arundel County. “What moral obligation do we have”?

Del. Tony McConkey

Del. Tony McConkey

“A promise made is a promise kept,” noted Del. Mike McKay of Allegheny County.

Indeed.

Short-sighted illogic got Maryland into deep trouble the first time. Will lawmakers be foolish enough to go down that road again?

Glendening Started It

Back in the early 2000s, Gov. Parris Glendening intentionally underfunded state payments to the pension program so he could increase education aid. The legislature not only went along but came up with a flawed accounting gimmick to justify lower payments.

Known as the “corridor funding method,” this scam lets the state cut its pension allocations when times are good and stock market returns are strong.

But when the recession hit in the late-2000s that corridor became a dead end. The state’s pension liabilities skyrocketed. Tough, painful reforms had to be instituted.

Eventually, the state pension board agreed to phase out the corridor funding method that had caused all the trouble.

Walking Away

Now, DLS is proposing that Maryland repeat its actions of the early 2000s, but without calling it “corridor funding.” The state would walk away from its pledge to state workers and teachers and stop its supplemental payments.

Sure, there would be short-term benefits, enabling legislators to allocate more money for other priorities. Over the next 11 years, the state would save $2 billion that could be spread around to worthy programs.

But here’s the catch: In the subsequent 14 years, the state would have to shell out a staggering $4.5 billion in extra payments to make the pension fund whole.

Even worse, that calculation doesn’t consider what happens to the pension fund in the next two or three recessions. After all, economic downturns are inevitable and an integral part of the economic cycle.

Nightmare on State Circle

What a nightmare this could turn into.

As Brinkley told the House Appropriations Committee on Friday, if the pension fund’s earnings performance turns south over the next 10 years, “this will be a disastrous decision.”

The legislature’s fiscal leaders, especially Del. Maggie McIntosh of Baltimore and Sen. Ed Kasemeyer of Howard County, need to think hard about the dire consequences that could ensue by taking such a dangerous step.

They should remember what writer-philosopher George Santayana said:

“Those who cannot remember the past are condemned to repeat it.”

###

Sticky Tax Conundrum

By Barry Rascovar

Feb. 23, 2015 — Sometimes a simple, sensible-sounding tax reform runs smack into sticky realities. The result is a puzzle for Maryland legislators trying to do the right thing.

That’s the case this session with bills (SB190, HB209) designed to clarify state law regarding the “taxable price” of discounted hotel rooms sold over the internet by travel websites.

Advocates claim companies like Orbitz and Expedia are ripping off the state by buying blocks of discounted rooms from hotels, re-selling them to Maryland consumers at higher rates but paying state sales tax on the original, lower purchase price.

Expedia logo

If that’s true, we should change Maryland’s tax laws and close this alleged “loophole.”

But it’s a complex situation in which the role of the internet travel companies isn’t transparent. There’s a yawning gulf between what lawmakers believe and what may be the true facts.

Confusion Abounds

Even the legislature’s fiscal analysts seem confused. They aren’t even sure if the proposed reform will result in more tax revenue. Opponents flatly assert the Department of Legislative Services got the facts wrong.

Travel agents maintain they are not purchasing discounted, hotel room blocks and then re-selling them to the public at a higher price. They maintain they aren’t in the room-selling business.

They say they are acting as an intermediary between the hotel and the consumer. The hotel negotiates a discounted room rate with the travel company, which then advertises this discounted rate. When a sale is made, the customer pays the discounted rate to the hotel, plus a service charge or fee that goes to the intermediary.

That extra charge isn’t taxed.Orbitz

The travel agents claim the hotels pay all the room taxes on the discounted, negotiated price. There’s no jacked-up extra room charge to consumers by Orbitz or Expedia other than that service fee.

Murky Issue

If all this is true, legislators need to take a closer look at those tax-reform bills. It may be a case of not understanding the true situation.

But it gets murkier.

The comptroller’s office is suing internet travel agents on much the same grounds. The case is before the Maryland Tax Court. Meanwhile, four counties already have sued the big internet travel sites and settled out of court.

While all this is going on in court, it seems senseless for the General Assembly to further confuse matters in ways that could mess up the current tax case and lead to years and years of new litigation.

There are other problems with the bills.

The measures would impact local travel agents, local tour operators and vacation rental managers. It would impose a new administrative tax burden on many small travel-related businesses.

Double Tax?

It also could wind up as a double tax on these local travel businesses, since they already pay a corporate income tax on their service fees.

Here’s another complication: This would amount to a new tax on services — an area where Maryland has tried not to impose levies. Is this opening the door to a broad application of the state sales tax to all service businesses?

Given the results of the last election, a drive to add more tax levies that will be paid by consumers seems ill-timed and poorly thought through. That’s especially true given the uncertainty about what’s really going on in the discounted hotel room-rate industry.

This is not the first tax squabble where well-meaning lawmakers have run into unexpected obstacles because the issue is poorly understood and hard to simplify.

For years, liberal lawmakers have pushed for a “unitary tax” on out-of-state corporations. The combined-reporting bill runs into insurmountable headwaters each session because it’s not a black-or-white issue. Previous studies show the reform might prove counter-productive and yield little in new revenue over the long haul.

Tread With Care

The best course for legislators on the room-tax issue is to proceed with caution.

Let the comptroller’s court case play out. That will provide additional definition of the “taxable price” of these discounted rooms, which is strongly under dispute.

There’s also need for more legislative study.

How do these internet travel sites really work? Do they jack up discounted room rates or not? Are they true intermediaries between the hotels and consumers, collecting only a service charge?

If the state starts taxing this travel-agent service, shouldn’t it do so uniformly on all business services? Would this be wise tax policy? Would it put Maryland businesses at a competitive disadvantage?

The more we learn about this room-tax issue, the cloudier things get.

With so much room for doubt, legislators would do well to pass on these tax-reform bills until they get a clear picture of what’s at stake and how the discount room-rental industry really works.

###

Hogan’s Continuing Campaign

By Barry Rascovar

Feb. 11, 2015 — When is Gov. Larry Hogan Jr. going to stop campaigning and get serious about governing?

He started on the right foot with his “placeholder” budget that lets him tread water till he wraps his arms about the state’s fiscal problems next year.

He followed the same approach with his State of the State address. In most respects, it was a bland, “placeholder” address.

But then he and his speechwriters lost their focus and started waving the Republican Party’s bloody flag during that speech rather than reaching out sensibly to Democrats.

Hogan addresses legislature

Gov. Larry Hogan Jr. addresses MD General Assembly

He said little that was new. There were no rhetorical flourishes. He offered no surprises or initiatives.

Instead, he reverted to campaign mode, re-hashing his partisan themes and denigrating the prior Democratic administration.

Everything Gov. Martin O’Malley did was placed in the negative. Larry Hogan and the Republicans are here to save Maryland!

No wonder Republicans applauded and Democrats responded with silence and growing anger.

Taxes are too high. We’re overregulated,. We need to get government off our backs. We’re anti-business. Maryland is in trouble. It’s headed in the wrong direction.

Sure, Maryland is beautiful. It’s citizens are hard working. But we’ve got to “get Maryland back on track.” Clearly Hogan thinks he knows how to do it.

Economic Turnaround

He pledged to turn Maryland’s economy around.

Who is he kidding?

Maryland is at the mercy of large, macro-economic trends and developments. He’s promising more than he can deliver.

Limited Role

Like any governor, Hogan can only nibble around the edges to make Maryland’s economy stronger and create jobs.

He is fortunate the national economy continues to show steady improvement. If that continues, Hogan will be the beneficiary. But he can’t claim he helped cause it.

His State of the State Address laid out a number of steps he wants to take in his first year, but few are realistic or achievable. They are far too partisan.

The worst aspect of his speech was the overwrought refrain about the dreadfully misnamed “rain tax.”

What an evil! Why, it’s almost sinful to ask counties to raise funds to prevent stormwater runoff from polluting the Chesapeake Bay and its tributaries.

Demanding an end to the “rain tax” is good Republican red meat.

The fact that the tax is pretty much voluntary already is irrelevant to Hogan. He’s in this fight for long-term political gain. He’s using this gambit to undercut Democrats.

He’s also making enemies in the General Assembly — powerful enemies he will need as friends in short order.

Democrats’ Response

There was few references to bridge-building in Hogan’s speech, or in the press conference he called to introduce his “rain tax” abolition bill. He was using tired campaign rhetoric.

No wonder Democratic leaders responded with coolness, followed by sharp criticism.

Then they delayed approval of his Cabinet appointments.

The battle lines are hardening far earlier than anticipated, and Hogan is to blame.

The new governor’s State of the State address was so short on specifics as to make it a useless document for determining how he intends to find common ground with the dominant political party in the General Assembly.

His “rain tax” remarks this week added fuel to the fire.

Hogan -- State of the State Hogan can win most of his budget fights with the legislature, but he is a sure loser on all other legislative matters if he doesn’t stop his partisan rants. He needs to figure out where he and House Speaker Mike Busch and Senate President Mike Miller are in agreement.

Delivering a budget that necessarily tightened the state’s purse strings was bound to cause ill will and anger. Hogan has done little since then to bridge the gap with Democrats.

In his State of the State address, Hogan pledged to “create an environment of trust and cooperation, one in which the best ideas rise to the top based upon their merit, regardless of which side of the political debate they come from.”

A week later, that remark seems a mere platitude.

Until Hogan drops the partisan politicking, his legislative agenda is dead in the water.

He’s got to start acting like a governor, not a candidate.

###

Hogan’s Era of Good Feeling

By Barry Rascovar

Jan. 21, 2015 — At least for a brief moment, Gov. Larry Hogan Jr.’s Era of Good Feeling ruled Annapolis.

Hogan Inauguration

We’ll soon learn if his strong message of bipartisan harmony and mutual respect can survive the harsh reality of Hogan’s first, greatly diminished budget, which he’ll release Thursday.

Hogan’s inaugural, with snow flakes falling faster and faster as the event progressed, struck all the right chords.

“Dignity, respect and camaraderie” is what we expect from our public servants, said Jim Brady, who presided over the outdoor ceremonies on the State House steps and also ran Hogan’s transition team.

“Focus on things that unite us” and “work across party lines,” was how Lt. Gov. Boyd Rutherford put it.

“Compromise and consensus are not dirty words,” emphasized New Jersey Gov. Chris Christie, who introduced the new Maryland governor and championed Hogan’s election.

Hogan’s Themes

“A rebirth of our spirit and common purposes,” is how the 62nd governor of the Free State expressed it. No more “wedge politics and petty rhetoric.” A “new beginning.” A “sense of optimism.” “Limitless possibilities.” “An environment of trust and cooperation” where ideas are acted upon “based on merit.”

All the right words. It was a typical inaugural, full of positives and good wishes.

Hogan came across as he always does: a down-to-earth fellow who wants to run government with the focus on efficiency and effectiveness, not political ideology. He repeatedly used the term “common sense” to describe how he will govern.

He quoted a Democrat (John F. Kennedy) and a Republican (Abraham Lincoln) to stress the need for a new approach in political Annapolis that sets aside differences and finds “middle ground.”

A Little Red Meat

There were a few digs sprinkled among the words of comity, especially when Hogan spoke of “rebuilding the forgotten middle class” and getting government “off our backs and out of our pockets” — red-meat Republican applause lines straight from his campaign monologue.

Once the celebrations are over late tonight, the real work begins. It won’t be pretty and it won’t be met with unified applause.

Hogan promised to set Maryland on a different course, one that re-shapes the bloated state budget in ways Democrats are likely to resist.

The Inauguration Scene

The Inauguration Scene

There is growing agreement even on the Democratic side that Maryland has been living beyond its means, that spending on programs is expanding faster than the tax receipts coming in.

But will lawmakers stand by idly as cuts are made to education and health care? Are they willing to forego mass transit lines? These are the kinds of questions intentionally left out of inaugural speeches.

Putting Maryland on a more sustainable fiscal footing is an admirable goal that could help Hogan meet his pledge to lower taxes. Yet it will be difficult to achieve in the short term and possibly even in the long term unless Hogan gets  a boost from the national economy.

On another front, Hogan can take early, unilateral steps to cut red-tape and bureaucratic regulations. It’s been needed for a long time. The push-back from special interests could be intense, though.

For a day, Larry Hogan’s vision of a less partisan, more practical state government in Annapolis held sway.

The Hogans and Rutherfords in the State House.

The Hogans and Rutherfords in the State House.

His unfailing optimism and ability to search for areas of agreement are his greatest assets. He’s taking a more accommodating track than Maryland’s last Republican governor, Bob Ehrlich.

So far, Hogan is off to a cheery and encouraging start.

###

Gill to the Rescue?

 By Barry Rascovar

(A version of this column was published by CenterMaryland.)

Jan. 13, 2015 — For Gov.-elect Larry Hogan Jr., there’s no more important cabinet appointment than secretary of the Department of Business and Economic Development.

What happens on job-growth and business-growth are likely to determine the success, or failure, of the Hogan administration.

So there was a lot riding on last week’s choice of R. Michael Gill as DBED secretary. The response to date: overwhelmingly positive and complimentary. Hogan seems to have picked a winner.

Mike Gill

New DBED Chief Mike Gill

“He’s absolutely perfect for the job,” says former Sen. Frank Kelly, who served with Gill on the University System of Maryland Board of Regents.

“Mike has the most positive attitude of anyone I know. His enthusiasm is contagious. I think that’s what we need.”

Super-Salesman

Gill has a deep, abiding love for all things Maryland. He won’t have trouble “selling” the Free State to business prospects. It will come from his heart.

He’s a smart, personable super-salesman with a knack for retaining details about the people he meets. He’s quick on his feet, interesting to talk to and a true people-person.

Mike Gill has 32 years’ experience in information technology and wireless communication, starting with sales and marketing jobs at IBM, a fertile training ground.

He struck it rich by founding an early telecom wireless services and repair company (AMERICOM), but he also knows what it is like to take over a struggling technology company (Bluefire Security Technologies) and watch it flounder because its product was ahead of its time.

Gill is a master networker and civic presence, an investment banker (chairman of Evergreen Advisors) for middle-market companies and a never-give-up booster of state education institutions, especially his alma maters, Calvert Hall and Towson University.

Facebook Friends

The new DBED chief’s wide spectrum of acquaintances is reflected on his Facebook page, where “friends” are listed.

At the top is Hogan, followed by the state’s new insurance commissioner, Al Redmer, former state budget chief Chip DiPaula, and veteran Baltimore disc jockey Eddie Applefeld.

A second column lists University of Maryland Medical System vice president and lobbyist Mark Wasserman (a former DBED secretary), Towson real estate promoter Bob Latshaw, former Republican state chair and moving van mogul John Kane and business pal Ed Crawford.

Some are Democrats, though most are Republicans. Nearly all of them have important government experience and/or years of business know-how.

This symbolizes what Hogan is trying to achieve: Running government more like a business by turning to a mix of successful private-sector executives and entrepreneurs to light the way, along with folks possessing government management backgrounds.

Reviving DBED

Gill’s orders are to jump-start a moribund DBED weighed down for the past eight years by Gov. Martin O’Malley’s love-hate relationship with Maryland businesses. “Selling” Maryland was never at the top of his “to-do” list.

During those eight years, Maryland gained a reputation as a state where government was hostile to the private sector. No wonder O’Malley’s DBED secretaries proved lackluster.

It won’t be easy turning around the department and creating the sort of buzz that sparks corporate interest in moving jobs to Maryland.

If anyone can do it, though, it is Mike Gill.

Mike Gill

Keeping Spices at Home

He’s already waxing eloquent about retaining McCormick & Co.

Thanks to his decades-old relationship with McCormick, Mike Gill is well positioned to find a way to satisfy the Fortune 500 spice company so it will anchor its new headquarters near McCormick’s historic roots.

Gill has a wealth of knowledge about Maryland’s high-tech and bio-tech advantages and the state’s first-rate institutions of higher education.

North Carolina may have a Research Triangle, but Maryland has a Research Rectangle (NIH, UM’s flagship College Park campus, Johns Hopkins and UM’s professional schools and medical research campus in Baltimore).

Boston may have a Route 128 Technology Corridor, but suburban Washington has its own, high-powered I-270 Tech Corridor, which dominates Montgomery and Frederick counties.

Only Maryland has an emerging cyber-security corridor stretching from Fort Meade and NSA to Washington, D.C.

Combine this with business incentives Hogan is certain to propose from the State House, and DBED might start generating exciting news sooner rather than later.

No Desk Jockey

One of Mike Gill’s favorite quotes (from espionage mystery writer John Le Carre), goes like this:

“Behind the desk is a dangerous place to view the world.”

That is especially true in government, as Gill will discover. Too many State House leaders spend way too much time in meetings. Their daily schedules are chock full of paper-shuffling, conference calls and roundtable talkathons.

Gill insists on an outside-the-office routine, where he gets to know his staff intimately, learns from them about issues and problems and works cooperatively to find solutions.

It won’t be much different dealing with Maryland’s businesses.

As DBED secretary, Gill will be on the go constantly, searching for companies that appreciate Maryland’s quality of life and its vast potential, finding out what local firms need and offering start-ups guidance and hand-holding from economic development pros.

Mike Gill has been described by a business friend as “a man of action, not words.” That sounds like the right formula for DBED at this juncture.

###

Hogan’s Heroes Arrive

By Barry Rascovar

Jan. 19, 2015 – The Changing of the Guard takes place in Annapolis this week: There will be a sharp course correction with the arrival of Hogan’s Heroes.

Hogan's Heroes Leader-Larry Hogan Jr.

Gov.-elect Larry Hogan Jr.

On Wednesday, Republican Larry Hogan Jr. takes the oath of office as governor, followed by the departure of former Democratic Gov. Martin O’Malley as he starts his quixotic quest for the highest office in the land.

On Thursday, Governor Hogan unveils his sharply reduced budget, which will be a shock to the system of Maryland Democrats.

Thus, the Hogan era begins.

Democratic interest groups will have to learn some new tricks.

The old way of bludgeoning a Democratic governor and Democratic legislature into submission won’t work.

Outdated Lobbying Methods

Massing hundreds, or thousands, of protesters on the State House steps used to do the trick when O’Malley was in power.

Hogan, though, could care less if the teachers union or the state workers union or the construction unions fill Lawyers’ Mall to overflowing or flood his office with form-letter emails.

Simply demanding more pay, more benefits, more school funds, and more social services won’t be helpful, either.

The new governor is approaching his job with a firm set of ideas on how to govern Maryland that is in marked contrast to the traditional Democratic method.

No longer will the state budget balloon to satisfy special interest groups within the Democratic Party. No longer will special-interest bills designed to mollify those same power bases within the Democratic Party hold sway on the second floor of the State House.

Businessman as Governor

Hogan takes a businessman’s approach to governing. He holds definite conservative views, but Larry Hogan is far from an extremist. He’s no friend of tea party fanatics. He’s not about to take Maryland back to the Stone Age.

That could be seen clearly in many of his appointments.

Hogan chose a well-rounded group of upper-level managers and advisers, including a good number of pragmatic, moderate Democrats with legislative experience, such as former Sen. Rona Kramer from Montgomery County, former Baltimore County Councilman Joe Bartenfelder, former Delegates Steve DeBoy and Keiffer Mitchell from the Baltimore area and former Delegates Van Mitchell and George Owings from Southern Maryland.

DeBoy in particular is an important choice, since he will be engaged in lobbying lawmakers on behalf of the Hogan administration. He’s a retired cop from Catonsville who was highly respected by fellow delegates for his friendliness, common-sense and conservative pragmatism.

Understanding Hogan

Many of the appointees have strong business backgrounds. That is the key to understanding Hogan’s mindset.

People with experience in business know the crucial importance of avoiding a deficit. You spend what you take in, and no more. You don’t expand services hoping that the economy soars. That is the path to bankruptcy.

Hogan won’t have much sympathy for teacher unions demanding ever-increasing amounts of school funding. That’s not how businesses work.

Hogan is going to take a jaundiced view of state worker union demands for pay increases and benefit gains every year. He knows that’s a sure way to drive a business to the brink of insolvency.

There will be plenty of pain as Hogan squeezes budgetary excesses out of Maryland’s funding programs. Businesses do that all the time. The goal is to build a leaner yet more effective company.

Losing Bad Habits

Hogan is almost certain to tell Marylanders that state government has gotten itself into bad habits: excessive borrowing; depleting all the government’s “piggy bank” accounts to paper over revenue shortages; shifting around funds; spending far more each year on education than revenues allow, imposing new taxes to cover up bureaucratic inefficiencies.

Righting the Ship of State in Maryland won’t be easy. The last Republican governor, Bob Ehrlich, rashly thought his charisma would be enough to win over doubting Democrats in the legislature.

Hogan was part of Ehrlich’s team. He saw the gridlock and ill will that resulted. He learned some painful lessons.

Centrist Politics

The new governor is a glad-handing, commercial land-development salesman and negotiator. Those skills will come in handy. He knows that the art of the deal involves compromise – on both sides.

Governing from the center is pivotal if Hogan is to succeed.

He can’t be a conservative ideologue, tea party libertarian or doctrinaire Republican. None of that will fly with a liberal General Assembly.

Hogan already has shown us he knows how to campaign as a Republican centrist. It proved wildly popular with voters in November.

If he can repeat that recipe as governor, Larry Hogan Jr. could be living in the governor’s mansion for a considerable length of time.

###

Dumb, Dumber and Dumbest

By Barry Rascovar

You might call them Dumb, Dumber and Dumbest. They have earned those titles for outrageously ignorant and beyond-the-pale actions as elected officials. Their names: Kirby Delauter, Richard Slutzky and Jack Young.

Judge for yourself which is Dumb, Dumber and Dumbest.

KIRBY DELAUTER

I am using his name in this blog without Kirby Delauter’s authorization.

Frederick County Councilman Kirby Delauter

Councilman Kirby Delauter, Frederick County MD

Who is this guy? Kirby Delauter was a Frederick County Commissioner for one term and before that served on the Thurmont Police Commission. He runs a Thurmont contracting company and was elected to the new Frederick County Council last year, representing District 5.

He claimed the right to exclude his name from media publications.

After the Frederick News-Post wrote about a juvenile spat involving Delauter over special councilmanic parking spaces, he responded by threatening the reporter: “Use my name again unauthorized and you’ll be paying for an Attorney.”

Huh?

Guess Delauter forgot about the First Amendment, i.e., freedom of the press. He also apparently isn’t aware of court decisions that make it clear Kirby Delauter, as an elected public official, is fair game for the media. You don’t need a permission slip from him to mention his name.

Delauter’s temper tantrum went viral around the world. He’s been mocked and made fun of by his local newspaper and folks all over the country.

No wonder he backed down, claiming he acted before thinking about the ramifications of his nasty missive to the newspaper.

He still owes the reporter an apology. He sought to bully and threaten her.

Nice move.

Now he has painted a bull’s eye on his back. From now on, when he sends an outrageous email or mouths off without thinking at a council meeting, it will be reported by the media.

What an embarrassment.

RICHARD SLUTZKY

Who knew members of the Harford County Council are prime terrorism targets?

Council President Richard Slutzky, Harford County

Council President Richard Slutzky, Harford County

Thanks to the council’s new president, Richard Slutzky, we’re fully aware of these unbeknownst dangers when a citizen walks to the dais to converse with a council member after a meeting.

Holy mackerel, imagine what terrorists have in store for the rest of us if they’re targeting Slutzky & Company!

No wonder Slutzky used his new-found power to ban reporters and citizens from approaching the dais. Apparently he feels that mingling with common folk or the media is too dangerous for an elected lawmaker in Harford County.

What might reporters be hiding in their pens and note pads? What might that citizen be concealing in her pile of papers?

It seems Slutzky dreamed this one up all by himself. It was a good excuse to avoid being pressed or asked uncomfortable questions about his remarks or votes. He apparently dislikes being accosted by angry constituents who disagree with him on local issues.

So he decided to waste taxpayer dollars by hiring a County Council spokesperson to serve as the mouthpiece for the county’s elected local legislators.

Want to get a comment from Slutzky? The spokesperson will respond for him.

Want to know why Slutzky voted a certain way on a bill affecting your neighborhood? The County Council’s spokesperson will come up with some blather so Slutzky doesn’t have to deal directly with upset constituents.

What a great idea! Isolate yourself and the council from the public and the media.

Wait a minute. Didn’t Anthony Brown employ that same tactic when he ran for governor last year?

It proved a disaster. Brown came across as aloof, arrogant and afraid of tripping over his own words if he had to deal with voters or reporters directly. He diverted all questions to a taxpayer-paid propagandist.

Slutzky apparently shares Brown’s distaste for direct contact — though a harsh negative response from Harford residents soon forced him to retract his ban on dais-approaching.

Slutzky’s idea of elevating the status of council members — and creating an unnecessary government post at a time of government austerity — so they don’t have to mess with common folk is not exactly the American Way. It’s not even the frugal Harford County Way.

JACK YOUNG

Here we go again.

First, Baltimore City Council President Jack Young abused his power and stripped a dissenting lawmaker, Councilwoman Rikki Spector, of all committee assignments.

Council President Jack Young, Baltimore City

Council President Jack Young, Baltimore City

It was a crass display of power and a clear sign Young craves total control of the City Council.

After all, Spector was the only one to oppose Young on two controversial bills to ban plastic grocery bags and force 3,000 city police officer to wear body cameras.

Forget the fact Young’s grocery bag ban was an ill-thought and counter-productive idea that accomplishes little. And forget that the council has no authority to dictate policy to the police department.

When Dictator Young speaks, he wants everyone on the council, without exception, to salute and vote as he commands. Winning 15-1 isn’t good enough for him.

Now Young is furious because the city Law Department told him he can’t remove Spector from the city planning commission as well. It seems that is the prerogative of the mayor.

Why did Young strip Spector of all substantive committee work? Because she “has not supported anything I have done for four years.”

Poor Jack Young. He just can’t stand it when someone disagrees with him all the time. He uses his power to mete out extreme punishment. Off with her head!

Young also thinks the answer is to hire his own lawyer to give the council president legal advice he wants to hear.

Yet even a hack lawyer hired to mouth the legal guidance Young desires would have trouble satisfying his narrow-minded boss on the aforementioned issues. Here’s why:

Police powers lie with Baltimore’s mayor, not the council.

Appointment powers to the planning commission lie with the mayor, too.

Read the law, Jack Young, it’s not beyond your capabilities.

Betcha don’t remember what Lord Acton said about folks like yourself: “”Power tends to corrupt, and absolute power corrupts absolutely.”

***

There you have it: Dumb, Dumber and Dumbest.

How would you match this trio of elected officials with those three titles?

Hogan’s Unappetizing Choices

By Barry Rascovar

Jan. 5, 2015 — The New Year belongs to the victors, like Gov.-elect Larry Hogan Jr. But reality will set in quickly once hard, unappetizing choices pit campaign pledges against on-the-ground reality.

Larry Hogan Jr.

Governor-elect Larry Hogan Jr.

Here are some examples:

RED LINE/PURPLE LINE

During the campaign, Hogan criticized both mass transit lines as too expensive for Maryland’s financial situation.

He said the money would be better spent on roads, not rapid rail.

At the same time, Hogan pounded away at the need for aggressive job and business creation. He pledged to energize the state’s lackluster economic development effort.

Killing the Red Line in Baltimore and the Purple Line in the Washington suburbs would, indeed, save lots of money for Maryland — $1.035 billion on the Red Line and $637 million on the Purple Line.

But not a penny of the savings will help Hogan close the $1 billion general fund budget deficit staring him in the face. Transportation funds are segregated in a separate account.

Even worse, the savings probably wouldn’t pay for much in the way of local highways work, either. That’s because the state would only be paying one-sixth (or possibly less) of the cost each year during the lengthy construction stage.

Compounding matters, revenue estimates for transportation taxes are proving overly optimistic, leaving a $441 million hole in the state’s six-year transportation plan.

Killing the Red and Purple lines would close that gap, but what’s left wouldn’t have much of an impact on local road-building when spread over six years, plus inflation.

The demise of Maryland’s two major transit projects, meanwhile, would be devastating for transportation contractors and the thousands of workers who wouldn’t be employed building the two rail lines.

That hurts Maryland’s jobless rate and the state’s economic growth.

So killing the two projects outright may not be the smartest step.

Baltimore badly needs the Red Line to connect its inadequate transit system and get low-income city workers to job sites. The Purple Line is crucial for near-the-beltway, lower-income neighborhoods and for lessening the crunch in rush hours on the Capital Beltway.

Then there are the political ramifications.

Kill the two transit lines and the new governor immediately makes enemies of the three largest delegations in the Maryland General Assembly — Baltimore, Montgomery County and Prince George’s County.

Together, the three have enough votes to make life miserable for Hogan.

There’s got to be a middle-ground way, which would involve a construction delay while engineers search for cost-effective options to lower the price tag for the two rail routes.

When the Woodrow Wilson Bridge crossing the Potomac River near National Harbor was reconstructed, the cost soared out of sight. Only after an innovative project engineer, Tom Mohler (now a partner with RK&K Engineers in Baltimore) devised a cheaper approach — chopping the massive project into smaller chunks — did the price tag diminish enough for Maryland, Virginia and the District to proceed with construction.

That’s what may have to take place on the two expensive mass transit routes, too.

SCHOOL CONSTRUCTION

Hogan faces a huge budget deficit, which may require a deep cut in school construction funding, from the $300 million level favored by the O’Malley administration to the $200 million level.

The problem is that many of the counties where Hogan was wildly popular are the very counties lobbying the state for more new-school dollars to handle a surge in students.

Hogan might end up disappointing the very voters who put him in office.

Clearly the state’s budget hole, plus the state’s over-reliance on floating bonds, call for reductions in spending.

School construction sticks out like a sore thumb.

Hogan might attempt to do more with less — by putting the state’s money into renovations of existing schools instead of costly new construction. He may be able to stretch fewer dollars further.

But it won’t make all his supporters happy, especially those with kids attending overcrowded public schools.

FILM TAX CREDIT

Maryland’s generosity toward the film industry led two TV production companies in recent years to work in the state on “Veep” and “House of Cards.”

Since 2012, this has cost Maryland taxpayers $62.5 million in tax credits to the production companies.

Yet it has put hundreds of skilled laborers to work behind the scenes: designing sets, arranging the lighting, working on the sound and engineering crews, preparing the costumes and working as extras. Hundreds more have been hired locally to play roles in the TV series.

If the tax credit is killed, one of the biggest losers would be Harford County, which, ironically, gave Hogan an overwhelming victory in November.

The Department of Legislative Services claims the film tax credit has generated little in the way of a return on the state’s investment, but the DLS may have been looking at the wrong indicators.

As an economic development tool, the tax credit is nurturing a local film industry. It is responsible for the evolution of a solid core of high-quality, skilled craftsmen and artists — just the right ingredients for luring more film crews to Maryland.

Kill the film tax credit and you likely kill any chance of Maryland retaining “Veep” and “House of Cards.” Hogan would be chopping off any possibility of Maryland gaining a reputation in Hollywood as a welcoming place for film production.

For a governor promising to grow jobs and the state economy, Hogan would be sending the wrong signal by taking an ax to the film tax credit.

Such unappetizing choices put him in a bind.

Hogan must find a way to balance the state’s books while not forsaking his pledge to jump-start Maryland’s quest for jobs and business — while at the same time not alienating his supporters or powerful groups in the legislature that could potentially subvert his agenda.

It won’t be easy.

# # #

Barry Rascovar writes a blog, www.politicalmaryland.com. He can be reached at brascovar@hotmail.com