Exactly what we don’t need in Annapolis

This statement by conservative Richard Viguerie sums up perfectly the approach that we should endeavor not to import into our newly divided government in Annapolis:

“There’s a certain willingness among conservatives to reconsider our Cuba policy, but the fact that it’s been negotiated by Obama — whom we have no confidence or trust in — makes it suspect,” said Richard Viguerie, a longtime conservative leader. “If this had been done by a trustworthy, conservative Republican, it would have been different.”

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ACT Sees Purple Line Dream Fade; MCDOT Follows 7S

The Action Committee for Transit (ACT) sees its Purple Line dreams moving out of reach and has sent out an email trying to rally support:

The Purple Line is again in grave danger — at the very moment when it is about to begin construction.

ACT’s definition of “about to begin construction” is different from most. While this phrase invokes visions of bulldozers ready to go, no federal funding has been awarded and the State has yet to receive–let alone evaluate–proposals from concessionaires (i.e. contractors) for the public private partnership (P3) who would still need to design the system.

Social Justice Out, Jobs Program In

The reasons that ACT believes we need to save the Purple Line have altered in focus:

Maryland will lose thousands of jobs in construction and future growth if we don’t build the Purple Line now.

Here, ACT has jettisoned its social justice rhetoric, formerly at the center of Purple Line appeals, so easily that it should give pause to those who support the Purple Line Compact to protect residents and businesses likely to be displaced by it. It’s now (and probably always was) all about something else.

Interestingly, the new front-and-center focus is on construction jobs. A temporary jobs program requiring massive public spending seems an odd way to appeal to our Governor-Elect and shows a tin ear in an attempt to bootstrap synchronicity with Hogan’s values by former Brown supporters.

Still Confusing Purple Line with Metro

Not all ACT rhetoric has changed:

The new Silver Line has four stations in Tysons Corner because Virginia understood the economic importance of rail transit; Maryland must not fall behind. Businesses and commuters are counting on the state to keep the commitments it has made and go forward with the Purple Line.

ACT  continues to equate the building of the light rail Purple Line, which will not be part of the Metro system, with the heavy rail Silver Line, which is integrated into Metro and will terminate at Dulles Airport. This effort to obfuscate the differences through the use of a color name similar to Metro lines has long been one of the most clever parts of ACT’s communications strategy. Light rail and heavy rail are quite different–the former is more similar to bus-rapid transit systems (RTS), though RTS is far less expensive.

Give to Aid the Land Company Now

ACT’s email closes with the traditional fundraising appeal:

If you can do one more thing for the Purple Line, ACT needs your financial help to continue our campaign. Please make a special contribution now.

By allowing for increased development, Purple Line proponents argue that it will raise land values around stations. Indeed, that is the goal. For example, the wealthy Chevy Chase Land Company is keen to see the Purple Line built–they’re organizing a letter to Hogan arguing for the pricey project–because it will increase the value of their holdings in that area. Yet we are asked to pay for the privilege of aiding the Land Company by donating to ACT.

Ironically, virtually all of the development over the short and medium terms will occur at Chevy Chase Lake without the Purple Line. The revised sector plan added 1.7 million square feet that will move forward with construction even if the Purple Line isn’t built. This will include about 700 apartments and 70 town houses, a hotel and over 250,000 square feet of commercial development. This is more than than the 1.3 million square feet that would be built much later on condition of Purple Line construction.

New Twitter Follower

I am happy to welcome the Montgomery County Department of Transportation Director’s Office as a follower to @theseventhstate.

Correction: Earlier version had MDOT instead of MCDOT. Apologies for the Error.

The Republican Bench

The Statewide Republican bench for 2022 got a whole lot deeper on November 4th.

Alan Kittleman
Pro-Marriage Equality, Anti-Death Penalty former State Senator and Howard County Executive Alan Kittleman is a suburban moderate Republican of the northeastern breed that’s been dying out since the early 90’s–socially liberal and fiscal conservative  with a patrician demeanor.  Kittleman brings a growing base in Howard County to a statewide contest.

Boyd Rutherford
The Lt Governor is supposedly an apolitical technocrat with no desire to run for office at the top of a ticket. But an apolitical technocrat who happens to be an African American from the Baltimore Suburbs with a certain affable charm could be a truly amazing statewide candidate. Food for thought.

Barry Glassman
The new Harford County Executive is a talented fundraiser and represents a rapidly growing jurisdiction with around one-quarter million residents. He has an appealingly home spun way about him and Fallston is not a bad place to start raising money for Governor.

Steve Schuh
If I were picking the Republican nominee for Governor, I’d go with the guy. Dartmouth undergrad. Harvard MBA. Masters in Education from Johns Hopkins. A former Senior Executive at two major investment banks. The incoming Chief Executive of one Maryland’s largest counties (Anne Arundel with nearly 700,000 residents). If that doesn’t spell gubernatorial contender, I don’t know what does.

Now, the most interesting play might be if instead of these guys fighting it out in the primary, they formed a formidable statewide ticket. Boyd Rutherford would be a highly intriguing candidate for Comptroller, and Alan Kittleman would be a credible candidate for Attorney General. With Schuh at the top of the ticket and and Glassman as Lt Governor, I wouldn’t be surprised to see a statewide Republican sweep.

The worst thing for the Democratic establishment to happen on November 4th wasn’t Larry Hogan’s election as Governor. It was the fact that further down ballot, Republican’s now have a legitimate bench of candidates.

Missing someone? Disagree with me? Email johnga.ems@gmail.com

Miller Announces Committee Assignments

From the Press Release:

Senate President Miller Announces New Committee Assignments

Annapolis, MD – Today, Senate President Thomas V. Mike Miller Jr., announced new committee assignments effective upon the swearing in of the newly elected Senate.

“These committee assignments reflect the diversity and unique background and knowledge of each of our Senators and Senators-Elect. I am pleased to announce these appointments and know that these Senators will be very successful in these roles,” said Senate President Miller. “We have incredible talent and knowledge in the Maryland Senate and I am certain all of these appointments will serve our State well.”

The following Senators and Senators-Elect have been appointed to the following committees.

Budget & Taxation Committee

·         Senator Edward J. Kasemeyer (D-12, Howard & Baltimore Counties) – Chair
·         Senator Richard S. Madaleno (D-18, Montgomery County) – Vice-Chair
·         Senator Ulysses Currie (D-25, Prince George’s County)
·         Senator James “Ed” DeGrange (D-32, Anne Arundel County)
·         Senator-Elect Adelaide C. Eckardt (R-37, Caroline, Dorchester, Talbot, and Wicomico Counties)
·         Senator George Edwards (R-1, Garrett, Allegany, and Washington Counties)
·         Senator Bill Ferguson (D-46, Baltimore City)
·         Senator Joseph Getty (R-5, Carroll County)
·         Senator-Elect Guy J. Guzzone (D-13, Howard County)
·         Senator Nancy J. King (D-39, Montgomery County)
·         Senator Roger Manno (D-19, Montgomery County)
·         Senator Nathaniel McFadden (D-45, Baltimore City)
·         Senator Douglas J. J. Peters (D-23, Prince George’s County)

Education, Health, & Environmental Affairs Committee

·         Senator Joan Carter Conway (D-43, Baltimore City) – Chair
·         Senator Paul G. Pinsky (D-22, Prince George’s County) – Vice-Chair
·         Senator-Elect Gail Bates (R-9, Howard & Carroll Counties)
·         Senator-Elect Cheryl C. Kagan (D-17, Montgomery County)
·         Senator Karen S. Montgomery (D-14, Montgomery County)
·         Senator-Elect Shirley Nathan-Pulliam (D-44, Baltimore County & Baltimore City)
·         Senator Jim Rosapepe (D-21, Prince George’s & Anne Arundel Counties)
·         Senator-Elect Johnny Ray Salling (R-6, Baltimore County)
·         Senator Bryan Simonaire (R-31, Anne Arundel County)
·         Senator-Elect Steve Waugh (R-29, St. Mary’s & Calvert Counties)
·         Senator Ronald N. Young (D-3, Frederick County)

Finance Committee

·         Senator Thomas “Mac” Middleton (D-28, Charles County) – Chair
·         Senator John C. Astle (D-30, Anne Arundel County) – Vice-Chair
·         Senator Joanne C. Benson (D-24, Prince George’s County)
·         Senator Brian J. Feldman (D-15, Montgomery County)
·         Senator Stephen S. Hershey, Jr. (R-36, Kent, Queen Anne’s, Cecil, and Caroline Counties)
·         Senator J.B. Jennings (R-7, Baltimore & Harford Counties)
·         Senator Delores Kelley (D-10, Baltimore County)
·         Senator Kathy Klausmeier (D-8, Baltimore County)
·         Senator James N. Mathias (D-38, Somerset, Wicomico, & Worcester Counties)
·         Senator Catherine Pugh (D-40, Baltimore City)
·         Senator Edward R. Reilly (R-33, Anne Arundel County)

Judicial Proceedings Committee

·         Senator Bobby Zirkin (D-11, Baltimore County) – Chair
·         Senator Lisa Gladden (D-41, Baltimore City) – Vice-Chair
·         Senator Jim Brochin (D-42, Baltimore County)
·         Senator-Elect Bob Cassilly (R-34, Harford County)
·         Senator-Elect Michael J. Hough (R-4, Frederick & Carroll Counties)
·         Senator C. Anthony Muse (D-26, Prince George’s County)
·         Senator-Elect Wayne Norman (R-35, Harford & Cecil Counties)
·         Senator Victor R. Ramirez (D-47, Prince George’s County)
·         Senator Jamin “Jamie” Raskin (D-20, Montgomery County)
·         Senator Christopher Shank (R-2, Washington County)
·         Senator-Elect Susan C. Lee (D-16, Montgomery County)

Mizeur is Ready For. . .

Former Del. Heather Mizeur lined up to support Hillary Clinton at a recent Ready for Hillary event with many major Maryland heavy hitters:

MizeurRfH

Initially, the most notable part of the invitation was Mizeur joining with erstwhile opponent Gansler to support Clinton and not Gov. Martin O’Malley, who put his muscle behind Brown. But then Heather attacked the budget compromise on her Facebook page and called for progressives to support Sen. Elizabeth Warren:

MizeurWarren

Outgoing Appropriation Chair Barbara Mikulski, a Democratic icon in this state, was working the phones to urge support for the budget compromise. As became clear to all this year, Heather is a campaign expert and perhaps tying herself to Warren makes it easier to position herself as a progressive alternative to Mikulski in 2016.

However, looking lower on Heather’s Facebook page reveals that Heather has not jumped from the Clinton to the Warren bus but was never committed to either campaign. In fact, she’s also supports Bernie Sanders:

MizeurClinton

The many who read the Washington Post and see the Ready for Hillary invitations but do not read her the fine print on her Facebook page might not realize that Heather is more Ready to Consider Hillary rather than Ready for Hillary.

The Giant Purple Credit Card, Part III: Is Pro-Purple Anti-Transit?

Opportunity Costs

The choice to spend vast sums of money on one project requires foregoing other choices. The tangled finances for the Purple and Red Lines (see also here) render it especially obvious. When the fares from Baltimore’s public transit system are needed as a backstop in case Purple Line fares are lower than hoped, the use of the Transportation Trust Fund (TTF) for non-Purple purposes is obviously going to be quite limited.

The plans to move ahead also with Baltimore’s Red Line should further assure that the TTF is tied up for literally decades. Indeed, the two projects have been closely tied together in order to build political support. It is hard to imagine moving ahead with one project without the other, as legislators in one metro area are unlikely to want to fund an incredibly expensive project in the other unless their constituents share in the benefits.

Existing Transit Needs

Montgomery and Prince George’s County already have an extensive public transit system. Both are integrated into WMATA’s Metro and Metrobus system. Each operates its own bus system: RideOn and TheBus. Both are also tied into the MARC system.

All parts of the system have suffered from cutbacks and need investment in infrastructure. Metro, the lungs of Washington’s transit system, remains in particularly dire need of money to maintain and to upgrade its infrastructure. Placing so many chips on the Purple Line will constrain the ability of the State to aid Metro–Montgomery and Prince George’s cannot expect to get all of Maryland’s transportation funding.

Less widely heralded in Montgomery in the face of perennial Metro problems–endless single tracking, escalators that don’t work, overly crowded trains at rush hour despite stagnating ridership–have been the cutbacks to MARC and Ride-On. Oddly, we reduced transit service designed to connect to the Purple Line even as we move forward with building it.

Foregoing Other Transit Opportunities

Some key supporters of the Purple Line recognize these implicit tradeoffs even if they don’t advertise them. In the at-large County Council debate in Chevy Chase, new Council President George Leventhal derided Councilmember Hans Riemer’s support for additional Ride-On service. He and other Purple Line supporters have also expressed great skepticism about the proposed countywide bus-Rapid Transit System (RTS).

The irony here is that for the cost of building the Purple Line, we could build a RTS that would serve all parts of the County. Indeed, a Purple Line incorporated into an RTS would accomplish most of the goal at far less cost than the proposed light-rail system even according to MTA’s own analysis (see also here).

Purple Line supporters like to accuse opponents of being anti-transit–it’s a good simple communication meme that boils down a complex decision to good versus bad. Except that wanting to spend transportation dollars wisely and get the most for our tax dollars is pro-transit. Opposition to expanding bus service and continued negativity regarding an RTS that could serve the whole county sure doesn’t sound pro-transit.

The Bottom Line

We shouldn’t starve our existing transit system and forego future opportunities in order to build the Purple Line and the Red Line. Ironically, we could build cheaper RTS versions of both that would save the State billions–not chump change–and allow for additional transit and road improvements that would truly aid economic development and the ability of all Marylanders to reach jobs far more broadly. Now that’s smart growth.

Darrell Anderson is the New MCDCC Chair

mcdcceboard

The New MCDCC Executive Board

Last night, the Montgomery County Democratic Central Committee (MCDCC) elected former Washington Grove Mayor Darrell Anderson as its new Chair. The rest of the Executive Board remains the same–these positions were not up for election.

MCDCC faces a lot of hard work now that the election is over not just to fix existing problems but to reenergize the party for the 2016 election. I hope that they will use metrics to assess progress on their goals. Similarly, accountability and transparency will be critical as MCDCC moves forward.

Now that the election is over, MCDCC has more time to approach problems in a more thoughtful, less pressured atmosphere. Fortunately, even its critics among Democratic officials and other constituencies have remained publicly and privately committed to working with MCDCC to achieve more success in the future.

The Giant Purple Credit Card, Part II: Thank You, Baltimore!

faux-card-purple

Mike Madden, the Project Manager for the Purple Line, was once again kind enough to answer questions on the topic. I appreciate his willingness to take the time. Today, I publish some of my questions and Mike Madden’s answers along with comments.

Show Me the Money

Seventh State Question: My understanding is that the service payments will come from fare costs. Is this correct (and, if not, where do they come from)? How does MDOT estimate the takings in fares as it hasn’t set the fares or negotiated a transfer agreement with WMATA for Metro yet? It is not correct that the payments come from farebox revenues.

Mike Madden: The annual payments will come from the Maryland Transportation Trust Fund, as does all the state investment and support for transportation projects and services. Farebox revenues go into the Transportation Trust Funds as do the other sources of revenue for transportation purposes. Again, the Pre-Solicitation Report provides further information on this topic.

Seventh State Comment: I followed Mike’s suggestion and looked at the report, which states that:

[T]he forecasted fare revenues generated by the Purple Line are estimated to be on average greater than the concessionaire’s debt service. Therefore, even though MTA would collect and account for the Purple Line fare revenues, the MTA revenues generated by the project are sufficient to cover the borrowed capital repayment share of the availability payment. (Source: “Presolicitation Report to the Maryland General Assembly, August 2013, pp. 17-18).

So in essence, MTA is claiming that the revenues from the Purple Line will be enough to pay back the cost of building it. There are major, serious problems with this claim. MTA has no idea what the fares will be at this point if only because they have no agreement negotiated with WMATA about how transfers between the Purple Line and Metro will be handled. As a result, we have no idea how the revenue from transfer trips–a significant number of trips including the PL–will be divided. Heck, MTA doesn’t even know how they will collect the fares on the open (i.e. no fare gate) system yet or how much it will have to spend on enforcement of it.

Next, if ridership has been overestimated, and Randall O’Toole explains why it almost certainly has been, MTA will either collect less money and or have to reduce fares in order to attract more ridership. MTA and Parsons-Brinckerhoff’s record along with their complete unwillingness to explain how they calculated ridership does not inspire confidence.

Operating Costs

Finally, notice that there is no mention of the operating cost, which will also be factored into the bids and for which the State will also have to pay. The sources of payment for this cost remain shrouded in mystery. My inquiry to Mike Madden didn’t reveal more:

7S Question: As fares usually do not even cover operating costs, where will the funds to operate the Purple Line come from?

MM: The payment for operating costs are included in the annual payments, which will come from the Maryland Transportation Trust Funds, as does all the state investment and support for transportation projects and services.

7S Comment: I imagine that the funds to fill the Transportation Trust Fund are expected to come from the planned gas tax increases–the same one our incoming Governor has vowed to stop and to repeal.

Thank You, Baltimore!

7S Question: Is it correct that the State’s ability to pay the concessionaire is backed by its income from public transit in Baltimore?

MM: No. The farebox revenues from transit services in the Baltimore region go into the Transportation Trust Funds.

7S Comment: Despite the flat denial, since the fares from the Baltimore region go into the Transportation Trust Funds, they are obviously going to be used to help guarantee that the State can pay for the Purple Line. It seems obfuscatory to pretend otherwise, especially as MTA has explained this to legislators.

More to Come in Part III

The Giant Purple Credit Card, Part I

One of the more esoteric part of the Purple Line is its finances. They are so complicated, in part, because the State has worked hard to mask that Maryland cannot afford to pay for the project.

State Debt Limit

The first sense that the State cannot afford it is the more difficult to understand and relates to the State’s tax-supported debt limit. Unlike the federal government, Maryland does not have a legally mandated limit on borrowing. Instead, it has a guideline of the maximum appropriate share of debt in relation to State revenues.

These guidelines–think of them as a credit limit for the State–are developed in line with the demands of the bond rating agencies. Maryland has had a stellar AAA bond rating for decades and losing it would raise significantly the cost to the State of borrowing money. Everyone agrees this is a bad idea.

Due to these constraints, the State could not afford to borrow directly the money to pay for the Purple Line because it would blow past the tax-supported debt limit guidelines. While the federal government will pay $900 million and Montgomery and Prince George’s will kick in another $220 million, the State is on the hook for the remaining $1.1 billion of the current estimated cost. As a result, the project loses feasibility because our debt would rise dramatically relative to revenues.

P3 to the Rescue?

Hence, the creation of the Public Private Partnership, or P3, as it is known. (Unfortunately, we’re just getting started with the transportation jargon, folks, so buckle up.) Through the P3, the State contracts with a company, called the concessionaire (I know, it sounds like they sell popcorn and Twizzlers), to build and to operate the Purple Line over 35 years.

Rather than having Maryland borrow the funds directly, the concessionaire borrows the bulk of the money needed and the State pays it back annually through the availability payment. MDOT contends the great bulk of the availability payment is operating costs rather than capital costs and thus should largely not be counted towards the State tax-supported debt limit.

Presto! Even though the cost is the same, through the wondrous magic of accounting, MDOT has made the debt limit problem go away.

Giant Purple Credit Card

MDOT claims that only the concessionaire’s cost of financing the debt (i.e. interest payments) and any bonds backed by the State’s Transportation Trust Fund (TTF) should count towards the State debt limit.

In order to make signing on the bottom line less painful (read: convince us we can afford it), the State plans to use the federal funds to pay for the early years of the payments. Except that we’ll be on the hook for the those honking availability payments for years to come. It’s really not much different than the Ruthless People clip I posted at the top of the post.

Will the Credit Agencies Buy It? Should We?

The problem for MDOT and Maryland is that no one knows if the bond rating agencies will swallow these manipulations. After all, the great portion of the availability payment is to cover the building of the Purple Line, not to operate it, despite the work of fiction authored by MDOT.

Moreover, Maryland will have signed a contract. The State will owe all of that money decade after decade. It’s like signing a 35-year mortgage for the purposes of building a house and saying that, once it’s built, it hasn’t reduced your credit because the mortgage payment is really the operating cost of the house. Except the money is still coming out of your account and you have less of the green stuff to spend.

The Department of Legislative Services (DLS) has studiously avoided wading into the political soup of taking a position on the Purple Line and the debt limit. But their failure to take a position actually makes clear that it remains open whether the bond rating agencies will buy MDOT’s theory on the debt:

At this point, there is insufficient information to determine if the capital availability payments are State debt. Whether or not it is State debt depends on such factors as the use of the project (is it a public good or is it for general use), is there a long-term liability for the State, and do State revenues support the project.

Concerns have been raised that federal funds have not been awarded so there is some risk that they may be less than anticipated. MDOT advises that if federal funds appropriations are insufficient, TTF bonds will be issued. Since these TTF bonds are State debt, a loss in federal funds could affect debt affordability. Source: “Effect of Long-Term Debt on the Financial Condition of the State,” Department of Legislative Services 2013, p. 81.

Note that the answers to at least two questions raised by DLS–“is there a long-term liability for the State and do State revenues support the project”–are clearly yes.

And even if the State is willing to swallow the idea that this debt is not a debt, should the public? The reason bond rating agencies care about debt ratios is obvious and sensible: exposure. If we really need to shuffle the cards so much to pretend that the debt is affordable, it’s probably an indication that the Purple Line is not in the more fundamental, conventional sense. Regardless, it will limit our ability to borrow for other purposes for decades.

More in Part II.

Maryland Politics Watch

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