Is Maryland Trying to Punish Craft Breweries?

By Adam Pagnucco.

Craft breweries have been growing rapidly in Maryland and elsewhere, forever changing the beer business.  Maryland scored a huge win a couple months ago when Diageo announced their intention to open a $50 million Guinness brewery in Baltimore County, creating a tourist attraction and dozens of jobs.  Best of all, unlike many employers, Diageo is not asking for one thin dime of public subsidy to come to the state.  But instead of welcoming the new facility with open arms, the House of Delegates reacted by making it harder for Diageo to do business here, as well as many other breweries in Maryland.

The debacle began when Diageo asked for a change in state law to allow them to sell 5,000 barrels of beer at a restaurant and tap room on the brewery site.  (Maryland’s current limit of 500 barrels is by far the lowest in the nation; the second-lowest state, North Carolina, has a limit of 25,000 barrels.)  Other brewers sought a limit of 4,000 barrels in on-site sales for their own operations and five different bills followed.  HB 1283 was the one that passed the House of Delegates and did three main things.

  1. It increased the on-site sales limit to 2,000 barrels. Breweries could apply to the Comptroller for permission to sell another 1,000 barrels on-site, but they would have to go through a distributor to do so.  That means the brewery would have to brew its own beer, then turn it over to a distributor, then receive it back from that distributor and of course pay the distributor a fee for its service.  Guess who ultimately pays that fee?  That’s right, you the customer!
  1. It established closing times for tap rooms of 9 PM during the week and 10 PM on weekends, down from local closing times ranging from midnight to 2 AM.
  1. It limited tap room sales to beer brewed on-site only. This repeals a long-standing practice in which brewery tap rooms supplement their own products with contract beer brewed for them by other breweries.  Such contract beer sales are major sources of revenue for some craft brewers and make tap rooms more attractive to customers.

Brewers characterized the combination of changes as “one step forward and two steps back” and predicted layoffs and business losses.  Why would the House pass such a bill?

One of the biggest opponents of liberalizing rules on craft breweries is the Maryland State Licensed Beverage Association, which represents restaurants and small alcohol retailers.  The group is particularly influential in Annapolis as its PAC has contributed over $180,000 to state politicians since 2005.  The association sees craft brewers as competition for its members.  From a zero-sum perspective, every pint purchased in a brewery tap room is a pint not purchased in a restaurant or package store.  But that view doesn’t recognize the synergies between these types of establishments as well as their differences.  Diageo’s brewery has the potential to be a major tourist facility, bolstering the entire local economy.  And if a consumer purchases a new product at the Diageo site and likes it, he or she will be motivated to buy that same product at restaurants and stores.  That means more business for everyone.

Some brewers would prefer that HB 1283 simply die in the Senate because of the problems it would cause, but it’s not so simple.  If the bill dies, the state’s current on-site sales limit of 500 barrels would stay in place.  That could cause Diageo to cancel its project, costing Baltimore County a $50 million tourist attraction that other states would kill to get.  Think of the impact that would have on the industry’s perception of Maryland.  If we lose Diageo, what other major brewer would ever relocate here?

Maryland has a number of anti-competitive laws on alcohol, including the much-loathed prohibitions on sales in most grocery stores and Montgomery County’s dysfunctional liquor monopoly.  The last thing we need is even more of these laws, especially if it causes us to lose a major employer and gives us a national black eye.  HB 1283 must be fixed.  Cheers to the State Senate if they can get it done.

General Assembly Passes Bill to Protect Planned Parenthood. Next Stop is Hogan’s Desk

The General Assembly passed great legislation sponsored by Sen. Rich Madaleno and Del. Shane Pendergrass designed to ensure that Planned Parenthood stays funded, regardless of the federal budget, so that all Marylanders have will retain access to their vital family planning and health services:

“Today we made sure that no matter what happens in Washington, Maryland will ensure that all women have access to health services — especially those who have historically faced barriers to quality health care — women with low incomes, on Medicaid or living without health insurance, people of color, those living in rural areas, and LGBTQ people,” said Madaleno.

“This is a great day to be a Marylander and Planned Parenthood is grateful to the General Assembly for its leadership,” said Karen J. Nelson, President & CEO of Planned Parenthood of Maryland.

The bill now heads to Larry Hogan’s desk. Will he allow it to become law without his signature–I doubt that he will sign it–or will he force a veto override? This gives the Governor a great opportunity to keep his promise during the 2014 campaign that he won’t work to restrict access to abortion or birth control.

But the Governor has said he remains personally opposed to abortion. Opposition to Planned Parenthood, long the object of Republican ire, has become a totem for Republicans in the wake of bogus accusations that Planned Parenthood profited off of the sale of fetal tissue. At the national level, the issue helped cement Rep. Jason Chaffetz’s reputation as a complete jackass:

Once again, Trump’s victory has brought the national home to Maryland. Whether or not Hogan has the votes to uphold a veto, his decision will speak volumes about his views on Planned Parenthood. Will Hogan stand with Trump and extreme congressional Republicans? Or will he keep his promise to preserve access to abortion and birth control in Maryland by protecting Planned Parenthood?

Hogan’s Incoherent, Petulant Fracking Ban Press Conference

Gov. Larry Hogan’s press conference in which he announced his support for the fracking ban pushed by Democrats in the legislature was vintage Hogan in its petulance and dissembling.

As much as he tries to pretend, Hogan just doesn’t do bipartisanship well. He could have just gotten up and celebrated that Republicans and Democrats agreed to support a fracking ban. Instead, he had to dissemble about his own past record and blame Democrats:

Our administration proposed the toughest regulations in all 50 states of the United States of America. The regulations that we proposed would have made it virtually impossible for anyone to ever engage in fracking in Maryland. However, the legislature has failed to act, or enact, these tough regulations.

The horse manure in the last two sentences is so heavy that one needs a shovel to parse through it, but here goes. First, Hogan’s proposed regulations would not have made it “virtually impossible” to ban fracking.

The entire point of Hogan’s proposal was to allow fracking to go forward while claiming it would be environmentally safe. After all, if Hogan just wanted to ban fracking, he could have just supported the bill that had already passed the House of Delegates banning it in the first place.

Attacking the Democrats for failing to enact his regulations is just bizarre. Regulations are promulgated by the executive branch, so any failure here rests on Hogan and not the General Assembly. Now, he attacks Democrats, as he signs on to a Democratic bill to ban fracking opposed by many Republicans.

Hogan thrashed about in the press conference and lashed out at Democrats because the General Assembly cornered him into supporting the fracking ban against his will. In particular, he went after Senate President Mike Miller:

The choice to me is clear. Either you support a ban on fracking or you are for fracking. It came to my attention today that Senate President Miller, Sen. Paul Pinsky and others are working on a plan that would open a door to fracking in Maryland. They are pushing to put a referendum on the ballot that would allow for fracking. Because the legislature has failed to enact our tough regulations, and because there is now a move by the Senate President to allow for fracking, today, I have decided to announce my full support for the Maryland fracking ban.

More Hogan incoherence. If you either “support a ban on fracking or you are for fracking,” then why did Hogan take so long to support a ban? Why did he support regulations that were designed to allow fracking, even though he now pretends otherwise? Furthermore, if the Governor has really always been against fracking, why was he so bitter that the legislature was moving toward adopting a ban?

Ironically, Hogan tipped his hand during his fulminations. Miller’s proposed referendum would have put fracking on the ballot during Hogan’s reelection bid. Hogan didn’t want to have to defend his regulations to allow fracking as environmental, so he caved to the Democrats.

Hogan had another political goal in his seemingly incoherent railing against the failure to adopt his regulations designed to allow fracking even as he claims that they would have banned fracking. Specifically, he would like to shore up support among Garrett and Allegany Republicans who are not happy with the Governor and very much supported fracking in Western Maryland.

(Headline: Hogan stands up to Western Maryland to support fracking ban.)

As it turns out, Hogan did not consult any members of Garrett or Allegany’s legislative delegation before the press conference:

Sen. George Edwards registered disappointment Friday after learning of a press conference in which Gov. Larry Hogan announced his support for a fracking ban. Edwards and the three delegates who make up the District 1 Delegation have been staunch advocates for hydraulic fracturing in Western Maryland. Hogan had not indicated in the past year that he opposed fracking, much less expressing any desire for an outright ban, according to Edwards. . . . “It would have been nice to have known this a month ago,” said Edwards. “It would have saved us this back and forth over the issue.”

The statements by Edwards, a Hogan ally, provide more evidence that Hogan has not always opposed fracking, despite his statements to the contrary at the press conference. The Hagerstown Herald-Mail similarly reports that Hogan had taken a “wait-and-see position” until Miller made his move.

While “nobody puts Baby in a corner,” the Democrats sure cornered Larry who, even as he whined about it to the end, adopted their position. Like Trump with his failure on health care, Hogan now wants Democrats to feel bad about it. But somehow, I don’t think that’s gonna happen.

Leventhal Trolls Trone

By Adam Pagnucco.

Council Member George Leventhal, who is running for County Executive, is running the ad below on Facebook.  While ostensibly directed at President Donald Trump, it’s an obvious shot at a possible campaign opponent, Total Wine co-owner David Trone.

Leventhal has gone after Trone before, blasting him for illegal campaign signs and corporate contributions.  The latter charge is ironic considering Leventhal’s taking of more than $300,000 in corporate contributions over the last three cycles.

Negative campaigning has a long, LONG history in Montgomery County.  But it’s a bit unusual to target a person who is not yet officially running.  In any event, it is now crystal clear that if David Trone does run for Executive, George Leventhal will be ready.

Washington Post Poll Shows Hogan Vulnerability

By Adam Pagnucco.

Governor Larry Hogan loves to discuss his high approval ratings in polls, which have usually been in the range of 60-70%.  But a new Washington Post poll that examines his reelection prospects shows that they are well below his approval numbers and provides hope to Maryland Democrats.

The Post poll of March 16-19 has sample sizes of 914 adults and 841 registered voters.  The margin of error for those two groups is 4 points, growing to 5.5 points for a half-sample and 6.5 points for the 317 respondents who live in Maryland’s D.C. suburbs.  These margins of error must be kept in mind when reading the poll –  effectively, only large gaps are meaningful for small sub-groups.

With that significant caveat in mind, let’s examine data on Hogan’s reelection prospects.  The Post asked respondents the following question: “Thinking about Maryland’s Governor’s race in 2018… if Larry Hogan ran for re-election as governor, do you think you would vote for him OR for the candidate nominated by the Democratic Party?”  Among adults, 39% said they would vote for Hogan and 36% said they would vote for the Democratic nominee, an advantage of 3 points for the Governor.  Among registered voters, 41% said they would vote for Hogan and 37% said they would vote for the Democrat, a margin of plus 4.  So far, this looks very much like Hogan’s 4-point victory in 2014.

But the sub-group results are more interesting.  We compiled the Post’s sub-group data on this question in the presentation below.

Let’s recall the margin of error estimates above.  Margins of 10-15 points or less for small sub-groups are probably not very meaningful.  That said, many of the Governor’s strengths are predictable.  He does well with Republicans, Conservatives, Whites and rural residents.  He is weak among Democrats, liberals, African Americans and Prince George’s residents.  One item that stands out is his strength with seniors, with whom he has a 17-point advantage.  Seniors are among the most reliable voters in any election.

Now let’s compare the geographic results of this poll with how the Governor actually performed in 2014.

The Governor appears stronger in the poll in Baltimore and the Washington suburbs, but weaker elsewhere than in 2014.  This could be statistical noise due to large margins of error.  But it could also be the result of tax fatigue in some Democratic strongholds, like Montgomery (where voters recently passed term limits by 40 points) and Prince George’s (where the County Executive proposed a 15% increase in property taxes two years ago).  It’s hard to believe that the Governor is actually weaker in Anne Arundel and Howard, both of which have Republican Executives who are strongly favored for reelection.  (And a random question: what pollster combines Baltimore City and County in one estimate?  C’Mon, Man!)

The big takeaway from the poll is this: Larry Hogan will not be coasting to reelection.  Maryland is simply not wired that way.  It has too many Democrats, African Americans, liberals, immigrants and people who are either employed by or do business with government at some level to give any GOP statewide incumbent a blowout win.  From a purely political perspective, the Governor deserves credit for his focused message of tax cuts, job growth and reform (like redistricting) while trying his best to avoid distractions from the right, the left and Washington D.C.  His approach gives him a path to victory in a rather blue state.  But if the Democrats begin preparing now, play smart and field a good candidate for Governor, Larry Hogan can be defeated.

Hogan Exploits Rape for Politics

By Adam Pagnucco.

Governor Larry Hogan is now exploiting the rape of a Rockville high school student to get a political edge over General Assembly Democrats.  It’s a clearly deplorable tactic.  But will it work?

Two big stories are colliding at the moment to further inflame the volatile issue of how to deal with illegal immigration.  First, the House of Delegates has passed a version of the Maryland Law Enforcement and Trust Act, a bill to limit state and local cooperation with U.S. Immigration and Customs Enforcement (ICE) so that immigrant communities will not hide from police for fear of arbitrary deportation.  Second, two students at Rockville High School have been arrested for raping a 14-year-old at the school and were subsequently alleged by ICE to be present in the country illegally.

Governor Hogan reacted with the Facebook post below, saying:

The post garnered 700 shares and 500 comments in its first five hours, accomplishing its purpose of throwing gasoline on the fire of the immigration debate.

The implication of the Governor’s post is that Montgomery County does not currently cooperate with federal authorities.  But in fact, it does.  The Washington Post’s Bill Turque summarized the county’s immigration policy a month ago:

Montgomery police operate under a 2009 directive that bars officers from conducting “indiscriminate questioning” of suspects, witnesses or prisoners about immigration status. Once in custody, all prisoners are fingerprinted, and arrest information goes into state databases, where it is available to ICE. If the agency identifies an undocumented prisoner, it can send the county a “detainer” notice, asking that the person remain in custody for at least 48 hours beyond the scheduled release date.

The county complied with detainers until 2014, when the Maryland attorney general’s office issued an opinion advising localities that they could be liable for damages by holding prisoners past their release date.

Since then, Montgomery officials said, the county honors detainers only if they are supported by a federal court order or warrant. It will also provide ICE publicly available release dates of undocumented immigrants who have committed felonies and whom the agency is seeking to deport.

The county has released hundreds of prisoners to ICE since 2012, though the pace of releases has dropped since the county stopped honoring 48-hour detainers.  The amended version of the House-passed Trust Act resembles county policy.  On the Rockville High School rape suspects, County Executive Ike Leggett said, “The county — consistent with our longstanding policy — will cooperate fully with ICE to see that the two are deported to their countries of origin.”

Why would Hogan insinuate that Montgomery County does not cooperate with federal law enforcement to protect its citizens?  Hogan knows that there is little support in the community for protecting violent criminals from deportation.  A new CNN poll finds that 60% of Americans believe the government should be “developing a plan to allow those in the U.S. illegally who have jobs to become legal residents,” but it also finds that 78% of Americans believe that “the government should attempt to deport all people currently living in the country illegally who have been convicted of other crimes while living in the U.S.”  Big majorities of every demographic group measured support the latter statement, including 64% of Democrats.

Depicting Maryland’s largest local jurisdiction as soft on crime is bad enough.  Exploiting a rape for political gain is even worse.  Such tactics expose just how hard the Governor can throw his elbows in partisan combat.  Forget about engaging with General Assembly leaders to develop good public policy; the Governor has never been interested in that.  But the cold political truth is this:

If Hogan can get away with characterizing Democrats as protectors of rapists and other criminals, he wins.

Will You Be Paying Dan Snyder?

By Adam Pagnucco.

The Washington National Football League franchise is perhaps the only organization in America that could make Donald Trump’s White House seem like a smoothly running model of efficiency.  The club’s savage firing of its General Manager, the subsequent exodus of red chip starters like Pierre Garcon, DeSean Jackson and Chris Baker and the failure to sign star quarterback Kirk Cousins to a long-term contract have brought the franchise to its worst point in decades.  But here’s the kicker, folks.

One of these days, whether you want to or not, you could be paying for all this.

Daniel M. Snyder, the current majority owner of the Washington franchise, has often been described as the worst owner in pro sports.  Part of this is because of the team’s woeful performance on the field.  Snyder has owned the franchise for 18 years, over which it has compiled a 125-162-1 record, six winning seasons and only two playoff wins after winning three Super Bowls under the prior ownership.  The club just posted its first two consecutive winning seasons since 1991-1992 and the owner reacted by annihilating the team’s architect.  But it’s the franchise’s activities outside of the stadium, characterized by team President Bruce Allen as “winning off the field,” that are truly eye opening.  Consider this.

  • The team sued 125 season tickets holders between 2004 and 2009 to force them to honor their purchase contracts even though many were in financial distress. One of them was a 72-year-old retiree who claimed that the team’s judgment against her would force her into bankruptcy.
  • In 2006, the team tried to profit from 9/11 by selling “Pentagon Flag Hats” which featured “the team’s trademark curly ‘R’ in gold with a patch in the shape of the Pentagon and the colors of the American flag sewn on the side.” The club was the only one in the NFL to try to sell such merchandise.

  • Unhappy with negative coverage, Snyder has been buying up local media for years. It’s hard for journalists to criticize the team when they are on the owner’s payroll.  Snyder reacted to a harsh article by the Washington City Paper’s Dave McKenna by suing the newspaper and the journalist, an action he later dropped.

We could go on and on and ON.  But we know what you’re thinking.  I’m not a fan of the team, you might say.  Why should I care?

Because soon you could be paying for all this.

Dissatisfied with his twenty-year-old stadium in Landover, Snyder is now in the hunt for a new facility somewhere in the D.C. area.  The District of Columbia, home to the franchise in its glory years, is an iffy possibility given that the current Mayor has branded the team’s nickname as “offensive.”  Virginia Governor Terry McAuliffe, an enthusiastic dealmaker, is “in a hurry” to land the team before he leaves office.  And Maryland Governor Larry Hogan has said, “We will do whatever it takes to keep them.”  That could lead to a bidding war, and an expensive one at that.  NFL teams have extracted billions of dollars in public subsidies for their stadiums over the years.  Las Vegas has offered $750 million in tax money to the Raiders to entice them to move from Oakland.  And St. Louis, which just saw the Rams move out, still owes millions in bond payments on its now-empty football stadium.

Hogan loves corporate welfare, having approved millions in disbursements to Marriott and Northrop Grumman.  But those companies at least employ thousands of people in Maryland.  Snyder’s franchise is headquartered in Ashburn, Virginia and his millionaire players are almost all Virginia residents.  NFL teams are dubious candidates for public investment at best since most of them play just ten home games a year, but the Washington team’s Virginia ties make subsidizing it even more questionable.

So what can you do about this?  Snyder is only 52 years old, so he could be the team owner for decades to come.  But Hogan is another matter.  If the Governor insists on throwing hundreds of millions of dollars at this poor excuse for a franchise, you will have the last word in next year’s election.

Just do what Dan Snyder does and fire him!

Trone Running Ads on Twitter

By Adam Pagnucco.

A Seventh State reader sent us a screenshot of a Twitter ad run by Total Wine co-owner and former CD8 Congressional candidate David Trone in the early hours of March 16.  The reader does not follow Trone’s account and the term “promoted” at the bottom of the screenshot clearly indicates its status as an ad.

Trone is known to be considering a future candidacy.  He told Bethesda Magazine’s Lou Peck that he is “focused very heavily right now” on looking at a race for Montgomery County Executive.  He has polled on the race at least once and says openly on his website that he is exploring it.  The Twitter ad joins this evidence to suggest that Trone could very well be on the ballot again.

Hell No!

By Adam Pagnucco.

A state commission charged with examining changes to Maryland’s public school funding formulas is sifting through recommendations for improvement.  And in the early deliberations, one big loser stands out:

Montgomery County.

The State of Maryland is a major player in public schools funding.  In FY17, the state will send $5.5 billion in operating aid to local school districts, about a third of its general fund budget.  MCPS gets 28% of its operating budget from the state.  Prince George’s County Public Schools gets 57% of its budget from the state.  In total, state aid accounts for 48% of Maryland public school budgets.

The state’s generous K-12 spending is driven by formulas dating back to 2002, when a state commission led by Howard University professor Alvin Thornton (commonly known as “the Thornton Commission”) proposed massive new investments in education.  These investments have helped rank Maryland’s public schools among the nation’s best.  Now another state commission chaired by former University of Maryland System Chancellor William E. Kirwan is reexamining the state’s funding formulas to see if they can be improved.  And here is where things are starting to go badly wrong for MoCo.

A consultant paid by the Maryland State Department of Education recently completed a two-year study on the state’s funding formulas.  In the interest of promoting “adequacy” in public school spending for students across the state, the consultant made several recommendations for changing the funding formulas which are now being examined by the Kirwan Commission.  One of them is that Montgomery County should get a 63% cut in state aid (a reduction of $354 million) while local taxpayers should pay 60% more (an increase of $842 million) towards MCPS.  Montgomery County Council Member Craig Rice, a member of the commission, said “that would be devastating” and termed the suggested local dollar increase for MCPS “impossible.”  Indeed, the County Council just levied a 9% increase in property taxes in part to increase funding for MCPS.  The consultant’s recommendations don’t just apply to MoCo: they would phase out all state aid for schools in Kent, Talbot and Worcester Counties while sending massive increases to St. Mary’s, Harford, Charles, Calvert and Prince George’s.

MoCo is already short-changed on state aid because of wealth formulas that disadvantage the county because of its high property values and high incomes but don’t recognize its high cost of living.  The result is that MoCo taxpayers get back just 24 cents for every dollar in taxes they pay to the state.  The state average for all residents is 42 cents.  Howard County, which has a higher average household income than MoCo, gets 30 cents.  Only Talbot and Worcester Counties get back proportionately less than MoCo.  If anything resembling the consultant’s report winds up being recommended by the Kirwan Commission and passed into state law, this imbalance will get a lot worse.

Your author has been told that the report is merely a “conversation starter” and thus is irrelevant.  But we are reminded of the last conversation the state had about public school funding.  For decades, the state covered the cost of teacher pensions as part of its commitment to K-12 education.  The program was particularly valuable to MoCo, which has higher teacher compensation costs than other jurisdictions because of its high cost of living.  A decade ago, state leaders began to have “conversations” about having the counties pay these costs despite the fact that Boards of Education, not county governments, set teacher compensation packages.  A spokesperson for the Speaker of the House said it was “a philosophical argument that we definitely need to have.”  In 2010, almost all MoCo state legislators promised to oppose a shift in their election campaigns.  But just two years later, Governor Martin O’Malley proposed a partial pension funding shift, backed by both the Speaker and the Senate President, and most MoCo lawmakers voted to support it.  The cost of the shift to the Montgomery County Government increased steadily from $27 million in FY 2013 to $59 million this year, with $6 million offset by the state.  This far exceeds the cost to any other local government and is more than a third of the amount collected by the county’s recent 9% property tax hike.  The county government now pays more for teacher pensions than it does for libraries, recreation, courts, IT, housing or environmental protection.  Its teacher pension payments easily swamp any money earned from the liquor monopoly, which will return $21 million to the general fund this year.

So goes these conversations.  Now that this new conversation has started, here is a suggested response from all of our state legislators and county leaders to this consultant’s report.

HELL NO.

Maryland Politics Watch

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