Category Archives: taxes

Political Awards 2020

By Adam Pagnucco.

It’s that time: here are the political awards for 2020, the year that was!

Politician of the Year: Governor Larry Hogan

There is really no other choice. Because of the unique demands of the COVID-19 crisis, it’s possible that no Governor of Maryland has wielded more power than Hogan did in 2020 since the colonial era. Local governments, employers and residents all over the state have had to react to his many executive orders. He has had successes, such as Maryland’s relatively low COVID case rate compared to the rest of the country, and he has had failures, such as the flawed test kits from South Korea. Above all, he has been incredibly consequential – far more than any other political figure in the state – and that is enough for this award.

Debacle of the Year: The Purple Line

Again, there is no other choice. The Purple Line’s public-private partnership (P3) was supposed to protect taxpayers from liability, but its collapse will cost us $250 million that would otherwise be available for other transportation projects. The state is promising to complete the project, which will someday generate real benefits for the Washington region, but no one knows its completion date or its ultimate cost. With another P3 pending for the Beltway/I-270 project, the Hogan administration owes it to Marylanders to report on lessons learned from the Purple Line so that its mistakes are not repeated.

Runners Up
Two powerful officials – Hogan Chief of Staff Roy McGrath and MoCo Chief Administrative Officer Andrew Kleine – lost their jobs due to scandal. The McGrath story may not be over.

Worst Move of the Year: Robin Ficker’s Question B

Ficker thought he could get MoCo voters to approve a draconian tax cap that would handcuff county government forever. Instead, not only did voters reject his idea, but they approved a competing ballot amendment (more below) that will actually generate more revenue for the county over time.

Runners Up
MoCo Republicans badly wanted the nine council district charter amendment to pass but they wound up helping to defeat it because of their prominent embrace of it in the toxic year of Trump. Talbot County officials insisted on keeping a confederate statue at their courthouse, a long-term loser for the county.

Best Move of the Year (Tie): Andrew Friedson’s Question A and Evan Glass’s Question C

Former Obama Chief of Staff Rahm Emanuel once said, “Never allow a good crisis to go to waste.” Council Members Andrew Friedson and Evan Glass sure didn’t, drafting competing ballot questions against Ficker’s anti-tax charter amendment and another amendment providing for an all-district council structure. The result of the passage of Friedson’s Question A and Glass’s Question C is a more rational, liberalized property tax structure and a larger county council to service a larger population.

Runner Up
Baltimore County Executive John Olszewski Jr. issued an executive order capping third party food delivery app fees at 15%, preventing excessive fees ranging as high as 30%. The order also bans them from reducing driver compensation and tips to comply with the fee cap.

Missing in Action Award: Almost Everyone Planning or Thinking of a Run for Governor

Comptroller Peter Franchot is the only declared candidate for governor. He has a war chest, a statewide profile and a consulting firm. Right now, he has no competition. As Roger Waters would say, is there anybody out there?

Big Deal of the Year: Moratorium Repeal

The county council repealed the county’s illogical housing moratorium policy, which did not accomplish its intended purpose (alleviating school crowding) but did prevent housing construction in the face of MoCo’s affordable housing shortage. Housing construction still has challenges – including financing problems stemming in part from slow job growth – but the council was right to junk moratoriums that did no good and made housing problems worse.

Just Because She’s Great Award: Delegate Anne Kaiser

She never asks for attention or takes credit for anything. But Delegate Anne Kaiser is everything you could want in an elected leader: smart, practical, savvy, mentors younger politicians and plays the long game. Best of all, she’s a down to Earth person who doesn’t let success go to her head. She’s a worthy successor to the great Sheila Hixson as chair of Ways and Means. Long may she serve.

MoCo Feud of the Year: JOF vs Stephen Austin

In one corner: political newcomer Stephen Austin, running for school board on a platform of opposing MCPS’s boundary analysis. In the other corner: former school board member Jill Ortman-Fouse (universally known as “JOF”), leader of a movement favoring boundary studies in the interest of equity. This was never going to be a great relationship, but this feud set a record for most screenshots in a MoCo political dispute. Here’s to more in the new year!

Runner Up
County Executive Marc Elrich vs Governor Larry Hogan. This one runs hot and cold but it flared big-time when Hogan stopped MoCo from instituting a blanket shutdown of private schools. These two can’t stand each other so expect more this year.

Media Outlet of the Year: Baltimore Brew

If you’re not reading Baltimore Brew, you need to start doing it right now! No city scandal can hide from the Brew’s hustling, dirt-digging journalists, whether it’s document shredding, scams, SLAPP suits, politician tax liens, travel expenses, or other questionable activities. Baltimore Brew is a must-read and a true gem of Maryland journalism.

Game Changer Award: Len Foxwell

For more than a decade, the Franchot-Foxwell partnership roiled Annapolis, grabbed headlines and marched steadily towards Government House. Now Foxwell is a free agent and available for hire as a communications, public relations and political strategist. Few people combine knowledge of politics, policy, press and all things Maryland like Len. Having him on the market is a game changer, especially for anyone who hires him.

County Employee of the Year: Inspector General Megan Davey Limarzi

Limarzi is MoCo’s dynamite inspector general, whose reports on mischief in county government regularly rock Rockville. Two especially notable reports revealed an “overtime scam” in the fire department and overpayment of COVID emergency pay in at least one county department. In Fiscal Year 2020, complaints to the inspector general increased 92%, suggesting confidence in her work. Count me as her biggest fan!

Runners Up

Like Calvin and Hobbes, Travis Gayles (the county’s health officer) and Earl Stoddard (the county’s emergency management director) come as a pair. Both of them have played critical roles in responding to COVID. Gayles is a happy warrior who shrugs off criticism and is indefatigable in his job. Stoddard is a stand-up guy who earned a lot of respect in taking responsibility for the county’s grant management issues. Given the nature of their jobs, Gayles and Stoddard are not always loved, but they deserve credit for taking the heat and carrying on when so many other health officials are leaving around the country.

Quote of the Year: “Hope is Not a Fiscal Strategy”

Council Member Andrew Friedson has said this so many times that his colleagues (and executive branch officials) are probably sick of hearing it. But it’s true: the county has been praying since the summer for a federal bailout that has yet to arrive while the day of reckoning is near. We could have done better.

Gaffe of the Year: “Can I Say the Council is Fact Proof?”

Here is an instance in which County Executive Marc Elrich’s snarky sense of humor was not appreciated by the county council in this hot mic moment. Can we get more hot mics please?

Survivor of the Year: Linda Lamone

After numerous glitches in the primary election, state elections administrator Linda Lamone looked like she might finally be run out of Annapolis. But she outlasted calls for her resignation and the general election went better, so she remains in her job. Given her many problems and a string of bad audits, Lamone isn’t just a survivor of the year – she is THE survivor of the last twenty years. State leaders need to restructure the accountability of her position after she finally retires.

Departure of the Year: Bob Dorfman

We’re not fans of the county liquor monopoly here at Seventh State, but former monopoly director Bob Dorfman was a capable manager who tamed some of its worst problems. Depending on who succeeds him, the county could really miss him.

Most Ignored Story of the Year: Public Information Act Suspension

The Elrich administration’s indefinite suspension of public information act deadlines is the single biggest setback for open government in MoCo that I have seen in almost 15 years of writing. And yet to my knowledge, not a single politician said anything about it publicly and not a single D.C. area press outlet has followed up. I’m not surprised by the politicians. But I am surprised by how meekly the press surrendered to the suspension of one of the greatest tools of investigative reporting available – the public information act. To quote Roger Waters again, is there anybody out there?

That’s all for 2020, folks!

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Top Seventh State Stories, December 2020

By Adam Pagnucco.

These were the top stories on Seventh State in December ranked by page views.

1. What Happened to White Flint?
2. The Day of Reckoning is Near
3. Jawando Calls for a Tax Hike
4. Come on Now
5. Who’s the Boss?
6. MCEA to School Board: Reopening Should be Safe
7. Trump vs Hogan: Votes by MoCo Town
8. Council Overrides Veto, Attacks Elrich, Cuts Revenue for School Buildings
9 (tie). Minority Members of the U.S. House
9 (tie). Corporate MoCo Council Adopts Supply-Side Economics

The top three stories fit together and have meaning for the new year and beyond. The Day of Reckoning is Near summarizes the county’s dire fiscal picture as it heads into a challenging FY22 budget discussion in the spring. Jawando Calls for a Tax Hike kicks off an inevitable dialogue about taxes, one which will only get hotter before the executive makes his budget recommendation on March 15. And What Happened to White Flint? – December’s runaway winner – lays out the story of how the county’s premier development plan has been held back by our slow rate of job growth. Budget headaches, taxes and economic problems are about to collide.

Welcome to 2021, folks!

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What Happened to White Flint?

By Adam Pagnucco.

Ten years ago, White Flint was regarded as the future crown jewel of MoCo. With a shiny new master plan, a tax district for infrastructure and an assortment of regulatory breaks, the area was supposed to create new high-end high-rises combining office, retail and residential uses that would generate billions of dollars in county revenues over coming decades. Everyone who lives here knows that vision is still largely unrealized. And now a new report by county planning staff lays out why.

First, let’s revisit what White Flint was envisioned to become in its 2010 master plan: a smart growth, walkable mecca around a transformed Rockville Pike which would be transit-heavy and pedestrian friendly. The plan required substantial infrastructure investment including streetscaping, a new road network and a bus rapid transit route. Unlike many county master plans, this one had a mechanism for financing infrastructure: a new special taxing district. Properties inside the taxing district would pay into a fund used to pay for the new infrastructure needed to bring the plan to life. In return, impact taxes were set to zero. The council set an infrastructure project list through a resolution and projects in the district were exempted from county traffic reviews. This combination of high density, infrastructure investment and regulatory exemptions was revolutionary for MoCo at the time and still has not been fully replicated. MoCo politicians love to throw around the word “bold” like peanut shells, but White Flint (now marketed as the Pike District) truly deserved the adjective.

So what happened?

In simple terms, the planning staff describes a negative, self-reinforcing feedback loop that has no identifiable end. The loop functions like this. Low levels of development led to low proceeds for the tax district. It was supposed to raise $45 million in its first 10 years but only generated $12-15 million. Low tax district revenues held back the construction of some of the transportation improvements and other infrastructure necessary to make the area more attractive to investment. Developers seeking financing for projects were hindered by the inadequate infrastructure along with the “prominence of underutilized properties.” One of those properties, the mammoth White Flint Mall site, was tied up by years of litigation. The lack of financing, along with construction costs and market conditions, has held back development. And of course the lack of development holds back tax district revenues necessary to pay for infrastructure, so the cycle continues.

This map from the report shows the vast majority of land in White Flint is underutilized (areas marked in red and orange) relative to its zoning.

The most interesting part of the report summarizes comments from White Flint property owners, who comprise a who’s who list of prominent MoCo developers. First, let’s identify what they don’t complain about. They don’t complain about the plan itself; indeed, they think the area still has potential. They don’t complain about market demographics; they find the wealth and education levels in the area attractive. They don’t intend to sell their existing properties, which generate enough cash to cover operating costs and taxes, but they’re not in a hurry to redevelop them. And not a single one of them complained about taxes or requested a tax abatement.

Here are a few excerpts from the report on their take on White Flint’s problems.

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All developers interviewed cited Montgomery County’s limited job growth as a fundamental challenge to continued construction in the Pike District. Low levels of new jobs limit the number of new families seeking to occupy units in the county (household formation), decreasing demand for new development. In addition to limited employment growth, construction costs increased dramatically since 2010, office users occupied less space per employee, and retail demand declined with the rise of online shopping, all factors that continue to reduce demand for or limit the financial feasibility of new development.

Multiple developers noted without providing details that their firm managed to solve issues of high construction costs in other submarkets where there is a higher pace of job growth and household formation, which in turn supports rent growth.

Developers interviewed affirmed that the Pike District is accessible to fewer jobs within a reasonable commute than its peer non-downtown submarkets, and that this reduced access to job centers limits demand for additional multifamily units.

All developers interviewed cited Montgomery County’s limited job growth as a fundamental challenge to continued construction in the Pike District. Low levels of new jobs limit the number of new families seeking to occupy units in the county (household formation), decreasing demand for new development. Developers cited the reduced pace of household formation as a key contributor to stagnant rents, a major concern for the feasibility of future projects.

Several developers independently stated that the attraction of a major employer to the Pike District, such as a life science campus, would significantly increase the feasibility of new multifamily projects.

Developers are not currently willing to build speculative office projects in Montgomery County due to the lack of underlying job growth and the uncertainty about the future of the office sector. Several developers mentioned that they would still consider speculative office construction in Tysons and along the Silver Line corridor, highlighting the continued job growth in Northern Virginia and the contrast with suburban Maryland.

Several interviewees contrasted recent Northern Virginia economic development wins, such as the expansion of Microsoft in Reston, with news that a large distribution center project in Gaithersburg for Amazon is in jeopardy due to delays in the entitlement process. These interviewees stressed that while the number of jobs in these deals is modest, there is a constant drumbeat of positive economic news from Northern Virginia that is unmatched from suburban Maryland.

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Let’s boil this down to three words: jobs, Jobs, JOBS. Employment growth was the dominant theme for these developers, but they had a few things to say about business climate and regulations too.

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Interviewees related that development projects ultimately deliver equivalent profits as similar projects in neighboring jurisdictions, but that Montgomery County’s reputation as generally “a difficult place to do business” limits developer interest.

Developers agreed that the difficulty of the business environment issue is primarily about perception rather than the ultimate profitability. Interviewees cited as examples a range of policy issues such as a minor energy efficiency tax that Montgomery County leadership presented and implemented as a temporary measure but that never expired.

Multiple interviewees stated that in competitor counties they feel that the entitlement review process is oriented to enabling and facilitating a project, whereas in Montgomery County it feels like an oppositional relationship. Related to this, developers feel the County continually creates new policies and initiatives that adversely affect development, and which ultimately encourages them to focus on assets elsewhere in the region.

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The county council and the planning staff are focused on tax abatements as a way to stimulate development, especially housing. But developers in White Flint weren’t complaining about taxes. In fact, tax revenues are NECESSARY to finance infrastructure required to make development happen and function well. It is the absence of tax revenues that resulted in under-financing of infrastructure in White Flint, a key part of the area’s negative feedback loop.

Instead of taxes, the key issue identified by White Flint developers is the absence of job growth, which they believe would stimulate demand for housing and eventually make the economics of housing construction work even with high construction costs. In short: if you want more housing, create more jobs. All of these developers know what we have been saying on Seventh State for years: MoCo has one of the worst records on job growth and business formation of any large jurisdiction in the metro area.

The county’s terrible record on job growth and business formation must be reversed.

All of this points to the need for a strategic decision. MoCo can focus like a laser on job creation, doing everything possible to help entrepreneurs grow their organizations and create employment for residents. If the county does that, the vision of White Flint and other smart growth plans can be realized. Or MoCo can keep handing out tens of millions of dollars in corporate welfare as it has done for decades, thereby depleting its ability to construct infrastructure that facilitates economic growth. Or it can do nothing.

Those are the choices. What will MoCo choose?

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Jawando Calls for a Tax Hike

By Adam Pagnucco.

This morning, the county council and representatives of the executive branch discussed the county’s abysmal new fiscal plan, which raises the prospect of cuts to county government (excluding MCPS and Montgomery College) of up to 12% next year. That attracted many comments from the council as one might imagine. Council Member Will Jawando was the only one to call for a tax hike to prevent draconian cuts. His comments (which can be seen on county video) are transcribed below.

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Thank you, Mr. President and thank you to Mr. Madaleno [the county’s chief administrative officer] and Mr. Coveyou [the county’s finance director] and acting director [Jennifer] Bryant [the county’s acting budget director]. Excited to confirm that shortly. And to all the staff.

A couple things I just wanted to note. I think Council Member [Evan] Glass said something that’s really important I want to underscore and I agree with, that our focus needs to be on maintaining services for those who need it the most, and Director Bryant, you said this as well, and I think everyone agrees with that. But I also want to make sure that we are also looking at how we’re going to come out of this crisis. And we are in the unenviable position of having to both manage our fiscal situation, deal with the multiple pandemics – health, social, economic – and try to make sure that we don’t exacerbate inequality and we plan for the recovery at the same time.

And that’s not easy, right? We’re dealing with that, as is the nation, as is the world. But I think we are in a better position than most to try to make those plans. And I want to urge us to do a couple of things as we’re thinking about that, so as Mr. Madaleno, as you’re coming back in January with your team. We have reserves for a reason. So we should use them. If we’re not going to use them now, I don’t know when you would use them. I’ve said this since the beginning. And we have been using them on special appropriations and we have been seeking reimbursement.

Jawando speaks in open session today.

But I think to – as we’re looking at, there’s been a lot of talk of savings plans. We cannot cut critical services to those in need that are going to exacerbate income inequality. And if those decisions are being made or are on the chopping block, we have to use reserves.

The other thing is we have to consider how we’re going to raise additional revenues. This has been one of the most unequal pandemics and recessions that we’ve ever seen. There was a report out in October that billionaires increased their net worth by $637 billion through October during the pandemic. And obviously those numbers are smaller for millionaires. But equal growth. While at the same time, you see more than 40 million Americans applying for unemployment insurance. My office has helped hundreds, I know other colleagues have. So this recovery, this pandemic has not been equal. And Montgomery County is a perfect example of that. We have – we are in the wealthiest county in the wealthiest state with the most millionaires per capita in the country. And so as a state and as a county, some who have done well, and I’m happy that that’s the case – we’re going to do have to do more for our residents. So before we discuss any cuts to services that are in need that are going to exacerbate inequality, we’re going to need to look at these types of options.

I’m glad that we included in the statement we sent to Annapolis asking for the authority to levy a progressive tax bracket on the income tax. We need to do that. I’ve said it before. If we were to increase the top bracket from 3.2 to 3.5 percent on just millionaires in the county, you’d bring in over $90 million in revenue a year. I’m not saying that’s the specific proposal we need to do, but we certainly need to be talking about those things in the context of this larger picture. And I just want to say that because it hasn’t been said. So I look forward to reviewing the details. I appreciate the sobering picture and look forward to working through this with you and our colleagues.

Thank you, Mr. President.

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Elrich Vetoes Impact Tax Cut

By Adam Pagnucco.

County Executive Marc Elrich has vetoed a bill passed by the council that would effectively cut impact tax collections. While the bill passed the council on a 9-0 vote, making it unlikely that Elrich’s veto will be upheld, the policy debate lays out stark differences between the executive and the council.

Impact taxes are charged to development projects in order to pay for the additional demands for infrastructure that they create. MoCo levies two: a school impact tax and a transportation impact tax. Both are used to finance the capital budget and are dedicated to schools and transportation projects respectively. The county council periodically adjusts impact tax rates, credits and discounts, and various structural aspects of how they are administered.

This year, the planning board proposed as part of a new subdivision staging policy (which sets the county’s policies on infrastructure) a package of tax changes. Bill 38-20 instituted a range of changes to impact tax collections that would effectively reduce the county’s receipts. Among the planning board’s proposals were to cut the school impact tax rate to 100% of the cost of a student seat from the current 120% of the cost of a student seat and to apply discounts to single-family detached and multifamily units in desired growth areas to incentivize growth, both of which would cut receipts. These cuts would be partially reduced by a new utilization premium payment applied to development projects in areas with crowded schools.

To offset the impact tax losses in Bill 38-20, the planning board proposed Bill 39-20E, which would raise recordation taxes. Currently, recordation tax receipts are split between the operating budget’s general fund, the capital budget (especially schools) and rental assistance programs. And so the planning board’s vision was to cut impact taxes and raise recordation taxes to spread the cost of financing infrastructure across both new and existing development.

Lots of changes were made to the planning board’s proposals but the bottom line is that the council passed Bill 38-20, which cut impact tax receipts, and has not yet passed Bill 39-20E, which would raise recordation tax receipts to help pay for lower impact taxes. (The latter had significant opposition from the real estate community.) The recordation tax increase is not dead, however; the council will return to that issue eventually if for no either reason than to examine the capital budget next year.

That leaves the county executive, who repeatedly expressed concerns about the changes to impact taxes and other growth policies throughout the fall. Elrich believes that Bill 38-20 will cost the county $12.5-20 million a year in lost impact tax revenues, all of which go to paying for school construction and transportation projects. (That number is subject to dispute.) Elrich also never bought in to the trade of lower impact taxes for higher recordation taxes. He would rather use higher recordation taxes to cover operating budget shortfalls or more school expenditures than to offset lower revenues from impact taxes. Accordingly, Elrich vetoed the cut in impact taxes even though it passed the council on a 9-0 vote. The council will win the policy debate for now, but the politics (and the budget maneuvers) will go on.

Elrich’s veto message is printed below.


MEMORANDUM

November 30, 2020

TO: Sidney Katz, President, County Council

FROM: Marc Elrich, County Executive

RE: Veto explanation: Bill 38-20 Taxation – Development Impact Taxes for Transportation and Public-School Improvements – Amendments

With new development comes increased infrastructure needs; the newly renamed “Growth and Infrastructure Policy” (Growth Policy) reduces the funding available to provide the necessary infrastructure while the need to provide infrastructure is more critical to our success than ever. While I have long been concerned with how impact taxes work and I believe that there are alternatives that should be implemented, I cannot support simply reducing the necessary revenues without an appropriate replacement. Therefore, I am vetoing Bill 38-20.

The primary purpose of the Growth Policy is to put forth policies for adequate infrastructure – schools, transportation and more – that accompany new development. While I have other concerns about the bill, my primary concern is the projected revenue loss, which is estimated to be between $12.5 million and $20 million per year based on an analysis of projects in the development pipeline.

These reduced revenues are occurring at a time when we know we don’t have enough funding to address current needs or other infrastructure investments needed to grow our economy and maintain our status as a desirable place to live. For example, legislation to increase state aid for school construction will require the county to provide local matching funds; traditional state aid costs the County $3 for every $1 from the State or an average of $200 million annually. It is important to ensure the County will be able to continue to match traditional state aid for school construction as well as the approximately $400 million in additional state aid expected from the Built to Learn Act. (This Act will take effect immediately upon the legislature’s expected override of the Governor’s veto of the “Kirwan” bill.) School overcrowding and a $1.5 billion-dollar backlog in new construction, renovation and modernization needs burden our school system – one of our prime assets.

In addition, regional business leaders have said that improved transportation is central to economic development, pointing out the importance of efforts like Bus Rapid Transit.

Yet at a time when we know that (post-Covid19) we need improved transportation and relief for overcrowded schools and delayed modernizations, this Growth Policy reduces our ability to finance those needs.

These and other increased needs are coming while we are lowering our General Obligation bond borrowing to slow the growth of debt service costs, which lowers the amount of infrastructure we can fund with bonds. Less bonding and fewer impact tax revenues will not allow us to address our education and transportation needs. Even as the Growth Policy reduces revenues, the need for the infrastructure will not disappear. Either the funds will have to come from somewhere else, largely from county residents, or we will have to forgo important infrastructure improvements which will make righting our economic ship even more difficult.

I laid out my concerns in a letter I sent to the Council on September 10 (attached) and I highlighted my concerns again in another letter on November 10 (attached). My staff also raised several issues throughout the process. While I appreciate some of the improvements to the Growth Policy, including the improved annual school test and the clarification for agricultural storage facilities, I cannot sign this bill as it is currently written.

The Council has stated that it will consider an increase in the recordation tax to fill the gap from the reduced revenue, but that discussion is not currently scheduled. Furthermore, using an increase in the recordation tax shifts the costs from the developers of the projects to people refinancing or buying homes as well as to purchasers of commercial properties. Additionally, in these uncertain budgetary times, any potential revenue source may have to be reserved for other needs.

If competitiveness is the issue vis-a-vis our neighbors, then we should consider how our neighbors raised the money to meet their infrastructure needs. I think we will find that their focus was not on ways to reduce the revenues coming from development – rather, the opposite – they looked for ways to ensure the resources needed to provide the infrastructure for a growing community.

I regret that in the middle of this pandemic we have not had the opportunity for a more fundamental discussion of other methods to achieve adequate public facilities under the Growth Policy. While I recognize that one of the driving forces behind the recommended changes is to generate more housing, we know this will generate more residents in need of services, more students in our schools, and more people traveling to their jobs. This strongly suggests the need to increase revenue sources, not reduce them. I would welcome an opportunity to work with the Council to identify fair, alternative methods to fund the necessary infrastructure. For example, our office is working on how we could structure development districts, which have been successfully implemented in Northern Virginia and which were recently recommended by the Economic Advisory Group. Without such a replacement, I cannot support a loss of revenue. That’s not providing adequate public facilities by any measure. We can do better.

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Winners and Losers of the Ballot Question War

By Adam Pagnucco.

This year, MoCo saw its biggest battle over ballot questions in sixteen years. Most county players lined up on one side or the other and victory has been declared. Who won and who lost?

Winners

Council Member Andrew “Real Deal” Friedson
Friedson authored Question A, which liberalized the county’s property tax system to allow receipts to increase with assessments. Wall Street applauded its passage. Even progressives, who don’t love Friedson but owe him big-time for opening up the county’s revenue stream, have to admit that his Question A was the real deal.

Council Member Evan Glass
Glass authored Question C, which added two district council seats and defeated the nine district Question D. Lots of wannabe politicians are going to look at running for the new seats. Every single one of them should kiss Glass’s ring and write a max-out check to his campaign account.

County Democratic Party
It’s not a coincidence that MoCo voters adopted the positions of the county Democratic Party on all four ballot questions. With partisan sentiments running high and information on the questions running low, MoCo Democrats went along with their party and dominated the election.

David Blair
Blair was the number one contributor to the four ballot issue committees that passed Questions A and C and defeated Questions B and D. By himself, Blair accounted for nearly half the money they raised. Whatever Blair decides to do heading into the next election, he can claim to have done as much to pass the county Democrats’ positions on the ballot questions as anyone. (Disclosure: I have done work for Blair’s non-profit but I was not involved in his ballot question activities.)

Ike Leggett
The former county executive was key in leading the fight against Robin Ficker’s anti-tax Question B and the nine county council district Question D. Thousands of MoCo voters still like, respect and trust Ike Leggett.

Jews United for Justice
While not having the money and manpower of many other groups who played on the questions, Jews United for Justice played a key role in convening the coalition that ultimately won. They have gained a lot of respect from many influencers in MoCo politics.

Facebook
Lord knows how much money they made from all the ballot question ads!

Losers

Robin Ficker
At the beginning of 2020, MoCo had one of the most restrictive property tax charter limits of any county in Maryland. For many years, Ficker was looking to make it even tighter and petitioned Question B to the ballot to convert it into a near-lock on revenues. But his charter amendment provoked Friedson to write Question A, which ultimately passed while Question B failed and will raise much more money than the current system over time. Instead of tightening the current system, the result is a more liberal system that will achieve the opposite of what Ficker wanted – more revenue for the county. This was one of the biggest backfires in all of MoCo political history.

Republicans
The county’s Republican Party did everything they could to pass Ficker’s anti-tax Question B and the nine county council district Question D. In particular, they gave both cash and in-kind contributions to Nine Districts and even raised money for the group on their website. In doing so, the GOP provoked a fierce partisan backlash as the county Democrats rose up to take the opposite positions on the ballot questions and most Democratic-leaning groups combined forces to support them. With President Donald Trump apparently defeated, Governor Larry Hogan leaving office in two years and little prospect of success in MoCo awaiting them, where does the county’s Republican Party go from here?

This tweet by MoCo for Question C from a voting location explains all you need to know about why Question D failed.

Political Outsiders
It wasn’t just Republicans who supported the failed Questions B and D; a range of political outsiders supported them too. What they witnessed was a mammoth effort by the Democratic Party, Democratic elected officials and (mostly) progressive interest groups to thwart them. Even the county chamber of commerce and the realtors lined up against them. Whether or not it’s true, this is bound to provoke more talk of a “MoCo Machine.” Machine or not, outsiders have to be wondering how to win when establishment forces combine against them.

Push

MCGEO, Fire Fighters and Police Unions
These three unions are frustrated. They have not been treated the way they expected by the administration of County Executive Marc Elrich and they are also upset with the county council for abrogating their contracts (among other things). They wanted to show that they could impose consequences for messing with them and that was one reason why all three made thousands of dollars of in-kind contributions to Nine Districts. On the negative side, the nine districts Question D failed. On the positive side, the passage of Friedson’s Question A will result in a flow of more dollars into the county budget over time, a win for their members. So it’s a push. On to the next election.

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MoCo Ballot Groups Declare Victory

By Adam Pagnucco.

The four ballot issue committees who worked on behalf of Questions A and C and against Questions B and D have issued a joint victory statement. The committees and their affiliated organizations had different focuses on the questions but still coordinated their activities when possible. Their statement is reprinted below.

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FOR IMMEDIATE RELEASE

MONTGOMERY COUNTY BALLOT COMMITTEES CELEBRATE SUCCESS AT THE BALLOT BOX

Broad coalition of religious, business, labor, and community groups thanks all the members and partners who worked tirelessly to protect the future of Montgomery County.

MONTGOMERY COUNTY, November 5, 2020 — With a shared vision of a better Montgomery County that works for everyone, we successfully took our message to voters about the County ballot questions. Every vote counts and, as our County’s dedicated election workers complete the count, we take a moment to acknowledge the power of our community working together.

In a time when our country is so divided, Montgomery County showed how broad and diverse coalitions can work side by side to address tough issues. Whether it is tax policy or representation, the politics of lifting people up is more powerful than tearing people down. When we believe changes are needed, we are capable of coming together as a community to make it happen. We are confident in the opportunity ahead to build a better and stronger future for all Montgomery County residents.

Signed,

Montgomery Neighbors Against Question B
Press Contact: Daniel Koroma

Montgomery Countians For A & Against B
Press Contact: Scott Goldberg

Residents for More Representation
Press Contact: Marilyn Balcombe

Vote No on B&D
Press Contact: Susan Heltemes

Ballot committee coalition members:
● Baltimore-Washington Laborers’ District Council, LiUNA
● CASA
● CERG 2.0
● Greater Capital Area Association of Realtors(R)
● Jews United for Justice
● LGBTQ Democrats of Montgomery County
● MCGEO – UFCW Local 1994
● MoCoWoMen
● Montgomery Countryside Alliance
● Montgomery County Chamber of Commerce
● Montgomery County Council of PTAs
● Montgomery County Democratic Central Committee
● Montgomery County Democratic Socialists of America
● Montgomery County Education Association
● Montgomery County Hispanic Chamber of Commerce
● Montgomery County Women’s Democratic Club
● Montgomery County Young Democrats
● Nonprofit Montgomery
● Progressive Maryland
● SEIU Local 500
● Sierra Club
● Takoma Park Mobilization
● The Association of Black Democrats of Montgomery County
● and many other organizations, county leaders, and engaged residents!

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Moody’s: Passage of Question A is a “Credit Positive”

By Adam Pagnucco.

Moody’s Investors Service, one of the three major Wall Street bond rating agencies, has released an issuer comment characterizing the passage of Question A as a “credit positive” for Montgomery County. The comment is reprinted below.

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Montgomery (County of) MD

Voters amend limits to property tax revenue collections, a credit positive

On November 3, voters in Montgomery County (Aaa stable) approved a charter amendment on property tax limitations which enables the county to raise property tax rates without revenue constraints, a credit positive.

The approved measure (Question A) replaces the existing limit and enables a unanimous vote by County Council to adopt a tax rate on real property that can exceed the rate from the previous year. The amendment is credit positive for county operations because property tax revenue is not subject to any restrictions based on inflation, and revenue growth can be captured through tax base expansion in addition to any approved rate increases. The county’s previous charter limit, a self-imposed tax cap that was enacted in 1990, limited property tax revenue growth to the rate of inflation (CPI index) and an amount based on new construction.

A second charter amendment on the ballot (Question B) was rejected, which aimed to remove the county’s ability to increase revenue above inflation. The failure of the measure is also positive because it enables the county to retain flexibility to increase this revenue source when needed to balance the budget, particularly as its income tax rate is already levied at the maximum state cap of 3.2%. Montgomery County is just one of five counties in Maryland with a charter amendment limiting property tax revenue increases, and the ability to adjust the tax rate accordingly is important, particularly as most of the county’s debt is secured by its limited ad valorem tax and full faith and credit pledge.

Income taxes are the county’s primary general fund revenue source (43.5% of total fiscal 2019 revenue), followed by property taxes (36.6%) and other local taxes (7.8%).

The county demonstrated willingness to override its prior charter limit in May 2016 when it approved a 9.9% increase in property tax revenue to support rising debt service and insurance costs, as well as an increase in the Maintenance of Effort (MOE) for K-12 schools and the community college, mandated by the State of Maryland (Aaa stable). Without the increase, the county faced a $178 million budget gap in fiscal 2017 (ended June 30, 2017).

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How Many More Votes Will be Counted?

By Adam Pagnucco.

As of right now, here is the status of key election results in MoCo.

School Board At-Large: Lynne Harris 53%, Sunil Dasgupta 46%

School Board District 2: Rebecca Smondrowski 60%, Michael Fryar 39%

School Board District 4: Shebra Evans 66%, Steve Solomon 33%

Circuit Court Judge: Bibi Berry 23%, David Boynton 21%, Michael McAuliffe 21%, Christopher Fogleman 20%, Marylin Pierre 14%

Question A (Authored by Council Member Andrew Friedson, freezes property tax rate with unanimous council vote required to exceed): For 62%, Against 38%

Question B (Authored by Robin Ficker, would limit property tax receipt growth to rate of inflation and remove council’s ability to exceed): For 42%, Against 58%

Question C (Authored by Council Member Evan Glass, changes county council structure to 4 at-large seats and 7 district seats): For 61%, Against 39%

Question D (Authored by Nine Districts for MoCo, changes county council structure to 9 district seats): For 42%, Against 58%

You can see the latest results here for school board and judicial races and here for ballot questions.

But all of this is subject to a HUGE caveat: not all the votes have been counted. How many more remain?

Three batches have yet to be counted. First are the remaining election day votes. As of right now, only 3 of 40 election day vote centers in the county have reported 80% or more of their results. At this moment, 6,474 election day votes have been cast for president. That suggests tens of thousands of votes more could come in.

Second are the remaining mail votes. According to the State Board of Elections, MoCo voters requested 378,327 mail ballots. At this moment, 177,628 mail votes have been cast for president. This suggests that roughly 200,000 mail votes are out there. Not all of them will ultimately result in tabulated votes but it’s still a lot.

Third are provisional ballots. How many are out there is not known right now. However, this will be by far the smallest of these three categories and they will make a difference only in tight races.

So let’s put it all together. At this moment, 312,452 total votes for president have been tabulated. (I don’t have an official turnout number, but since the presidential race has the least undervoting, this figure is probably reasonably close to turnout so far.) This suggests – VERY roughly – that 55-60% of the votes have been counted, with the vast majority of outstanding votes coming from mail ballots.

What does that mean for the results above? To determine that, we need to examine how different the election day votes and the mail votes were from the total votes tabulated so far since those two categories are where most of the remaining votes are coming from. And of those two categories, mail votes will be far larger than election day votes.

President

MoCo’s votes for president (as well as Congress) are not in doubt but the differential results by voting mode are suggestive of a pattern affecting other races. Former Vice-President Joe Biden has received 79% of total votes as of this moment. However, he has received 51% of election day votes, 65% of early votes and 90% of mail votes. That illustrates a strong partisan pattern associated with voting, with election day votes most friendly to Republicans and mail votes most friendly to Democrats. Keep that in mind as you proceed to the races below.

Circuit Court Judges

Challenger Marylin Pierre has so far received 14% of early votes, 14% of election day votes, 15% of mail votes and 14% of total votes. Each of the incumbent judges cleared 20% on all of these voting modes. This is a non-partisan race so the partisan pattern noted above has minimal effect here. With little reason to believe that the next batch of mail votes will be different than the mail votes already tabulated, it’s hard to see Pierre pulling ahead.

School Board

The district races are blowouts. Let’s look at the at-large race between Lynne Harris and Sunil Dasgupta. Harris has so far received 53% of early votes, 60% of election day votes, 53% of mail votes and 53% of total votes. These are not big leads but they are fairly consistent. For Dasgupta to pull ahead, he would need to pull at least 55% of the outstanding votes yet to be counted, more than flipping the outcome of the existing votes. Unless the next batch of votes – especially mail – is somehow fundamentally different from what has already been cast, it’s hard to see that happening.

Ballot Questions

There are two things to note here. First, none of these results are close at this moment. Second, while these are technically non-partisan, the Democratic Party and the Republican Party endorsed in opposite directions and both sides worked hard to make their views known. The partisan split seen in the presidential election had an impact on the ballot question results.

First, let’s look at election day voting. Judging by the presidential race, this was the most favorable voting mode for the GOP. Here is how election day voting (so far!) compares to total voting (again, so far).

Question A For Votes: Election day 51%, total 62%
Question B For Votes: Election day 60%, total 42%
Question C For Votes: Election day 52%, total 61%
Question D For Votes: Election day 60%, total 42%

This looks like good news for supporters of Question B (Robin Ficker’s anti-tax question) and Question D (nine districts). After all, there are probably tens of thousands of election day votes yet to be counted.

However, the big majority of outstanding votes are mail ballots. Joe Biden received 90% of mail ballot votes tabulated so far, a sign that Democrats dominated this voting mode. Here is what the mail votes (so far) look like.

Question A For Votes: Mail 68%, total 62%
Question B For Votes: Mail 34%, total 42%
Question C For Votes: Mail 65%, total 61%
Question D For Votes: Mail 33%, total 42%

The mail votes uphold the winning margins of Questions A and C and depress the results for Questions B and D. That’s not a surprise if 1. Democrats voted disproportionately by mail and 2. Democrats stuck with their party’s position on the ballot questions. Indeed, we know here at Seventh State that this post on the Democrats’ statement on the ballot questions got huge site traffic.

As a matter of fact, one could even go so far as to say that once the ballot questions turned partisan, it may have been the beginning of the end.

Plenty of votes remain to be counted so let’s respect that. We may know a lot more by the weekend.

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Early Results on MoCo Races

By Adam Pagnucco.

The first batch of votes on MoCo races has been reported. This is VERY early and VERY incomplete. So far, the reports include only early votes and less than half the mail ballots requested by MoCo voters with no election day votes tabulated. All of that means these races are FAR from decided, folks!

All of that said, here are the earliest results. Bear in mind that the final percentages are going to be different, but how different they will be cannot yet be said.

School Board At-Large: Lynne Harris 53%, Sunil Dasgupta 46%

School Board District 2: Rebecca Smondrowski 60%, Michael Fryar 39%

School Board District 4: Shebra Evans 67%, Steve Solomon 33%

Question A (Authored by Council Member Andrew Friedson, freezes property tax rate with unanimous council vote required to exceed): For 63%, Against 37%

Question B (Authored by Robin Ficker, would limit property tax receipt growth to rate of inflation and remove council’s ability to exceed): For 41%, Against 59%

Question C (Authored by Council Member Evan Glass, changes county council structure to 4 at-large seats and 7 district seats): For 62%, Against 38%

Question D (Authored by Nine Districts for MoCo, changes county council structure to 9 district seats): For 41%, Against 59%

It is probably not a coincidence that these results mirror the recommendations of the county’s Democratic Party, but the results are far from final.

At some point tonight, the election day votes should be added in. You can refresh them here for school board races and here for ballot questions.

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