Category Archives: Ike Leggett

Ike Leggett’s Dump Fire

By Adam Pagnucco.

No one knows exactly when the worst dump fire in Montgomery County history started.  It was first reported to authorities on October 22, 1994.  A 40-foot high pile of trash at the Travilah Road dump had ignited and begun spreading airborne foulness throughout the vicinity.  The Washington City Paper reported, “The slow smolder spewed clouds of acrid smoke—filled with floating ashes and shreds of trash—and a putrid odor that engulfed the North Potomac area for miles around. The noxious fumes temporarily shut down Stone Mill Elementary School and forced residents from their homes; some had to take temporary refuge in motels.”  More than 200 people reported respiratory problems.

Incredibly, the county government did not act immediately to put the fire out.  Rather, it wanted dump owner Billy Mossburg and his family to put it out themselves despite their long history of bad blood with both the county and their neighbors.  The Washington Post reported, “The county doesn’t have the equipment to do the job, and it’s better for the company to spend its money under county supervision than for the county to spend tax money and bill Travilah Recovery later, said Capt. Ray Mulhall, a fire department spokesman.”  The county posted two environmental inspectors and three fire officials to the site to “ensure everything is done right.”

Internally, the administration of outgoing County Executive Neal Potter debated what to do.  Meetings of county officials went on for two hours or more without resolution.  Some in the administration worried about liability.  Others were concerned about who would pay to put out the fire.  Some worried about the difficulty of getting trucks into the dump or whether lights could be installed for night-time fire-fighting.  Just as a course of direction seemed in reach, someone would bring up more questions and the meetings would resume.  And the fire kept burning.

It was Paralysis by Analysis, then and now.

County Executive Ike Leggett has a dump fire, too.  It is otherwise known as the Department of Liquor Control (DLC).  Maligned for many years for its poor service to licensees and consumers, it was the subject of a landmark Washington City Paper story during Leggett’s first year in office.  The DLC is not a threat to public safety as Billy Mossburg’s dump once was.  But it chases away consumers, stunts the county’s restaurant industry and costs the county and state nearly $200 million a year in economic activity.  After a number of scandals including employee theft, employees drinking and driving on the job and use of an inventory system run with sticky notes, the County Council proposed a bill allowing private distributors to fulfill some special orders.  Delegate Bill Frick (D-16) went further, proposing a bill that would have allowed voters to decide whether to continue the liquor monopoly.  After initially supporting the council’s bill, Leggett opposed both of them and promised that he would fix the DLC through a task force.

The result of the task force?  Paralysis by Analysis, of course.  The task force’s eleven members included just two licensees and no consumers.  It had three meetings during which invited speakers extolled the benefits of government liquor monopolies.  It concluded with no task force statement and no proposal.  The administration completely ignored a proposal to recover DLC’s profits and pretended for months that the proposal never existed.  The Executive offered a tweak that no one else supported and later withdrew it, alleging that DLC’s problems were solved.  This is despite the fact that DLC suffered massive supply failures during the Christmas and New Year’s Eve week the prior two years.  On each occasion, Leggett defended the liquor monopoly just prior to its meltdowns.

The pattern here is the same as the reaction of County Executive Neal Potter to the Travilah dump fire.  Be cautious.  Worry about money.  Pretend that things aren’t so bad.  Play for time.  Maybe the problem will go away by itself.  Maybe public interest will move on to something else.

In the end, the Travilah dump fire was undone by an event it could not burn away: an election.  Incoming County Executive Doug Duncan raced from his inauguration directly to the Executive Office Building and demanded that county officials do everything possible to put out the fire.  Eight days later and roughly seven weeks after it was first reported, the fire was out.  The county later sued the dump owner to recover the cost of fighting the fire.

Here is the great lesson of the Travilah dump fire for today’s dump fire at the DLC.  Meetings and task forces won’t put it out.  Neither will consultants, financial analyses, promises, tweaks, defensive blog posts or PR campaigns.  One thing is needed to deal with the liquor monopoly.

Bold action.  From a new County Executive.

A Reply to the County Executive on the Liquor Monopoly

By Adam Pagnucco.

Thanks to County Executive Ike Leggett for responding to my post on how his administration ignored my proposal to make up revenue for the Department of Liquor Control (DLC).  I stand by my piece and reply to several of his points as follows.

1.  Contrary to the Executive’s contention, my proposal was in fact never analyzed during the time of the DLC task force.  His consultant’s report never mentions it despite the agreement of his staff to include it.  Try finding my proposal, my name, a reference to Seventh State or an analysis of my idea for using cable funds to finance DLC’s debt in the report.  They are simply not there.

2.  The Executive alleges that I made a “basic math mistake” by omitting DLC’s debt service from the revenue needing to be replaced.  Not at all.  Anyone reading my proposal can see that I did not omit it.  I simply dealt with it separately from the return DLC sends to the operating fund since the two revenue streams require different fixes.

3.  The Executive is correct that the state has imposed numerous unfunded mandates and fees on the counties in recent years.  I should know.  I helped organize a campaign against the teacher pension shift in 2012 that included county governments, school boards, community groups and elected officials in both parties.  But rather than merely complain about the state, let’s recognize that it has a role to play in dealing with the liquor monopoly and the revenue question since DLC was created in state law.  A visionary Executive with a plan to transition away from the liquor monopoly would be invaluable in securing the state’s cooperation.

4.  The Executive is wrong about my proposal to use cable funds to service DLC’s debt in two ways.  First, he claims that I proposed raising the 5% fee the county currently levies on cable bills.  That’s not what I said, and in any case, the fee is already at the maximum level allowed by federal law.  Second, he claims that “Cable fund money cannot legally be used for purposes other than cable-related needs: technology and communication purposes. We cannot take Cable Funds to build roads and schools.”  That is absolutely wrong.  The county’s own cable lawyer advised the County Council in 2012 that the county has discretion over how the 5% fees can be spent, but not on amounts collected over that level or on behalf of municipalities.  Those amounts not subject to county discretion were excluded from my analysis.  In fact, the Executive transfers some money from the cable fund to the general fund right now.  The approved FY17 budget states, “Funds are transferred from the Cable Fund to the General Fund to cover the cost of certain administrative services provided by the County to the Cable Fund ($654,353) and other contributions ($5,163,433).”  That’s right, folks, the Executive’s statement in his reply to us is contradicted by his own budget.

Why is the Executive so resistant to the idea of using cable funds for DLC’s debt service?  Perhaps one reason is because cable fees are the source of millions of dollars for County Cable Montgomery and Montgomery Community Media, two public “news” outlets that provide “coverage” for county elected officials.  Try to locate an unflattering “news” article about county elected officials in any of the “coverage” provided by these outlets.  Good luck finding any because one of them is part of county government and the other is a non-profit that gets more than 80% of its budget from the county.  What’s the better use for this money?  Financing Pravda-style public relations or helping to fix the liquor monopoly?

5.  The Executive notes that Worcester County’s former monopoly on spirits may be coming to an end.  He is probably right about that.  Worcester’s monopoly, while not including wine and beer as Montgomery’s does, did an even poorer job of customer service than MoCo and was busted by the Comptroller for breaking numerous laws in 2010.  After Worcester’s monopoly was opened to competition in 2014, the county lost 42% of its wholesale business after a year (while keeping 96% of its retail volume) and its leaders may decide to exit alcohol sales altogether.  But if they do so, it will be because they have decided they can’t compete with private distributors.

That seems to be the rationale the Executive has for shielding DLC from competition: since (in his view) it can’t compete, competition shouldn’t be allowed.  How is that a good thing for licensees and consumers?  Isn’t there a chance that open competition could cause DLC to improve while making private wholesalers pick up their game?

Also, the Executive says, “In the liquor business it is the suppliers/manufacturers who decide which ONE distributor/wholesaler will sell their products.”  That may be true under most circumstances in Maryland, but COMAR 03.02.01.12 exempts county liquor dispensaries from this arrangement.  In other words, state law allows manufacturers to sell to both county liquor sellers and private distributors.  That is what happens now.  In fact, DLC couldn’t exist without this exemption.  Competition between DLC and the private sector can occur if the state allows it.  The Executive simply opposes it.

The County Executive’s response shows that he is sensitive to criticism on this subject.  If only that were enough to make real progress on the county’s shameful liquor monopoly.

Exclusive: Ike Leggett Responds on the DLC

Today, I am pleased to present a guest blog by Montgomery County Executive Ike Leggett:

REALLY Setting the Record Straight…

Adam Pagnucco’s blog entry, Setting the Record Straight, does anything but set the record straight. Let’s be clear – I did not “throw in the towel” on privatizing the County’s Department of Liquor (DLC). The record clearly shows that I introduced State legislation that would have privatized our DLC while also protecting and maintaining the significant revenue stream of over $30 million a year it contributes to the County budget. Some on our County Council and in the State Delegation felt that, given the progress we’ve seen in DLC since we brought in a new management team with considerable liquor industry experience, and a number of substantive changes we had made to the organization already, we should give them additional time to make even greater improvements.

Philosophically, I am not opposed to privatization, but I also stand by my statement that not one of the critics of the County’s Department of Liquor Control (DLC) put forth a viable privatization proposal that would hold the County budget harmless by replacing the DLC’s profits. The County DLC is a taxpayer asset that produces a net profit of over $30 million a year and to privatize without replacing the revenue would be a disservice to our taxpayers.

After months of soliciting proposals, not one person or organization offered a viable plan to privatize DLC while maintaining the approximately $30 million in profits, including groups that assured us they would. While Mr. Pagnucco claims that his plan would have done so, his route to privatization, simply put, was based on faulty assumptions.

Mr. Pagnucco’s proposal was not ignored. It was carefully reviewed by us in the County and it was also reviewed by a consultant hired to review privatization options It was judged not viable because the underpinnings of the proposal were either unworkable, not legal or just plain wrong. Here’s why:

First, Mr. Pagnucco made a basic math mistake. He estimated that the County receives $20 million in “profit” in FY17, therefore starting with the faulty premise that to make the County whole, only $20 million in DLC profits each year need to be replaced. Unfortunately, he ignores that in FY17, the Department of Liquor Control earmarked $20.7 million for transfer to the General Fund and another $10.9 million to pay debt service on Liquor Bonds – bonds that have paid for road, and school construction in our County.

Therefore, the revenue to be replaced equals $31.6 million, not $20 million.

Mr. Pagnucco’s proposal then makes the argument that there will be a huge economic spinoff from privatizing by increased sales. He relies on a report done by the Comptroller’s Bureau of Revenue Estimates, which was itself built on an amazing number of alternative facts. But, for the sake of argument, say it was a sound analysis. Even Mr. Pagnucco admits that the tax revenue estimates presented in the report actually proves the county’s point that opening the alcohol market really only benefits the State coffers. He himself noted the county would receive less than $1 million of the revenue, while the rest of the estimated $35 million in economic spinoff benefit would go to the state’s general fund.

So he suggested that we pass a State law to compel the State to share its new revenue with us. The consultant, and everyone familiar with how Annapolis works, rightly pointed out that first, it requires the state to be a willing partner, and second and more importantly, there exists a legitimate concern about revenue sharing with the State. What the State giveth, the State taketh away. Just in the 1990s alone, the following County revenue sources were reduced or eliminated by the State:

  1. Liquor tax revenue sharing: eliminated; loss of $4.4 million to counties
  2. Beer tax revenue sharing: eliminated; loss of $4.2 million to counties
  3. Tobacco tax revenue sharing: eliminated; loss of $12.7 million to counties
  4. Property tax grant: eliminated; loss of $82.5 million to counties
  5. Teacher social security: eliminated; loss of $145 million
  6. Financial institution franchise tax sharing: eliminated; loss of $17 million to counties
  7. Transportation taxes revenue sharing (not highway user): eliminated; loss of $19.6 million to counties
  8. Abandoned property revenues: eliminated, loss of $5 million to counties
  9. Corporate filing fee revenues: eliminated; loss of $1.6 million to counties
  10. Security interest filing fee revenues: eliminated; loss of $1 million to counties

Mr. Pagnucco claims that the County can replace the bond money by raising our cable franchise fee and siphoning off dollars from the Cable Fund. With this statement he negates his own argument that his proposal would be “cost neutral” since it would in fact require raising fees.

But what he more importantly failed to realize is that Cable fund money cannot legally be used for purposes other than cable-related needs: technology and communication purposes. We cannot take Cable Funds to build roads and schools. Plus, utilizing this revenue would just create a budget hole elsewhere.

Another faulty assumption in Mr. Pagnucco’s proposal is using Worchester County as an example of how privatization in Montgomery County would work smoothly. He claims that after privatizing its liquor business, Worchester experienced reduced revenues but that the loss was negligible and that such a loss would equate to a mere $5 million per year for Montgomery. However, in reality, the unhappy ending to the Worchester story of privatization is that Worchester County is now going out of the liquor business forever and will generate exactly zero revenue for its budget in the future.

The final faulty assumption in Mr. Pagnucco’s proposal is his assumption that the county could just open up more liquor stores, which he notes would create additional profits.  See paragraph above: Worchester’s unhappy ending is testament that it just won’t happen.

Finally, Mr. Pagnucco says he was not proposing getting rid of the DLC – he just wanted to provide competition (i.e.; “end the monopoly”) by allowing our licensees to decide from whom to purchase products. But that’s not how it works. In the liquor business it is the suppliers/manufacturers who decide which ONE distributor/wholesaler will sell their products. The so-called monopoly doesn’t end, it simply transfers from the County to the private sector. Why turn over this asset that belongs to our county residents to the private sector for nothing?

We should be looking forward, not back. The DLC is, as they say, under new management. It has a new director, and is on course to continue making positive changes to improve operations and customer service.

Ike Leggett
County Executive

Setting the Record Straight

By Adam Pagnucco.

County Executive Ike Leggett has thrown in the towel on efforts to reform the county’s Department of Liquor Control (DLC).  We will have something to say about that soon.  But first, let’s address a claim the Executive has made in Bethesda Magazine: namely, that “the department’s critics have failed to put forth a proposal that included replacing the DLC’s profits.”

That is flat-out untrue.

On August 15, 2016, while the Executive’s DLC task force was meeting, your author posted a proposal on Seventh State for replacing DLC’s profits.  Our concept was to replace every dime of DLC’s net income with a combination of revenue sharing with the state, opening a few new liquor stores and financing the county’s liquor bonds with cable funds.  No new taxes or fees would be required.  In the email below, your author asked Bonnie Kirkland, the Executive Branch staffer running the task force, to have the proposal studied by the administration’s consultant.  Ms. Kirkland agreed to do that.  But the consultant’s report never examined our proposal and does not reference it at all.  And now the Executive claims that our proposal never existed.

Let’s give the Executive the benefit of the doubt.  No Executive is aware of every interaction his staff has with the public.  But it’s absolutely untrue that we had no proposal to replace DLC’s profits.  We did and we shared it with his staff.  It was simply ignored by his administration.

Below is the email exchange your author had with Ms. Kirkland as proof.  Let no one – not the Executive, not his staff, not anyone at the County Council and not anyone else – continue to claim that we presented no ideas for replacing DLC’s profits.

*****

From: Kirkland, Bonnie <Bonnie.Kirkland@montgomerycountymd.gov>

Sent: Thursday, September 1, 2016 3:47 PM

To: Pagnucco, Adam

Subject: Re: Proposal on liquor monopoly revenue

Adam – The proposal, along with the others, is under analysis by the consultant. They will present a preliminary report/analysis at the next meeting, September 15.

Bonnie

Sent from my iPhone

On Sep 1, 2016, at 2:28 PM, A P <acp1629@hotmail.com> wrote:

Hi Bonnie – have you had time to consider my request?  I believe it responds to the Executive’s view that he is prepared to depart from DLC’s monopoly status so long as the revenue gap is closed.  Adam

From: Bonnie.Kirkland@montgomerycountymd.gov

To: Acp1629@hotmail.com

Subject: RE: Proposal on liquor monopoly revenue

Date: Wed, 17 Aug 2016 17:13:08 +0000

Adam – Yes, I did receive your email. I am currently out of the office and will respond as soon as possible.

Bonnie

From: A P [mailto:acp1629@hotmail.com]

Sent: Wednesday, August 17, 2016 1:02 PM

To: Kirkland, Bonnie <Bonnie.Kirkland@montgomerycountymd.gov>

Subject: FW: Proposal on liquor monopoly revenue

Hi Bonnie – did you receive this email?  And if so, can you confirm that this proposal will be analyzed along with the others in the course of the DLC task force’s deliberations?

Thank you,

Adam Pagnucco

From: acp1629@hotmail.com

To: mcvim@aol.com; dwayne.kratt@diageo.com; mdharting@venable.com; molly@allsetrestaurant.com; rneece@esopadvisors.com; mmendelevitz@esopadvisors.com; mbalcombe@ggchamber.org; ggodwin@mcccmd.com; gitaliano@bccchamber.org; jredicker@gsscc.org; chris.gillis@montgomerycountymd.gov; joel.polichene@rndc-usa.com; bob.mutschler@rndc-usa.com; tbeirne@wineinstitute.org; jen@pwrjmaryland.com; sidney.katz@montgomerycountymd.gov; lisa.mandel-trupp@montgomerycountymd.gov; neal.insley@nabca.org; steve.schmidt@nabca.org; hgaragiola@alexander-cleaver.com; robert.douglas@dlapiper.com; sfoster739@comcast.net; mthompson@marylandrestaurants.com; jason@capstrategies.net; ashlie.bagwell@mdlobbyist.com; mcarter@vsadc.com; proddy@rwlls.com; lobbyannapolis@verizon.net; amy.samman@montgomerycountymd.gov; fariba.kassiri@montgomerycountymd.gov; bonnie.kirkland@montgomerycountymd.gov; ginanne100@aol.com

Subject: Proposal on liquor monopoly revenue

Date: Mon, 15 Aug 2016 12:00:24 -0400

Hi Bonnie:

I am requesting that this proposal on how to deal with liquor monopoly revenue be considered by the administration as part of its DLC deliberations.

http://www.theseventhstate.com/?p=6987

Thank you,

Adam Pagnucco

Baker and Leggett on Race and Endorsements

Prince George’s County Executive Rushern Baker got asked essentially why he, as an African-American leader, endorsed a white man over a black woman for U.S. Senate. Baker responded well and then Montgomery County Executive Ike Leggett jumped in to give an exceptionally eloquent statement:

Regardless of whether you prefer Van Hollen, Edwards, or someone else, their answers as to why they support Chris Van Hollen speak to the content of both of these gentlemen’s character.

Leventhal Says Leggett “Grandstanding” with Redskins Resolution

Grandstanding–Not by Leggett–Begins at 1:04

Montgomery County Executive Ike Leggett is considering asking the County Council to pass a resolution urging the Washington Redskins to change their name. The D.C. City Council has already passed a resolution declaring it “racist and derogatory.”

County Council President George Leventhal thinks it’s a bad idea, as he explained in this response to a constituent who wrote him on the issue:

“Your comparison to the civil rights struggle is, I think, inapt,” Leventhal wrote back Nov. 8. “Those who were in a position to change the law and enact civil rights protections had the moral obligation to do so. The Montgomery County Council has no authority over the names of NFL teams. If we were to pass a resolution like the one that passed the D.C. Council earlier this week, its effect would be only hortatory and would be perceived by many as grandstanding.”

Where to begin?

Symbolism Matters

The Council and the County engage in many actions that are symbolic. In this case, the statement would be a powerful one not just because Montgomery is home to many Washington football fans but because Dan Snyder lives and grew up here. It would speak loudly that the elected representatives in his hometown believe that the moral and the right thing to do is to change the name.

Consider just one example of the importance of symbolic actions highlighted in a press release from the County Council: “recognition” of the start of Lunar New Year:

“I am delighted to be joining with my friends and leaders in the Asian American community to recognize Asian Lunar New Year,” said Council President George Leventhal. “Montgomery County’s diversity is its strength, and one of the best parts of my job is being able to share in these celebrations.”

The County Council passed legislation in 2006 making Lunar New Year a day of commemoration to recognize the significant contributions Asian Americans have made in the County. Approximately 14 percent of Montgomery County’s population is Asian American.

Too bad for Native Americans that they compose only 0.7 percent of Montgomery’s population.

Hortatory and Grandstanding

Let’s next get the obvious out of the way: George Leventhal is no stranger to hortatory and grandstanding. Infamously so. More than any other elected official in Montgomery, George is renowned for his bursts of temper, lecturing and posturing in public and private. The clip above from the Washington Post is one example (see George unable to help himself starting at 1:04).

Whether it is what allows him to accomplish his goals or impedes him from being as effective or successful as he might like, many people in the County have seen or experienced it. Indeed, as in the above example, it often elides into bullying from exhortation or grandstanding.

Has George Leventhal Ever Met Ike Leggett?

For those of you less familiar with Montgomery County Executive Ike Leggett, who recently began his third term, allow me to explain that most of his speeches and actions are political oatmeal: reasonably satisfying and nothing that upsets the stomach.

While he has often been called highly cautious and prudent–and criticized at times for being overly so–I have never heard anyone ever describe the County Executive’s actions as “hortatory” or “grandstanding.” I heard him once get mildly exercised about Maintenance of Effort for a minute at a Committee for Montgomery breakfast but the moment passed.

Let me suggest that this is not accidental.

Notwithstanding the election of President Barack Obama, the election of African Americans from jurisdictions that do not have either a black majority or a combined black and Latino majority remains relatively rare. (If you go on researchgate.net, you can find some of my own publications on the topic.)

Unfortunately, the same actions that might be labelled as passionate or firm leadership by a white politicians have sometimes been stereotyped as angry and hostile when done by a black politician. Disciplined, successful African-American politicians who achieve high levels of non-black support tend to stay away from actions that could be perceived as hectoring or confrontational.

As a result, no one has ever confused Ike Leggett with H. Rap Brown. The payoff has been high: Ike Leggett is not just the County’s first African-American County Executive. He is one of Montgomery’s most successful politicians ever. Full stop. But no one views him as “hortatory” or “grandstanding.”

There is a reason that the Post has never run a clip of Ike like the one of George. It doesn’t exist.

 

Election Snow in MoCo?

Is today’s snowstorm going to put a dent in County Executive Ike Leggett’s reelection prospects?

Salt Shortage, Show Removal Problems

It has been a long winter and Montgomery County ran short of salt to pre-treat the roads for the storm. In many areas, the streets were first plowed before they were salted, uncovering a sheet of ice underneath the snow that will now likely to have to wait for warmer weather–not to arrive for at least a couple of day–to remove.

Smaller municipalities were especially hard hit. At first, the the County did not even want to release any salt to smaller municipalities that rely on it to supply it through longstanding arrangements. They were not happy.

Why and How it Could Matter

These problems play into Doug Duncan’s strengths. As County Executive, he was known as an avuncular guy focused on handling basic services very well. To the extent that the storm weakens Leggett’s reputation for the same, it could help Duncan and hurt Leggett.

The impact depends on three factors: (1) the severity of the problems, (2) how well surrounding jurisdictions do, and (3) whether Duncan is positioned to take advantage of it. My quick peek at traffic cameras around the County indicate that many major streets are looking good, though some still have problems.

If DC and Prince George’s open the schools but Montgomery does not, the County Executive will likely face at least some grumbling and have to answer questions about the lack of preparation. Winters vary in the amount of snow they bring, and residents rightly expect that the County will get more salt if needed. But if the schools in all three close, it looks like we’re all in the same boat.

Normally, our County officials do not get much attention. Not because they don’t merit it but because our news media covers the entire metro area. They choose to focus their coverage heavily on the District even though Montgomery, Prince George’s, and Fairfax all have far more people.

Bad events, however, can turn their gaze in our direction to the disadvantage of incumbent officials. It will be also interesting to see if members of the County Council raise questions about the level of preparation or choose to stay mum.

What It’s Not

Some may want to exaggerate and make the inevitable recollection of the disastrous handling (really non-handling) of snow in DC by Marion Barry on one famous occasion. Bad analogy. Leggett is not Barry. He’s the anti-Barry: a steadfast calming, often quiet, problem solver. Moreover, these problems are a minor hiccup compared to that fiasco. Don’t go there.