Category Archives: MCGEO

Gino Threatens Reznik

By Adam Pagnucco.

In a statement on the Facebook page of political blogger Ryan Miner, MCGEO President Gino Renne has vowed to defeat Delegate Kirill Reznik (D-39) in next year’s election.  In response to a post about Reznik’s decision not to run for Congress, Renne wrote to Reznik:

Thanks for your unproductive representation. I’m one of your constituents who believes you bring no value to our district’s representation in Annapolis. You were appointed to the seat which gave you the advantage of incumbency. This time around there are several quality candidates running for delegate in our district. I and many others intend to do whatever is necessary to unseat you. District 39 can do better and deserves better than you.

You now have the benefit of more unsolicited intel.

MCGEO once supported Reznik, giving him five contributions totaling $4,100 between 2007 and 2011.  What is their problem with him now?  Renne is not shy so we will probably find out!  Perhaps his casus belli includes Reznik’s support for Delegate Bill Frick’s End the Monopoly bill, a piece of legislation so objectionable to Renne that he famously promised to investigate the lifestyles of its supporters.

Few interest group leaders make such open threats against incumbents.  That’s because defeating incumbents is difficult and MCGEO is no better at it than anyone else.  In recent years, the incumbents MCGEO has tried to defeat include Council Member Phil Andrews (D-3) in 2006, Delegate Al Carr (D-18) in 2010, Senator Nancy King (D-39) in 2010, Board of Education member Mike Durso in 2010, Council Member Roger Berliner (D-1) in 2014 and Senator Rich Madaleno (D18) in 2014.  All of these candidates won by double digits except Carr and King.  Berliner won by 57 points even though his opponent’s campaign was managed by MCGEO’s former Executive Director.  MCGEO has supported two recent successful challengers to incumbents: Delegate Roger Manno (D-19) over Senator Mike Lenett and Hans Riemer over Council Member Duchy Trachtenberg (At-Large), both in 2010.  Lenett lost in part because he blew himself up with horrible mailers such as this one about the Holocaust.  Trachtenberg lost in part because she inexplicably hoarded $146,000 which could have been spent on campaign activity.

Here’s the problem with making threats of this kind: you have to follow through and win or you look weak.  Reznik has none of the weaknesses that sometimes result in incumbent losses in Montgomery County: he’s not a Republican, he’s not lazy and he doesn’t have legions of enemies at home.  It’s also not clear that there are enough strong open seat candidates in District 39 to seriously threaten him.  In fact, the smart move for the challengers is to court him and the other incumbents in hope of inclusion on their slate.  All of this is good for Kirill Reznik and not so good for Gino Renne.

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Gino Stands by His Man

By Adam Pagnucco.

Council Member Marc Elrich held his kickoff event for the County Executive race in Bethesda this past Sunday.  One of his guests was Gino Renne, President of the Municipal and County Government Employees Organization (MCGEO), the largest of MoCo’s non-education county employee unions.  The picture below says it all.

Photo by Kevin Gillogly.  More pictures available on Kevin’s Flickr account.

Elrich is a beloved figure by many in the local labor movement.  He has had support from almost all of the area’s major labor organizations in his recent runs for office.  His lead sponsorship of two minimum wage bills has strengthened those relationships.  Of specific importance to MCGEO, Elrich was the only Council Member to vote against cutting the union’s negotiated 8 percent raise in the last budget, which also included a 9 percent property tax hike.  Additionally, Elrich is a strong defender of the county liquor monopoly, famously accusing anti-monopoly restaurant owners of stealing and whining and then getting banned by one of them.  Protecting the monopoly is one of MCGEO’s highest priorities.

Gino’s thumbs-up is not an official endorsement.  The union has to go through its process, including candidate interviews and questionnaires.  But the symbolism of the picture above is hard to miss.  Elrich could very well be labor’s pick for Executive.

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MCGEO Gets Ready to Rumble

By Adam Pagnucco.

On Monday night, July 11, some MoCo residents received the following robocall.

I’m Tara Huber. I live in Montgomery County and I’m a county worker in child protective services. My job is to protect the vulnerable children in the county and can be very stressful. My job is made even more stressful by the fact that the County under the leadership of Council President Nancy Floreen has failed time and again to give me and my co-workers the right tools to effectively do our jobs. Floreen has mismanaged the county budget to such an extreme that we don’t have enough staff or tools to manage the high case loads. Protect your Montgomery. Call President Floreen at 240-777-7959 and tell her you expect better management of our tax dollars. Paid for by UFCW Local 1994, 600 South Frederick Avenue Gaithersburg Maryland 20877.

This is a new shot fired by MCGEO, the county employee union, in its on-again, off-again conflict with the County Council.  But it’s a risky one that could backfire.

First, some background.  MCGEO has a number of problems with the council, including:

  1. The council’s trimming of employee benefits during the Great Recession.
  1. The council’s vote to end effects bargaining for the police union, which was later upheld by voters.
  1. The council’s vote to cut MCGEO’s raise in half as part of its recently passed budget.
  1. The introduction of legislation by Council President Nancy Floreen that would change collective bargaining procedures in ways that the union claims would weaken its ability to negotiate.

These events and more have caused MCGEO President Gino Renne to tell the Post that his union might support Robin Ficker’s term limits amendment.  And on the night before the hearing on Floreen’s collective bargaining bill, the above robocall went out.  None of this is a coincidence.  Indeed, the union is gearing up for battle.  And no one, whether friend or foe of MCGEO and its fearsome President, has ever claimed that the union backs down when it is under threat.

The problem is that the robocall has little merit and such tactics may provoke the council to do even more against the union’s interest.

Montgomery County has a gigantic Health and Human Services (HHS) budget.  In FY16, HHS had an approved budget of $289 million, with 1,359 full-time positions and 327 part-time positions.  Children, Youth and Family Services, for which the robocall speaker (a MCGEO Vice-President) works, had an FY16 approved budget of $79 million with 525 full-time equivalent positions.

Using FY09 data, your author found that Montgomery County had the biggest HHS budget (along with housing) of any local jurisdiction in Maryland.  On a per capita basis, MoCo spent more than double the state average and lagged only the City of Baltimore.  MoCo spent more than 8 times on HHS and housing than did Prince George’s County.  From FY10 (the peak year prior to the recession) through FY16, MoCo’s HHS budget grew by 13%.  And as for the County Council specifically, it adds millions of dollars on top of the Executive’s recommended budget for HHS every year.  Below is a list of the HHS items added by the council to the Executive’s budget this year, financed with a nine percent increase in property taxes.

HHS Rec List FY17

It’s hard to argue that the council pinches pennies on HHS.  MCGEO has pooh-poohed the tax hike on its website.  What would the union like to see?  Does the council need to raise property taxes by 20% to get its approval?

There is more.  MCGEO is considering supporting term limits for county elected officials.  Fair enough.  The union has some legitimate grievances and any union would fight against a breaking of its collective bargaining agreement.  But let’s remember that the collective bargaining bill detested by MCGEO only had two sponsors at introduction, Nancy Floreen and Craig Rice.  That doesn’t speak well of the bill’s chances under normal circumstances.  But if MCGEO amps up its tactics and really does come out for term limits, could it actually help to recruit votes for Floreen’s bill?  After all, what do term-limited Council Members have to lose?  And let’s not forget that this council will decide on funding two more MCGEO annual compensation packages before the next council is seated.

In May 2011, when the County Council met to pass a budget that included cuts to employee benefits, a group of nine clowns appeared in the audience.  One of them wore a name tag with the first name of the Council President.  The police union refused to admit responsibility but was widely blamed.  Less than two months later, the council voted unanimously to repeal the police union’s right to bargain the effects of management decisions.

What goes around comes around.  Is MCGEO next?

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MoCo’s Giant Tax Hike, Part Six

By Adam Pagnucco.

Montgomery County’s giant tax hike will have consequences.  Here are a few of them.

1.  Term limits are more likely to pass.

There are several reasons why Robin Ficker’s newest term limits amendment will probably pass if he gathers enough signatures to place it on the ballot, but the tax hike is one of the biggest.  The last time the council broke the charter limit in 2008, voters responded by passing Ficker’s charter amendment to make tax hikes harder.  With a new tax hike in place, voters may be tempted to respond with term limits.

Ficker has taken notice.  He regularly runs Facebook ads linking term limits, the tax hike and the council’s 2013 salary increase like the one below.  Commenters respond predictably.

Ficker vs Elrich

Ficker may have a new ally in his quest to evict the council: MCGEO President Gino Renne.  After the council voted to abrogate his union’s collective bargaining agreement, Renne told the Post, “I’m tired of these clowns,” and said his union might support term limits.  An alliance between Gino Renne and Robin Ficker would be one of the strangest events in the history of MoCo politics.  Whoever can produce a picture of these two smiling and shaking hands will be awarded a gift certificate from Gino’s beloved Department of Liquor Control.

2. Outsider candidates could be encouraged to run for county office.

If term limits pass, two things will happen.  First, the County Executive’s seat and five seats on the County Council will be open in 2018.  Second, the tax increase will be blamed for the success of term limits.  Both factors could lead to the entry of outsider candidates with a message like this: “We need new leadership.  We need to do things differently.”  Translation: we need to run the government without giant tax hikes.

Some of these outsiders may use the county’s new public financing system to run.  But the strong performance of David Trone, who started with zero name recognition and won many parts of CD8, will encourage self-funders.  This being Montgomery County, there are a LOT of potential self-funders, including those who have previously run for office.  Candidates in public financing can raise as many individual contributions of up to $150 each as they are able to collect, but the system caps public match amounts at $750,000 for Executive candidates, $250,000 for at-large council candidates and $125,000 for district council candidates.  A wealthy self-funder could easily overwhelm candidates who are subject to these caps and make a mockery of public financing.

3.  More charter amendments on taxes are possible.

Ficker’s 2008 property tax charter amendment, which instituted the requirement that all nine Council Members must vote to override the charter limit on property taxes, was a mild version of his previous ballot questions on the subject.  His 2004 Question A, which would have abolished the override provision entirely, failed by a 59-41 percent margin.  Now that the 2008 amendment has been proven ineffective, Ficker could be encouraged to bring back his more draconian version soon.  In the wake of this new tax hike, would voters support it?

Passage of a hard tax cap would have very grave consequences for the ability of county government to deal with downturns.  In 2010, the County Council responded to the Great Recession by passing a tough budget combining cuts, furloughs, an energy tax increase and layoffs of 90 employees.  When the next recession comes, if the county has no taxation flexibility, it might have to pass a budget laying off hundreds of people and gutting entire departments.  If the levying of giant tax hikes in non-emergencies causes the voters to abolish the possibility of levying them in true emergencies in the future, it would be a serious calamity.

4.  Governor Larry Hogan is a big winner.

One of Governor Hogan’s favorite political tactics is to play the Big Three Democratic jurisdictions against the rest of the state, with the City of Baltimore being his prime target.  But he can also point to Prince George’s County, where the County Executive (and a potential election opponent) proposed a 15% property tax hike, and also to Montgomery County, where the council passed a 9% increase.  His message to the voters will be a simple one.

“Look, folks.  This is what you get when you allow liberal Democrats to have one-party rule: giant tax hikes.  That’s why you need people like me in office to stop them.”

How many MoCo Democrats will ask themselves this question: “What is easier for me to live with? Larry Hogan or nine percent tax hikes?” What do you think their answer will be?

Hogan received 37% of the vote in Montgomery County in 2014.  He had a 55% approval rating in MoCo according to a Washington Post poll last October.  A Gonzales poll taken in March found that registered voters in the Washington suburbs (defined as MoCo, Prince George’s and Charles) gave Hogan a 62.6% job approval rating, with 35% strongly approving.  If Hogan can use the tax issue to run in the low 40s, or even as high as 45% in MoCo, he will be very difficult to beat for reelection.

Reelecting himself is not Hogan’s only priority.  He would also like to elect enough Republicans to the General Assembly to uphold his vetoes.  That task is easier in the House of Delegates, where Democrats hold 91 seats, six more than the 85 votes required to override vetoes.  If the GOP can pick up seven seats, as they did in 2014, they can uphold the Governor’s vetoes on party line votes.  That would cause serious change in how Annapolis operates.  Could big tax hikes in Democratic jurisdictions like Montgomery help the GOP get there?

5.  It will be harder to get more aid from Annapolis.

In 2007, former Baltimore State Senator Barbara Hoffman commented to the Gazette on Montgomery County’s ultra-wealthy reputation in Annapolis.  “They have to overcome the view that they’re rich and trouble-free. … That’s not true anymore.”  She was right then, and she is even more right now.  The county has massive needs for transportation projects and both operating and construction funds for the public schools.  But when the county levies giant tax hikes on itself to pay for these needs, is it letting the state off the hook?  State legislators from other cash-strapped jurisdictions that lack wealthy tax bases like Bethesda, Chevy Chase and Potomac are perfectly happy to let MoCo tax itself while they ask the state to tax MoCo even more to pay for their needs.  (Remember the 2012 state income tax hike, of which MoCo residents paid 41% of the new revenue?)  As a result, the next time the Lords of Annapolis are asked to help Montgomery County, they could very well reply, “Tax yourselves to pay for it. You always do.”

6.  A major argument in favor of the liquor monopoly has been proven hollow.

County officials predicted that if the liquor monopoly was lost, annual property taxes would have to rise by an average $100 per household.  Instead, the monopoly was preserved and the council passed a property tax hike that will cost an average $326 per household.  The tax hike was in the works since at least January 2015, long before small businesses and consumers launched their campaign to End the Monopoly.  And the $25 million in new spending added by the council to this year’s budget actually exceeds the $20.7 million that the liquor monopoly is projected to return to the general fund.  This proves once and for all that liquor monopoly revenues do not prevent tax hikes!

7.  There will be pressure in the future for another tax hike.

As we discussed in Part Three of this series, the U.S. Supreme Court’s Wynne decision, which requires counties to refund taxes paid on out-of-state income, was one reason for the current property tax hike.  Senator Rich Madaleno’s state legislation extended the time that counties had to pay for refunds from Fiscal Year 2019 to 2024.  Below is a table showing the fiscal impact on all Maryland counties combined, of which Montgomery accounts for roughly half.  While the legislation enables counties to spend less in FY 2017-2018, it requires them to spend more in FY 2020-2024.  MoCo will have to spend around $20 million a year in most of the out years.

Madaleno Wynne Bill Fiscal Impact

Given its $5 billion-plus annual budget, Montgomery could easily afford the out-year payments by slightly slowing the growth rate in its annual spending.  But instead, the council added $25 million in new spending on top of the Executive’s FY 2017 budget, and unless it is cut, that spending will continue in future budgets.  The cumulative impact of that new spending plus future Wynne refund payments will start to be felt in three years.  At that point, the council could very well face a choice between trimming back their added spending or raising taxes.  What do you think they will do?

8.  Economic development will now be harder.

Despite the wealth in some of its communities, Montgomery County struggles with the perception that it is not business-friendly.  While its unemployment rate is low by national standards, its real per capita income fell steeply during the recession, much of its office space is obsolete and it lacks Northern Virginia’s two major airports and its new Metro line.  The chart below shows the county’s private sector employment from 2001 through 2014.  Despite recent sluggish growth, the county had fewer private sector jobs in 2014 than it did in 2001.

MoCo Private Employment 2001-2014

And while the county lost private sector jobs, the Washington region as a whole grew by 9.5% over this period.

Washington Private Employment 2001-2014

There may be a variety of factors explaining MoCo’s weak economic performance, but consider this: in the last 15 fiscal years, the county has seen six major tax increases.  The county broke its charter limit on property taxes in FY 2003, 2004, 2005, 2009 and 2017 and it doubled the energy tax in FY 2011.  (Most of the latter increase is still on the books.)

Good government is an exercise in balancing needs.  Education, transportation, public safety and public services are valuable and require resources, at times necessitating tax increases.  But all of that is impossible without a vigorous private sector that creates jobs and incomes and pays the government’s bills.  Those priorities must be balanced, and when they are, progressive policies can be afforded.  But if they are not, economic growth will fail, government services will be harder to sustain, taxes will fall increasingly on a shrinking base and a downward spiral could begin.

In the wake of its long-term stagnant economy and its Giant Tax Hike, how close is Montgomery County to that tipping point?

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MoCo’s Giant Tax Hike, Part Four

By Adam Pagnucco.

The tax hike is the part of the budget that is getting the most attention, but the County Council took another unusual step: it refused to fund part of the county employees’ collective bargaining agreements.  Labor has taken notice.

Salary increases in the county’s collective bargaining agreements are comprised of three main components.  First, there is a general wage adjustment that all employees receive.  Second, there is a service increment, also called a step increase, that employees who are not at the top of the salary scale for their classification receive.  Third, there is a longevity increment that is received only by employees who are at the top of their scale and have completed twenty years of service.  All of these items, along with many others, are negotiated by the three county employee unions (MCGEO, the Fire Fighters and the Police) and the Executive and codified in collective bargaining agreements.  The agreements then go to the council, which can decide to fund all, some, or no items that create economic costs.

During the Great Recession, the employees received no raises of any kind in Fiscal Years 2011, 2012 and 2013.  Afterwards, the unions negotiated for and received general wage adjustments, steps and longevity increments as well as “make-up steps.”  The latter were intended to compensate the employees for steps they did not receive during the recession.  The unions won make-up steps in Fiscal Years 2014, 2015 and 2017 (this year’s budget) with the exception of the Fire Fighters this year.  During these years, the combined general wage adjustments, steps and make-up steps ranged from 6.8% to 9.8% per year.

This year, the council approved MCPS’s funding increase on the condition that some of the money scheduled to fund MCPS employees’ raises be instead redirected to hire teachers and other staff.  The school board agreed.  In order to maintain equity between MCPS employees and county employees, the council insisted that the county unions give up some of their raises and primarily targeted their make-up steps.  The council refused to fund eight items in the collective bargaining agreements which together totaled $4.1 million in savings in Fiscal Year 2017, leaving the unions with raises of 4.5 percent.  Only Council Member Marc Elrich voted with the unions.

The county unions were outraged.  MCGEO, the largest of them, published a scathing response on its website, blasting the council as “hypocrites” who engage in “public manipulation in order to achieve what looks like sound fiscal management while achieving nothing.”  The council had approved make-up steps and total salary increases of 6.8-9.8% in both 2014 and 2015, so what had changed now?  The difference is that few people were paying attention in those two years because a tax hike was not on the table.  Now that a large tax hike was being considered, big raises were not politically feasible.  Hence MCGEO’s anger.

Justified or not, the council had achieved $4.1 million in savings by trimming employee salary increases.  That money could have been used to reduce the property tax increase, but that’s not what happened.  Why not?  We will have more in Part Five.

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Adam Replies to Gino on Liquor Control, Part III

Guest Blogger Adam Pagnucco replies to MCGEO’s Gino Renne

My reply to MCGEO President Gino Renne’s response to my post on the county’s Department of Liquor Control (DLC) concludes.

  1. The union says that if DLC were eliminated, union jobs would be replaced by non-union jobs.

MCGEO: “Mr. Pagnucco claims that privatization would not result in the loss of high paying union jobs. This is his most egregious of claims, especially for a former union employee. Where’s the evidence that ‘many private wholesalers’ are represented by IBT? Or even evidence that union membership will not suffer a net loss? Mr. Pagnucco needs to explain himself on this one.”

I’m happy to do so. As MCGEO states, I am a former union employee. I spent sixteen years working as a strategic researcher on organizing campaigns in the building trades. When President Renne writes, “It’s extremely difficult to organize a union in your workplace these days,” he’s absolutely correct. I have seen the extreme tactics that some employers use to keep their workers from unionizing. If I thought that the only alternative to DLC was a group of exclusively non-union employers, I would have misgivings about that.

Fortunately, that is not the case here. The International Brotherhood of Teamsters has been organizing beverage manufacturers and distributors for more than a century and has a Brewery and Soft Drink Conference to represent their workers. The union is also active in our local area. Washington Wholesale LLC, a distributor in D.C., is organized by Teamsters Local 639. Republic National Distributing Company, the second-largest distributor in the nation, is organized in Maryland by Teamsters Local 355. Reliable Churchill LLLP, the largest distributor in Maryland, is organized by Teamsters Local 570. If DLC loses market share to the private sector, it’s likely that unionized firms like these will pick up at least part of it.

This is deeply troubling to President Renne because non-union workers and Teamsters members have one thing in common: neither group pays dues to MCGEO. And that’s the real issue here.

So here’s a question for President Renne: what would happen if private distributors were allowed to compete with DLC? Restaurants and retailers who are happy with DLC could stay with them. Those who are unhappy could buy from the private sector. If DLC has lower prices as MCGEO claims and if their customer service is improving, they should hold on to most of their market share. If not, why should they be protected by a state-mandated monopoly? What do you say, President Renne? Can your members compete with the Teamsters?

  1. The union defends the County Council’s proposed “do-nothing fee” for DLC.

MCGEO: “The ‘fee’ Mr. Pagnucco complains about is paid by the distributor to allow for its participation in the Montgomery County market. Its structure has not yet been determined, just that there will be a fee.”

A quick briefer on the do-nothing fee. DLC has many commonly consumed beverages in its regular stock, but it often has trouble filling orders for specialty items it does not usually carry. These are known as special orders. Here’s a typical complaint:

Mike Hill, general manager of Adega Wine Cellars & Café in Silver Spring, said they have problems getting specialty wines and craft beer.

“If we like a beer or wine and we want to bring that into our store, the turnaround time can be eight days if we’re lucky or two to three months to not at all in some cases,” Hill said.

The County Council has recommended that restaurants and retailers be allowed to go directly to private distributors for special orders, but there are two big caveats. First, DLC determines what is in its regular stock and what is a special order. Second, the council wants to allow DLC to collect a fee on any direct sale by a distributor to “replace DLC estimated revenue lost by allowing the sale of special order beer and wines by private wholesalers.”

DLC loves this because it will get paid without having to do any work. Distributors aren’t so crazy about it. They would have to incur the costs of direct delivery to customers (of shipments that in some cases would be very small) and pay the extra fee on top to DLC because… well, the county just wants the money. Multiple distributors predicted in a hearing before the council that the economics would prevent them from participating in such a “reform.”

But the attitude behind the do-nothing fee is itself even worse. Whoever came up with this idea must believe that our county is soooooo much better than all of our neighbors that we can get away with imposing ridiculous impediments to doing business that no one else in our area would dare to do. Well guess what, folks? Residents and businesses have options. MoCo is a great place to live, shop and work, but so are the District, Frederick, Howard, Northern Virginia and most places near here. If you put enough measures in place to punish employers and consumers, they can and will go elsewhere. That’s the problem with the do-nothing fee and, indeed, DLC itself.

Comptroller Peter Franchot, the state’s top enforcer of alcohol laws and a MoCo resident, says of DLC, “Montgomery County is the last bastion of a medieval state system where the county, if you can believe it, sells all the spirits, alcohol, and we’re not just talking retail, we’re talking wholesale… This is a system that is incredibly slanted against the consumer and the ordinary citizen.”

He’s right. Why are we putting up with this? No one else in the Washington metro area has to deal with anything like this. We are the only ones.

It’s time for a revolt. It’s time to End the Monopoly.

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Adam Replies to Gino on Liquor Control, Part II

Guest Blogger Adam Pagnucco replies to MCGEO’s Gino Renne

My reply to MCGEO President Gino Renne’s response to my post on the county’s Department of Liquor Control (DLC) continues.

  1. The union claims that state monopolies on alcohol sales enhance public safety.

MCGEO: “Dr. Roland Zullo, a research scientist at the University of Michigan, examined the impact of state ownership of retail alcohol distribution on 23 different crimes grouped in six categories. Dr. Zullo finds that state control of retail alcohol distribution is associated with statistically significant reductions in crimes that have been linked to alcohol consumption, including domestic abuse, assault, and fraud. Control states also had lower rates for vehicle theft and vandalism (using a slightly lower threshold for statistical significance, the 10% rather than the 5% level).”

Guess what? This “research” was financed in part by DLC. That’s right, the study MCGEO is citing is an unpublished, non-peer-reviewed working paper paid for by the National Alcohol Beverage Control Association (NABCA), a trade group of government alcohol merchants. George Griffin, DLC’s Executive Director, is a former President of NABCA and a current member of its board. The organization’s budget is partially financed by dues payments from its members, one of whom is DLC. NABCA is fighting efforts to end government alcohol monopolies and was greatly dismayed when Washington state voters got rid of their state monopoly in 2011. So NABCA paid for the working paper cited by MCGEO and it was completed a year and a half later.

For what it’s worth, the study found no statistically significant relationship between state control of alcohol sales and crime for 20 of the 23 measures it examined. Maybe NABCA needs to pay for a better study!

  1. The union opposes blogging(!)

Maybe this is beside the point, but it is too hilarious for me to resist.

MCGEO: “This [County Council DLC] resolution came after months of hearings, testimony and input from stakeholders. If you don’t like the way the process was playing out, Mr. Pagnucco, why didn’t you participate in it? Why are you using your friend’s blog to post your opinion without allowing for public input or participating in the public forum?”

So MCGEO regards blogging as an illegitimate way to participate in public discussions. Who knew? I have a long history of writing in favor of MCGEO’s positions and they have never before uttered a peep of protest. To the contrary; they republished two of my blogs on their website and used another on a handout. Their former Executive Director once asked me to write a piece supporting legislation the union wanted that would have allowed library workers to unionize, and since I favored the bill, I did. But in the one instance when I have publicly disagreed with them, I am told to cease my annoying prattling!

Do you think that MCGEO will resume its recognition of the value of blogging once I start agreeing with them again?

I will finish up tomorrow.

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Adam’s Reply to Gino on Liquor Control, Part I

Guest Blogger Adam Pagnucco replies to MCGEO’s Gino Renne

Last week, MCGEO President Gino Renne, leader of the local union that represents most Montgomery County employees, responded to my post on the county’s Department of Liquor Control (DLC). President Renne has led MCGEO for more than twenty years and is an aggressive advocate for his members. I appreciate his taking the time to talk about DLC on Seventh State.

A few of his statements deserve examination. Let’s start with the one that is arguably most important to county consumers.

  1. The union claims DLC, an extra middle-man with an extra mark-up, actually has lower prices than our neighbors.

MCGEO: “Across all categories except special order beer, costs are 2-10 percent cheaper than neighboring jurisdictions.”

David Lublin put this argument to shame through his price comparison of DLC and Total Wine, which refuses to open a store in MoCo. Now let’s be fair: Total Wine not only blows away DLC, they beat almost everyone on price. How do they do it? The company explains:

We are committed to having the best wine selection with an emphasis on fine wines. This differentiates us from many retailers in the United States who specialize in one geographic area or price category. Our typical store carries more than 8,000 different wines from every wine-producing region in the world.

In addition to a world-class selection of fine wines, the typical Total Wine & More also carries more than 2,500 beers, from America‘s most popular beers to hard-to-find microbrews and imports, and more than 3,000 different spirits from every price range and category.

Total Wine & More is committed to having the lowest prices on wine, spirits and beer every day. Our tremendous buying power and special relationships with producers, importers, and wholesalers offers us considerable savings, which we pass on to our customers.

This business model is very difficult to implement with an extra middle-man interfering with the supply chain, especially one like DLC that is notorious for botching orders of specialty beer and wine. And so Total Wine will not open a store here even though its headquarters is in MoCo and its founders live here. MoCo customers are forced to drive long distances to access the company’s selection and low prices, and they do. Total Wine estimates that MoCo residents account for more than 20% of sales at its McLean, Virginia store and almost 25% of sales at its Laurel store.

But let’s set aside Total Wine for a moment and examine MCGEO’s assertion further. If DLC offers lower prices as they contend, that would be great news. Non-residents would be flocking into MoCo to get deals. We might even expect a proliferation of MoCo stores close to the county’s borders ready to lure non-residents in.

In fact, the opposite is true. There at least seven D.C. liquor stores within four blocks of the MoCo border. See the map below. The one DLC store near the border is in Friendship Heights and it is the only DLC store that is losing money. How is it possible for DLC to lose hundreds of thousands of dollars a year by selling alcohol to rich people? Perhaps one reason is that the District’s Paul’s Wine and Spirits is just three blocks away.

DC liquor stores

Alcohol sales data collected by the Maryland Comptroller’s office suggests substantial flight of customers away from MoCo. Both the U.S. Department of Health and Human Services and Gallup find positive correlations between alcohol consumption and education level, while Gallup finds an additional correlation with high incomes. Since MoCo is one of the highest-income and most-educated counties in the state, it should be a mecca for alcohol sales. But that is far from the truth. In terms of per capita sales deliveries to retail licensees inside each county, MoCo ranks 13th of 24 jurisdictions in wine, tied for 23rd in spirits and dead last (by far) in beer. Among the counties out-ranking MoCo in per capita wine sales are Calvert, Carroll, Cecil, Garrett, Harford and Kent, all mostly rural jurisdictions with far less disposable income than MoCo. Comptroller Peter Franchot, the principal enforcer of state alcohol laws and himself a MoCo resident, says of DLC, “Most people in Montgomery County go to Prince George’s, the District or Virginia to buy their alcohol because it’s such a disgrace.”

I will have more tomorrow.

 

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Ready for His Closeup: MCGEO’s Gino Renne

GinoRenneMCGEO President Gino Renne

MCGEO President Gino Renne should be on reality television instead of leading a union. When it comes to political drama, few serve it up more regularly than him. Unfortunately, his members appear to be bit parts in the MCGEO drama. Renne’s leadership has lost them allies in the past–and now it is costing them jobs.

The 2014 Election

In the 2014 Democratic primary, Renne bet large, thinking that taking down a number of incumbents would set him up as labor’s leader in the County and put the fear of Gino into the County Council. It backfired, big time, as an array of MCGEO-backed challengers and candidates for open seats lost.

Beyond wasting the dues of his members on campaign contributions for candidates that didn’t win, his actions alienated his members from their employers. After all, MCGEO (UFCW Local 1994) is the union that represents Montgomery County government employees, so the County Council sets their salaries.

Look at Me! I’m Still Relevant!

But Gino Renne raised the bar in the hearing on the independent Transit Authority (ITA) proposed by Montgomery County Executive Ike Leggett. Opposing it did not just tee off the County Executive but actually undermined the prospect of steady work for his members.

The ITA would allow the County Council to create a property tax that went specifically to transportation projects. As a result, it would provide a steady funding stream for work done by MCGEO members, expanding employment and allowing the union to grow.

But Renne nonetheless fought the state legislation to allow the County to create an ITA and turned the bill hearing on it into quite the event. Flanked by 50 often vocal yellow shirts, Renne argued that his union would no longer be assured of representing workers employed by the authority.

Del. Kathleen Dumais (D-15) did her best to point out that this concern was directly addressed in the bill (see p. 8, lines 14-20):

(II) for collective bargaining for Transit Authority employees with arbitration or other impasse resolution procedures with authorized representatives of Transit Authority employees; and

(III) that the authorized representative of Transit Authority employees shall remain the authorized representative of those employees unless decertified by the employees under the collective bargaining law enacted under this subsection.

In other words, why was Renne there? Or more to the point, why wasn’t Renne leading the charge for the bill? Renne made himself the star of the Gino Renne show at the very real cost to his membership. Bizarre doesn’t begin to describe it.

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MCGEO Paves the Way for Alcohol Reform

[UPDATE at the end of this post.]

During his campaign for the Democratic nomination in Montgomery County District 5, Evan Glass pushed hard for liberalization of Montgomery’s antiquated monopoly on the sale of alcohol in the County. Despite his narrow defeat, the next four years presents the best opportunity for reform in ages.

MCGEO, the union that represents the employees at County owned liquor stores, bet disastrously on the wrong candidates in the recent Democratic primary. The attempt by MCGEO under the leadership of Gino Renne to flex its muscle and become the leading force among unions and possibly in County politics backfired and earned the union far more enemies than friends.

Montgomery County Council
Let’s look first at County Council races. In District 1, MCGEO endorsed Duchy Trachtenberg’s bid to return to the Council in a challenge to incumbent Roger Berliner. Duchy even hired MCGEO’s former executive director as her campaign manager. Trachtenberg lost with 21% of the vote. MCGEO didn’t just lose; it looked puny and ineffectual.

The big race in District 3 went no better for MCGEO, Gaithersburg Mayor Sid Katz defeated their choice of Ryan Spiegel, who won less than one-quarter of the vote. In Districts 2 and 4, MCGEO did not endorse either incumbent in the primary even though they were unopposed. No relationships built there.

Tom Hucker, who was expected to win by more, limped home to the District 5 nomination in his battle against newcomer Evan Glass. While MCGEO should have a friend in Hucker, his narrow victory hardly impresses and its not clear yet how much weight this new member of the Council will carry with his colleagues.

In the at-large races, MCGEO supported incumbent Marc Elrich so a bright spot for them there. However, they also supported Beth Daly, the most serious challenger to the other incumbents, who all won reelection. No real reason for Nancy Floreen, George Leventhal, or Hans Riemer to prioritize MCGEO’s interests. And Hans has already expressed public interest in alcohol reform.

General Assembly
MCGEO played it safer in the General Assembly but surely has teed off the three incumbents whose opponents it supported in District 18. It gave $1000 to Sen. Rich Madaleno’s opponent. Madaleno won despite being heavily outspent by his self-funding opponent who dumped over $300K in the attempt. Unfortunately for MCGEO, he is already one of the more influential insiders on the Budget and Taxation Committee.

While MCGEO supported Jeff Waldstreicher, it also gave $1000 to Natali Fani-Gonzalez, which certainly cannot especially please incumbents Al Carr and Ana Sol Gutierrez. The two incumbents romped home easily with Fani-Gonzalez placing sixth out of seven candidates.

The Results
MCGEO spent a lot of money and political capital in an effort to look strong but made its weakness apparent. Its ill-conceived campaign to plant friends on the Council and instill respect of its power has left it vulnerable. Montgomery officials can move ahead with alcohol reform. They know they have nothing to fear.

UPDATE: MCGEO made another terrible investment in the District 17 Senate race. They donated $6000 to Del. Lou Simmons, another heavy self-funder. Despite having a clear financial advantage, Lou lost the nomination to former Del. Cheryl Kagan by 9 points.

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