The Giant Purple Credit Card, Part I

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

State Debt Limit

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

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

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

P3 to the Rescue?

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

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

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

Giant Purple Credit Card

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

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

Will the Credit Agencies Buy It? Should We?

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

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

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

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

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

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

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

More in Part II.


Silver Spring Transit Center Costs Up 17.5%

Silver Spring Transit Center 2

The Washington Post reports that the costs of the Silver Spring Transit Center are up by $21 million, or 17.5%. Still no opening date scheduled for this highly complex transportation hub, which was discovered to be unsafe after it was built.

Councilmembers continue to blame the County Executive who blames the project designer, Parsons Brinckerhoff, and contractor, Foulger-Pratt. Nevertheless, Council President George Leventhal says councilmembers will “hold our noses and vote for” County Executive Leggett’s request.

Somehow, I don’t think it comforts anyone about the loss of another $21 million or the County’s management of the project that the Council President is holding his nose. While both the Executive and the Council promise that taxpayers won’t have to pay for the increase, it remains to be seen if all or a portion of the expense can be extracted from Parsons-Brinckerhoff and Foulger-Pratt.

Same Firm Involved in the Purple Line

Parsons-Brinckerhoff also estimated the ridership data for the Purple Line, a project George Leventhal supports. However, the firm still is hiding how it calculated ridership in response to public requests. (see here and here). In light of these past problems, this lack of transparency and the lack of demands for it by the State or the County is not encouraging.

Any unforeseen increases in costs for the Purple Line would not be born by the Parsons-Brinckerhoff or the federal government. Hopefully, the County will get the designer to pay for the cost increases in the Silver Spring Transit Center. Right now, however, County taxpayers are footing the bill with the money lost to other needed County infrastructure projects.



Hogan to Appear at Committee for Montgomery

The annual Committee for Montgomery Legislative Breakfast will host Governor-Elect Larry Hogan as its keynote speaker. A great chance to chat with local politicos–it’s all about the coffee before the meal–it should be interesting if only for the dynamics, as all of the officials from Montgomery are Democrats.

Here is the notice:

Committee for Montgomery welcomes Governor-Elect Larry Hogan as the keynote speaker at our 25th Annual Legislative Breakfast, which is set for Friday, December 12that 7 a.m. at the Bethesda North Marriott Hotel and Conference Center.

This 20+ year old event is widely considered to be Montgomery County’s unofficial kickoff to the upcoming Maryland General Assembly session. Time is running out to become a sponsor and/or register. Sponsorship information is attached.

To register, go to Committee for Montgomery’s website:


Miller Announces New Senate Leadership

Today, Senate President Mike Miller announced his new leadership team. Except for Sen. Ed DeGrange from Anne Arundel, all are from either Baltimore, Montgomery or Prince George’s–for the excellent reason that these jurisdictions provide the majority of the Democratic Caucus.

Committee Leadership

Much speculation surrounded who would take incoming AG Brian Frosh’s place as Chair of Judicial Proceedings, and the post has gone to Sen. Bobby Zirkin, who played leadership roles in efforts to decriminalize marijuana and tighten the responsibility of dog owners for attacks by unleashed dogs. Sen. Lisa Gladden will remain Vice Chair of this committee.

Sen. Jamie Raskin now heads the Executive Nominations Committee with Sen. Delores Kelley serving as Vice Chair. Less exciting during unified government, this committee will likely play a much stronger role–particularly in the next few months–with the Senate controlled by Democrats and the governorship by the Republicans.

Sen. Rich Madaleno also advances to Vice Chair of the Budget and Taxation Committee. Interestingly, he now holds the same posts as U.S. Rep. Chris Van Hollen did when he was in the MD Senate. Sen. Ed Kasemeyer, a comparatively moderate Democrat, will remain chair, which likely makes Madaleno a key progressive point person on budget issues.

Besides serving as Chair of the Montgomery County Senate delegation, Sen. Nancy King will now serve as Chair of the Education, Business and Administration Subcommittee of the Budget and Taxation Committee.

Another progressive, Sen. Paul Pinsky, advances to Vice Chair of Education, Health and Environmental Affairs. Sen. Joan Carter Conway remains the Chair of this Committee. This committee also remains a likely flashpoint between the Governor-Elect and the Democratic General Assembly.

Additional appointments, including a slew of new faces in the party leadership, including Sen. Catherine Pugh–a leader from Baltimore City–as Majority Leader are announced in the full press release:


ANNAPOLIS, MD – Today, Senate President Thomas V. Mike Miller, Jr. announced the first round of new leadership appointments effective for the new legislative session. “We are blessed in the Senate to have a wealth of talent and wisdom to help lead the state forward,” stated Senator Miller. “These members will provide the leadership to move our state and chamber forward.”

Senator Bobby Zirkin (Baltimore County, D-11) will become the Chair of the Judicial Proceedings Committee. Senator Zirkin has served on the Judicial Proceedings Committee during his time in the Senate, and served as a member of the House Judiciary Committee during his time in the House. “Senator Zirkin has been a key leader on judicial issues, and I know he is the right person to lead this committee,” stated Senator Miller. “His work in the legislature, and in his law practice provides him with the real-world experience that will allow him to lead the Judicial Proceedings Committee through the many difficult issues they will face.” Senator Lisa Gladden will remain Vice-Chair of the Judicial Proceedings Committee.

Senator Jamie Raskin (Montgomery County, D-20) will serve as Chair of the Executive Nominations Committee, and Senate Chair of the Joint Committee on Legislative Ethics. Senator Raskin has served in the Senate since 2007, and has served as a member of many important committees including Legislative Ethics, and Judicial Proceedings. Since 2012, Senator Raskin has also served as Majority Whip. “Senator Raskin’s ability to lead on key issues, and knowledge of this state will serve well as Chair of the Executive Nominations Committee,” stated Senator Miller. “Additionally, his legal knowledge and strong moral compass will make him a perfect fit for the Joint Committee on Legislative Ethics.” Senator Delores Kelley will serve as Vice-Chair of the Executive Nominations Committee

Senator Richard S. Madaleno (Montgomery County, D-18) will serve as Vice-Chair of the Budget & Taxation Committee. Senator Madaleno has served in the Senate since 2007, all on the Budget & Taxation Committee. He will also serve as Chair of the Health and Human Services Subcommittee. “Senator Madaleno is one of the brightest budget minds in the Senate, and his leadership on a wide variety of budget issues will be critically important as we face looming deficits and difficult times ahead.” stated Senator Miller. “I am confident that Senator Madaleno will continue to be an effective advocate for the best interest of the entire state.” Senator Edward Kasemeyer will continue to serve as Chair of the Budget & Taxation Committee

Senator Paul G. Pinsky (Prince George’s County, D-22) will serve as Vice-Chair of the Education, Health, and Environmental Affairs Committee. Senator Pinsky has served on the Education, Health, & Environmental Affairs Committee in the Senate since 1994, and as the Chair of the Education Subcommittee since 2003. “Senator Pinsky has the depth of knowledge of the issues needed to help guide this committee,” stated Senator Miller. “His keen understanding of educational and environmental issues will be an asset to our state moving forward.” Senator Joan Carter Conway will continue to serve as Chair of the Education, Health, and Environmental Affairs committee.

Senator James “Ed” DeGrange (Anne Arundel County, D-32) will serve as Vice-Chair of the Rules Committee. Senator DeGrange has served in the Senate since 1998, and has formerly served as Vice-Chair of the Executive Nominations Committee, and currently serves as Chair of the Public Safety, Transportation, and Environment Subcommittee of the Budget and Taxation Committee, as well as Chair of the Capital Budget Subcommittee of the Budget and Taxation Committee. Senator DeGrange will continue in both these roles. Said Senator Miller: “Senator DeGrange is a true leader in the Senate and his longevity and leadership will ensure that the Rules Committee will have a strong voice as Vice-Chair.” Senator Katherine Klausmeier will continue to serve as Chair of the Committee on Rules.

Senator Nancy J. King (Montgomery County, D-39) will serve as Chair of the Education, Business and Administration Subcommittee, and will continue to serve as Assistant Deputy Majority Leader. “Senator King is a leader on budgetary issues in the Senate, and a key member of the Budget & Taxation committee,” stated Senator Miller. “As Education, Business and Administration Subcommittee Chair, Senator King will make certain we look out for the needs of all Marylanders.”

In addition to committee leadership, Senator Miller today announced Caucus leadership for the Senate Democratic Caucus. “We thank Senator Jim Robey for his service to our Caucus and our state. I am proud to announce the new Caucus leadership who will continue to make sure that as Democrats we continue to have a large tent that hears the views of all Democrats and all Marylanders.”

Senator Catherine Pugh (Baltimore City, D-40) will serve as Majority Leader. Senator Pugh has served in the Senate since 2007, has served as Deputy Majority Leader since 2011, and is the former Chair of the Women’s Caucus. “Senator Pugh has the respect and admiration of her colleagues throughout the Caucus and the Senate,” stated Senator Miller. “She has a strong grasp on the issues and will be a strong voice for the needs of all Marylanders.”

Senator Douglas J. J. Peters (Prince George’s County, D-23) will serve as Caucus Chair. Additionally, Senator Peters will serve as the Chair of the Pensions Subcommittee of the Budget & Taxation Committee. Senator Peters has served in the Senate since 2007, and has served as Chair of the Prince George’s County Delegation and Chair of the Veteran’s Caucus. “Senator Peters has been a strong leader in the Senate and will serve the Caucus well as its Chair,” stated Senator Miller. “His commitment and devotion to the State of Maryland and knowledge of budgetary issues will help to lead this state through the upcoming session.”

Senator Katherine Klausmeier (Baltimore County, D-8) will serve as the Deputy Majority Leader. Senator Klausmeier has served in the Senate since 2003, and the General Assembly since 1995. “Senator Klausmeier brings a unique perspective to our Caucus, and one that helps bind together and ensure that all areas and perspectives of our state continue to be heard,” stated Senate Miller. “I am excited to have her serve our Caucus in this key leadership role.” Senator Klausmeier will also continue to serve as Chair of the Senate Rules Committee.


Fountain Named for Chevy Chase Land Company Founder Source of Controversy

NewlandsFrom the Chevy Chase Land Company Home Page

The Chevy Chase ANC (Advisory Neighborhood Commission) in the District of Columbia will consider a resolution (see below) next Monday night to call for the renaming of the fountain in Chevy Chase Circle after someone other than U.S. Sen. Francis Newlands, who helped to found Chevy Chase, due to his long-time efforts to promote his negative views of Blacks, Jews, and Women.

The Chevy Chase Land Company still recalls Sen. Newlands with pride. When they unveiled their plans for Chevy Chase Lake at the Planning Board, then-President David Smith began his PowerPoint with a slide of Sen. Newlands. About as much time was spent telling us about Sen. Newlands’ role in founding the area as their actual plans for the area, though unsurprisingly no mention was made of his bigoted views.

Sen. Newlands still appears on the home page of the Land Company website (see above) with a biography on a linked page that–beyond crediting him for founding Chevy Chase–also informs the community that:

Because Senator Newlands was considered one of the fathers of modern irrigation, in the 1930s a fountain was built in Chevy Chase Circle (which was considered the gateway to the Federal City) memorializing his contributions in this area. To recognize the 100th anniversary of its founding, The Chevy Chase Land Company refurbished and repaired the Chevy Chase Circle Memorial Fountain in 1990, and held a rededication ceremony attended by members of the community. . . .

The Land Company to this day remains family owned and is proud of its long tradition of family leadership and its deep connections to the Chevy Chase community.

Here is the proposed resolution:

Resolution Calling for the Renaming of the Fountain at Chevy Chase Circle

WHEREAS, the fountain in Chevy Chase Circle is called the “Francis Griffith Newlands Memorial Fountain,” as evidenced by a plaque at the fountain dedicating it to the late U.S. Senator Francis G. Newlands (1846-1917), the fountain being listed on the National Registry of Historic Places;

WHEREAS, the Chevy Chase ANC desires that the fountain be renamed for a person that our community respects and honors, in accordance with all necessary approvals by any governmental agencies;

WHEREAS, the Chevy Chase ANC respectfully makes this request for the following reasons:

1. Senator Francis G. Newlands was instrumental in the creation of Chevy Chase D.C. & MD, but his vision was for Chevy Chase to be forever racially segregated. He included in most property deeds in Chevy Chase a racist covenant precluding land from ever being owned by African-Americans or Jews (these covenants have since been declared void but are still present in original deeds, usually lined out). He also used the formation of Rock Creek Park as a segregationist barrier in D.C. generally.

2. Senator Newlands was a lifelong outspoken racist and segregationist. He openly called (including in his 1912 campaign for U.S. President) for amending the constitution to prohibit the vote to African-Americans and limit immigration to whites-only.

3. During his political career, he fought to limit education for African-Americans to domestic and menial work only, and for other measures to suppress the rights of African-Americans.

4. He also opposed women’s suffrage.

5. The historic public record reveals his outdated beliefs. For example, he said: “I believe this should be a white man’s country, and that we should frankly express our determination that it shall be.” New York Times, June 17, 1912.

WHEREAS, Chevy Chase acknowledges the historic role played by Senator Newlands as the lead developer of Chevy Chase, but as we long ago progressed beyond his segregationist vision for our neighborhood, over the last many decades building a warm community that is open, tolerant, and inclusive in every respect;

WHEREAS, the primary purpose of this Resolution is to create a positive opportunity to name the fountain for a person that our current community (and the area and nation as a whole) respects and honors, leaving Senator Newlands to the annals of history;


The Chevy Chase ANC supports the renaming of the fountain at Chevy Chase Circle, and suggests the name [TBD, nominees include John J. Pershing (who lived in Chevy Chase) and Frederick Douglas (who lived in DC)]. The Chevy Chase ANC requests that the D.C. Council pass a Resolution supporting this Resolution, and forwarding both resolutions to the D.C. Historic Preservation Office for implementation through a name change on the National Register of Historic Places (which lists the fountain), a new plaque at the fountain itself, and such other measures to complete the renaming of the fountain.


Delegation Chairs from District 39

District 39

District 39 Sen. Nancy King will be the chair of the Montgomery County Senate delegation. Now, it appears as if the chair of the House delegation will also hail from D39, as it is said that Del. Shane Robinson has received assurances of support from a majority of Montgomery County delegates. Good news for residents of this part of the County–no worries that their concerns will fail to gain concern for the delegation.