Corruption at MTA

Maryland Reporter has the story:

In response to a call to its waste, fraud and abuse hotline, the Office of Legislative Audits investigated complaints about contracting at the Maryland Transit Administration, which runs the buses, subway and light rail line in the Baltimore region.

“Our review disclosed that MTA included language in certain contracts that allowed its employees to circumvent State procurement regulations by directing the contractors to use specific vendors as subcontractors,” chief legislative auditor Gregory Hook said in a letter to lawmakers. “The MTA management employee used this capability to direct work to specific vendors as subcontractors including one vendor with which the management employee had less than an arm’s-length relationship (related vendor). The related vendor was paid $3 million for the subcontracted work. Due to the questionable nature of certain of this activity, we referred this matter to the Office of the Attorney General – Criminal Division. We also identified possible violations of State ethics law that may require referral to the State Ethics Commission.”

“Our review also identified questionable procurement and contract monitoring practices, which may have limited competition and precluded effective monitoring of contracts and related payments,” Hook said. Contracts were issued without proper approval, and payments were made without invoices to back up the work.

Four contracts for snow and ice removal totaling $6.2 were issued to a contractor that the project manager had a relationship with.

While Secretary Rahn says that his office takes the “findings of the audit seriously,” he has yet to apologize or take responsibility for this occurring in his office on his watch on his pet project. When Gov. Hogan promised to make Maryland more business friendly, presumably he wasn’t talking about featherbedding of the form so appreciated by President Trump.

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Anemic business growth is the problem. So why does Empower MoCo think residential growth is the solution?

Empower Montgomery (EM) released a report today, displayed at the bottom of this post, arguing that Montgomery County faces strong economic headwinds. In particular, it highlights “a disproportionate, unhealthy reliance on residential tax base” for new revenues and a corresponding lack of growth in commercial business.

And this is where they lost the plot.

Despite having identified the lack of growth in commercial business, and “unimpressive” commercial real estate valuations, as critical challenges for the county, EM’s number one solution is bizarrely geared towards promoting more residential growth.

Specifically, EM’s report expresses alarm that several areas in the county could soon face building moratoria because of the lack of sufficient spaces in public schools to educate more kids. Empower Montgomery regards moratoria as a major business challenge and calls for building more schools to prevent them.

Leaving aside the question of the best places for needed capital investment in the public school system, often in existing schools, the problem facing Montgomery County is not residential development but commercial business. Put another way, we need more businesses that produce goods and services other than more housing.

Though this is the central point of the entire report, EM’s number one solution (literally, it’s numbered “1”) is obliviously to promote more residential housing growth. EM links school construction, rather than improving what’s inside the schools, to better outcomes. Perhaps it’s not accidental that the former but not the latter enables more housing construction.

In a similar vein, EM comes up with concrete ways to fund school construction. But their report is silent on the question of funding operations, which is far more critical to long-term student success and a heavy ongoing cost. Again, one might almost think schools are more about housing development than child development.

Beyond failing to make the connection between school construction and student performance, EM’s report completely neglects to explain why building more residential housing attracts new commercial business. That may be because the report itself inadvertently shows that it doesn’t. After all, EM’s report reveals that Montgomery’s housing stock and population have grown without attracting needed new business.

The truth about residential development is that it is often unprofitable from the county’s perspective. Once the builders are gone, they leave a new group of residents demanding additional infrastructure and services. While commercial business brings both employment and tax revenues, new residential development is much closer to a break-even proposition.

Even new residents who don’t need special government services—and many will—still require more police and fire protection. More residents mean we need more people at the 911 call center to take just one mundane example.

One set of new residents is especially expensive: children. Education is by far the most expensive service that local government provides. It takes up roughly one-half of the current county budget. Very few families are net contributors to the county budget while they have kids in the public schools. Unless we’re willing to increase classroom sizes, it’s also not easy to achieve economies of scale.

Depending upon who moves into new homes and infrastructure required, and the county school system remains a core asset, residential development can even exacerbate county balance sheet problems. I’m not saying education is not a worthwhile expense. As an educator, I have a decidedly vested interest in promoting it. But it’s not cheap.

In short, focusing on residential development as the solution ignores the critical problem. Even more myopically, it utterly ignores election results not just in Montgomery but also in other parts of the state, such as Anne Arundel, expressing frustration with the lack of infrastructure to support current residents.

Let’s be blunt. For too long, the county has often conflated building and business. We need to spend a lot more time thinking about how to attract and to grow commercial businesses into commercial spaces than building more residential housing. Attracting more business would sure help us afford the new residents for whom there is already ample zoning.

EM is right that expanding the commercial tax base has to be a key part of addressing that problem. As the previous county council under the leadership of Councilmember Nancy Floreen revised the zoning code in a pro-business manner, it would be welcome if the new council would turn its attention to promoting new commercial business.

In contrast, pursuing EM’s approach on development would be a perfect example of trying the same solution again and expecting a different result. Why on earth shoring up residential development is touted as essential when the central problem is a badly anemic commercial business sector remains a mystery.

Empower Montgomery is a business group—it supported David Blair for county executive—and it unsurprisingly contains pro-business recommendations. In terms of residential development, their approach represents more of the same, and it’s not going to cut it.

We are not going to solve our problems in attracting new commercial businesses by building more residential homes. At the same time, EM is right that expanding the commercial tax base has to be a key part of addressing that problem. Other ideas in the report may be well worth considering. I’m certainly a fan of privatizing the liquor monopoly.

The previous county council just revised the zoning code in a pro-business manner. It would be welcome if the new council would shift its attention to promoting new commercial business. We have a bunch of new councilmembers who hopefully can bring new perspectives on how to bring new business vitality to the county.

It would also be terrific if the business community would partner with the new executive and council in figuring out ways to both make Montgomery County government more innovative and efficient, and also work far better to attract business. Reforming county government has been a central plank of Marc Elrich’s platform. If business doesn’t take him up on it and keeps making him out to be the boogeyman, they’re missing a real opportunity.

Business needs to play a bigger role in helping move Montgomery County forward. But this report’s focus on residential development as a solution to commercial business problems suggests that the political representation of business may be just as skewed towards the residential developers as the county’s tax base is to residential development.

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Elrich Sends Pro-Business Signals – Anyone Listening?

Immediately after taking office as county executive, Marc Elrich confronted a budget dilemma. The way he handled it deserves far more notice that it has received.

Outgoing Montgomery County Executive Ike Leggett promised bond rating agencies that he’d move towards a reserve fund of 10% of the country budget. Increasing the county’s reserves provides evidence of fiscal prudence that bond-rating agencies like, so adherence to Leggett’s target helps preserve the county’s AAA bond rating.

But revenues for the current fiscal year so far have fallen short of projections. I don’t view this as due to wildly unrealistic projections by the outgoing executive or council. Projections are called projections and not certainties for a reason. Sometimes, we end up with more money than expected too.

The shortfall presented newly minted County Executive Elrich with tough choices. Elrich could have declared that the 10% reserves target was unnecessarily high and that he would not be bound by Leggett’s commitment. Alternatively, Elrich could have taken a wait-and-see attitude in expectation that the final revenues for the fiscal year will prove higher.

Elrich chose neither of these more expedient options. Instead, he made the tough choice and pledged to cut spending. By asking county agencies for a variety of options, Elrich also used it as an opportunity to do in a smart, policy-oriented way rather than a uniform across-the-board cut. In short, it’s a first small step towards reshaping country government.

In his first major decision, Elrich also acted in an inclusive way by bringing in Council President Nancy Navarro to discuss it in advance of the decision, though the Council will, of course, need to scrutinize Elrich’s independently developed proposal for cuts.

Business, taxpayers and the bond-rating agencies could hardly have asked for a more fiscally responsible approach. In his first move, Elrich sent a message that he intends to pursue strong, responsible fiscal management and work within fiscal constraints.

Throughout the campaign, Elrich repeatedly explained, at times to deaf ears, that he wants to reshape country government to make it more efficient. He understands that this is imperative if only because the county’s current fiscal path is simply unsustainable.

Moreover, Elrich wants to realize savings precisely because he wants the county government to do more. If the county maintains its current trajectory, that won’t be possible. Squeezing more out of residents isn’t really much of an option, as previous councils have already more or less maxed out the local income and property tax.

It’s a pity that the opinion pages that predicted an Elrich administration as dire for business and proper fiscal management haven’t paid more attention.

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Courthouse Offices: 2018 Results

You can also find the above chart and others on the Seventh State Results Tracker.

The table above shows the party that won the five courthouse offices of State’s Attorney, Clerk of the Circuit Court, Register of Wills, Judge of the Orphans’ Court, and Sheriff. Montgomery and Harford allocate the Orphans’ Court responsibilities to other officials.

Nine counties have all Republican teams: Allegany, Caroline, Carroll, Cecil, Garrett, Harford, Queen Anne’s, St. Mary’s, and Worcester. In Frederick, all but one judge of the Orphans’ Court are Republicans. In Somerset, the Sheriff is the only Democrat.

Six jurisdictions have all Democratic teams: Baltimore City, Baltimore County, Charles, Howard, Montgomery, and Prince George’s. In Dorchester, all but the Clerk of the Circuit Court are Democrats.

There are at least two officials from each party in six counties: Anne Arundel, Calvert, Kent, Talbot, Washington, and Wicomico. Calvert, Talbot and Washington are a bit of a surprise to me, as they lean heavily Republican in other county and state elections.

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Autopsy Part III: Was Jealous Just Too Left Wing?

Jealous was among the most left-wing candidates running for governor this year. While Jealous took offense at being asked if he is a socialist, it’s hardly an out-of-the-box question for someone who was a co-chair of Bernie Sanders’s presidential campaign. Sanders has been a proud socialist for decades. Moreover, Jealous ran as the most left-wing candidate in primary, consistently outbidding his opponents as the most uncompromising progressive.

The Jealous campaign promised that his hardline positions would motivate minority and progressive Democrats to vote and to elect him over Larry Hogan. Obviously, it didn’t work out that way. But did Jealous’s left-wing positions matter?

Why Did Jealous Perform Markedly Worse Than Abrams and Gillum?

 Jealous performed far worse than strong progressives like Stacey Abrams in Georgia and Andrew Gillum in Florida who faced much more hostile political environments. Why?

For starters, Adams and Gillum ran not just as progressives but as pragmatists who wanted to make a real difference instead of hardline ideologues. While Jealous promised single-payer healthcare and attacked the Affordable Care Act for its high premiums in comments eerily similar to those of Republicans, Abrams and Gillum wanted to take advantage of the ACA’s Medicare expansion to cover more people in their states.

Abrams and Gillum’s experience and accomplishments in government gave them fluency on the issues and heft to their plans to make government work better for ordinary people. Jealous’s pie-in-the-sky plan to pay for single-payer health care by legalizing marijuana and reducing the prison population lacked similar credibility.

Candidate Choices Matter

Centrist Democrats had the luxury of a real choice. While they would have voted for Jealous against a right-wing kook, they voted in large numbers for Hogan against a left-wing Democrat. Georgia and Florida Democrats didn’t face the same choice and voted for less dogmatic Abrams and Gillum, who also ran better campaigns, in huge numbers against Trump Republicans.

It turns out that perhaps centrists need even more attention than progressives, as centrists are more likely to have somewhere else to go. While the ultra-progressive strategy works great in primaries, it leaves Democrats extremely vulnerable when the Republicans present less kooky options like Hogan.

Overreliance on Republican Racism

Hogan has shown once again that minority voters are perfectly willing to consider Republicans when presented with non-racist non-wingnut choices. Ironically, the former NAACP leader appeared to assume that he would automatically gain massive African-American support and that other people of color would also line up behind his banner.

Neither happened. Hogan’s acceptability on key racial issues freed up African Americans, who hold diverse beliefs on many issues just like everyone else, to look at other questions. Jealous was not well known in the African-American community and a good chunk of black voters found Hogan’s attempts to keep taxes stable and reduce burdensome fees more appealing than Jealous’s promise of radical expansion of Maryland government.

Jealous’s Strategy Ran Counter to Voter Trends and Maryland Demographics

Jealous’s hardline left-wing campaign was ill-equipped to take advantage of the major winds benefitting Democrats among well-educated white women. While not the only group to shift Democratic this year, they moved blue most sharply and they make up a disproportionate share of voters in well-educated Maryland compared to other states.

Usually middle or upper-middle class, many of these voters are moderate or even former Republicans put off by Trump’s constant violation of norms and extremism on social and environmental questions. Though repelled by Trumpian radicalism, they are unsurprisingly also chary of more radical and less pragmatic Democratic plans. Hogan’s preemption on many issues, such as health care and community college, made Jealous’s plans an even tougher sell.

This didn’t cost Jealous the election but did help pad Hogan’s margin.

Progressives v. The Establishment

 This explanation is a bunch of hooey but serves as a convenient excuse for disappointed Jealous supporters looking to blame anyone except the candidate. Large numbers of current Democratic officials hold the same positions as Jealous or are certainly willing to consider them. As I’ve detailed previously, the party was fully behind Jealous. Remember also that the full weight of the establishment didn’t manage to elect Anthony Brown four years ago.

To the extent that some elected officials didn’t hug Jealous tightly, it was for far more practical reasons. Most thought was a lousy candidate and seemed certain to lose. Why on earth would Democratic candidates for the legislature tie themselves to a sinking ship, especially if they aspire to represent areas where Hogan was about to win big?

Notwithstanding Jealous’s claims to be at the center of progressive accomplishments in Maryland, legislators didn’t know him and Jealous evinced little desire to know them, as his skipping the MACO meeting in Ocean City made plain. Jealous also didn’t endear himself to members of the General Assembly by bashing their progressive credentials in the primary and then taking credit for progressive legislation in the general.

At the end of the day, however, these problems had little to do with Jealous’s loss. Indeed, Jealous’s loss had far more to do with candidate choices, his lack of money, and the failure to get out any message that could rally Democrats in the general election.

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Del. David Moon Touches the Third Rail of Maryland Politics

Delegate David Moon (D-20) may have done his political career irreparable harm and further cemented Takoma Park’s reputation as a very strange corner of Maryland when he tweeted the following joke the day before Thanksgiving:

We joke about lots of things in Maryland. Crab cakes and Old Bay aren’t among them. I won’t even eat “Maryland” crab cakes outside of the Old Line State because they are just a sad, pale shadow and about as real as Trump’s skin color.

Reaction has been swift:

If we don’t have an official state seasoning, someone needs to get on this ASAP. When politicians attack our core values, we need to take action. Or is this one of the terrible consequence of same-sex marriage that have finally come home to roost?

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Thanks, Adam

Thanksgiving seems a perfect time to say thanks to Adam Pagnucco. For many years, Adam wrote many wonderful posts for Seventh State and its predecessor, Maryland Politics Watch. Combining his penchant for bringing hidden information to light with his wicked sense of humor and insightful analysis, Adam kept everyone jumping and uncovered many stories before the local news media.

Adam has now moved his writings over to Bethesda Beat, an invaluable online news source for all things Montgomery County. He’s already doing an excellent job of ruffling feathers over there, most recently with his column asking if Montgomery is becoming a second-class county.

I’m incredible grateful for all that Adam has contributed to Seventh State over the years from his smart private insights to his great blog posts. I’m even more thankful for his generous friendship, which I know will continue no matter where he hangs his hat.

Happy Thanksgiving to Adam and to all of Seventh State’s dedicated readership.

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Eight White Majority Districts Elected Black Members of Congress. That’s a Breakthrough

Read my piece in the Washington Post’s Monkey Cage blog:

This year, Americans appear to have elected a record 53 African Americans to the House.

Forty-four were reelected. Of those, four-fifths won reelection from majority-minority districts — defined here as districts where non-Hispanic whites form a minority of the voting-age population according to the 2010 Census. That’s what we’ve seen in the past: Historically, black representatives have been elected from majority-minority districts.

But here’s the big news: Eight of the nine newly elected African Americans won in districts dominated by non-Hispanic whites.

Read the full piece online over at the Post.

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Autopsy Part II: Why Did Jealous Lose?

Continuing my analysis of why Jealous did so poorly in the gubernatorial election, today’s post examines factors that contributed to Ben Jealous’s defeat.

Larry Hogan

This is really the key factor. Gov. Larry Hogan was a good candidate. Throughout his tenure, he’s had an eye for the small politically popular act. He didn’t make any major changes, which also meant that few were offended. His cancer made him all the more sympathetic. Democrats thought that reaction to Trump would bring him down but Hogan proved a nice contrast. On top of that, the Governor raised a ton of money for his reelection campaign.

Connection to Maryland

Notwithstanding the lie on his campaign website that he “lived in Maryland throughout his career,” Ben Jealous’s ties as an adult to Maryland are quite weak. He only began voting here in 2012 and the 2018 gubernatorial primary was his first. Even when Jealous headed the NAACP he lived in Washington, D.C. Especially outside of the D.C. suburbs, Jealous came across as a member of the Washington establishment rather than a Marylander. Marylander has a history of rejecting candidates viewed as having parachuted into the state.

Ironically, the repeated reference to Jealous as the “nationally known” leader of the NAACP only reinforced this impression. Moreover, Jealous is well-known in elite Washington circles but not so much among ordinary African-American Marylanders who ended up voting for Hogan at far higher rates than usual for Republican candidates. During the primary, Jealous didn’t tout a single endorsement from any local or state officials of any race. His campaign repeatedly brought in national politicians.

Knowledge and Previous Impact in Maryland

Jealous’s knowledge about Maryland was painfully thin at times. He made ending mass incarceration a central plank of his campaign. Except the General Assembly working with Gov. Hogan had already taken action on this issue. As David Moon mentioned in a recent blog post, Maryland now has the fastest rate of decline in its prison population.

Similarly, Jealous tried to bring the federal fight over judicial nominees to Maryland and make voters fear Hogan’s appointees. Hogan’s judicial appointments have been neither radical nor politicized, as evidenced by the lack of Democratic opposition. It didn’t help that Jealous mistakenly referred to the Court of Appeals as the “Supreme Court.”

Jealous massively over claimed about his political impact in Maryland. He touted frequently his leadership in fights to eliminate the death penalty and pass marriage equality. I spoke with Sen. Bobby Zirkin, one of the pivotal senators on the death penalty question, and he still has never met Jealous. Similarly, none of the General Assembly leaders on marriage equality met or strategized with him during the lengthy battle on this issue.

The campaign repeatedly relied almost exclusively on an increasingly shopworn citation from the Baltimore Sun as “Marylander of the Year” to buttress his claims. But neither Jealous nor his campaign backed up these claims convincingly or had Marylanders ready to attest to them.

Finally, even his record as leader of the Baltimore-based NAACP was mixed. Jealous liked to talk about all the money he brought in to the NAACP and his role in building up the organization. But he left it facing a financial crisis. Revenue was down by roughly one quarter in his last year and the organization is now about the same size as when arrived but poorer, as the NAACP’s assets declined substantially during his tenure.

Poor Fundraising

 The love of money may be the root of all evil but campaigns need it to get their message out. In Montgomery County, the campaign almost did not exist until the very end when we were treated belatedly to a bushel of low-quality television ads. I never saw any online ads for Jealous. Nor did I receive any mail from the campaign.

I don’t know why Jealous didn’t have the money. During the primary, Jealous used his vaunted ability as a fundraiser to convince many endorsers to support his campaign. He delivered in the primary, but the general was a bust notwithstanding his claims that he could raise in excess of $10 million.

Despite being labelled inspirational and transformative by supporters, the Jealous campaign’s fundraising contrasted dramatically with even average Democratic candidates around the country who outraised their Republican opponents. Did he just not engage enough in the necessary evil of call time?

Part III continues this analysis of this year’s Democratic gubernatorial defeat.

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$6.7 Million Embezzled from the County

Montgomery County prides itself on its good government reputation. So it’s a bit of a shock to hear from the Washington Post that a county employee managed to steal $6.7 million:

A local official embezzled $6.7 million from Montgomery County through a years-long scheme of diverting county money meant to grow local businesses, federal prosecutors said in court filings unsealed Friday.

Byung Il Bang, the former chief operating officer for Montgomery’s Department of Economic Development, pleaded guilty to wire fraud and making a false statement on a tax return at a hearing in U.S. District Court in Greenbelt, Md.

He is set to be sentenced Feb. 2, and agreed in court to seek treatment for a “gambling addiction.”

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