Tag Archives: MCGEO

Five Myths About MoCo’s Department of Liquor Control

Today, I am pleased to present a guest blog by Adam Pagnucco.

Few issues in county government have received more attention over the past two years than the operations of its Department of Liquor Control (DLC). In most parts of the United States, the alcohol industry has been divided into three tiers since the end of Prohibition: producers, distributors and retailers. DLC, which is a county department but derives its authority from state law, inserts itself into this structure as an extra middle-man between distributors and retailers. Instead of being able to sell directly to Montgomery County-based retailers, distributors must sell their products to DLC which in turn sells them to stores and restaurants. DLC then charges an extra mark-up which, after paying for its cost of operations, is returned to the county’s general fund as revenue. DLC also has a complete wholesale and retail monopoly on hard alcohol and sells it through county stores.

A sure way to increase costs, delays and inefficiencies in any distribution system is to add more middle-men, especially ones who do not add value to compensate for their fees. DLC is no exception and has been the subject of complaints for years. But mounting problems, growing press interest and the emergence of the agency as a political issue in last year’s election have brought DLC to the forefront of public attention.

It’s time for a hard look at the myth and reality of DLC.

Myth 1. The county needs DLC’s net income to function.

In Fiscal Year 2016, DLC is expected to transfer $24.5 million in net income to the county’s general fund. That amount represents 0.48% of the county’s total $5.1 billion in projected revenues.

The county regularly adapts to revenue shortfalls of much larger amounts. Its six-year fiscal plans contain revenue estimates that vary up and down by tens of millions of dollars before actual revenues are recorded. The council just approved a $54 million reduction in its recently passed operating budget. The Silver Spring Transit Center is $50 million over budget (and counting). Between Fiscal Years 2013 and 2015, the council reduced energy tax revenues by a cumulative $31 million per year. And in 2010, the council approved a $191 million reduction from the prior year’s tax-supported budget. None of these adjustments were painless, but the county got through them and the world did not end.

The county government can survive without DLC’s money. It simply chooses to collect it because it can.

Myth 2. DLC’s monopoly is needed for public safety.

Last year, Council Member Craig Rice claimed that “county control of liquor sales promotes safety, particularly when it comes to sales to those who are under age 21.” The DLC does indeed vigorously regulate alcohol licensees. It has an eleven-person Licensure, Regulation, and Education program that conducts 400 minor consumption compliance checks annually and trained more than 1,300 licensees in safe alcohol service last year. Additionally, the county’s Board of License Commissioners issues liquor licenses and can revoke and suspend them for violators. But these functions are separate from the county’s role as an alcohol merchant and do not depend on a sales monopoly to be effective. In fact, there is no evidence that the county’s monopoly itself contributes one way or the other to regulatory efficacy. In Washington State, which gave up its alcohol sales monopoly in 2012, both DUI arrests and drunk driving collisions actually FELL a year later.

Myth 3. Without DLC, high paying union jobs will be lost.

This claim is frequently made by MCGEO (Municipal and County Government Employees Organization), the union which represents more than 300 DLC employees along with many other rank-and-file workers in county government. The union has a responsibility to protect its members and generally does an excellent job of it, so its position is understandable. But if DLC’s operations are eventually eclipsed by the private sector, there is no guarantee that union employment will suffer a net loss. That is because many private wholesalers are organized by the International Brotherhood of Teamsters, another union noted for its aggressive defense of its members. MCGEO may prefer that wholesale alcohol employees pay dues to its treasury rather than the coffers of the Teamsters, but that is not a public policy concern that warrants large-scale extractions from county residents.

Myth 4. DLC is getting better.

George Griffin, the long-time Director of DLC, is a happy warrior and tireless defender of his agency. In 2005, Griffin was elected President of the National Alcohol Beverage Control Association (NABCA), a group of public alcohol organizations. He told NABCA of his efforts to continually improve DLC’s operations, including its new Enterprise Resource Planning program to increase efficiency and its installation of security cameras in warehouses. Griffin said, “POS (point of sale), inventory control, accounting, the warehouse, licensee ordering, buyers: they’ll all be tied together… from the retail stores, which will have running inventories, to our drivers, who will be equipped with handhelds.”

Years later, subsequent investigations revealed DLC to be anything but a model of efficiency. This past February, the county’s Inspector General found that DLC employees used “informal, handwritten notes” to track inventory, resulting in “significant decreases in the recorded quantities of warehouse inventories in FY2013 and FY2014.” NBC4 discovered DLC employees drinking and driving on the job and skimming cases of beer to sell on the black market. Restaurant owners have gone on the record with searing complaints about DLC’s service, with one even calling the agency an “evil empire.” Even Gino Renne, leader of the union that represents DLC’s employees and one of its biggest defenders, concedes, “This department needs to be more nimble.”

Myth 5. The County Council has called for “historic reform” at DLC.

On July 28, the County Council passed a resolution calling for a procedural change concerning some of DLC’s sales. The resolution is not binding but may be the basis for a future state-level bill, which is required to affect DLC. County Council Member Hans Riemer called the resolution “historic” in a mass email. But is it really?

The resolution addresses “special orders,” or products that are requested by DLC customers that are not part of its regular stock. These products are often specialty wines or craft beers that have not yet developed wide distribution in the county. Restauranteurs have complained for many years that DLC special orders are subject to long delays, big markups and substantial shortages, particularly when compared to the service offered by private wholesalers. The council’s resolution would allow customers to bypass DLC and deal directly with the private sector when requesting these items.

That sounds great except when considering the actual details of the resolution itself. Among other things, the resolution authorizes the county to establish a fee to “replace DLC estimated revenue lost by allowing the sale of special order beer and wines by private wholesalers.” That’s right, DLC would earn money on alcohol it does not even deliver. Multiple distributors testified at the council’s hearing on this resolution that the size of the fee, along with the additional cost of direct delivery to customers, might deter them from participating in this program. In other words, there would be no effective change.

DLC’s fee for doing nothing is reminiscent of Pepco’s “bill stabilization adjustment,” under which the utility was allowed to charge customers for power it did not deliver during outages. Many people condemned Pepco’s ability to charge for a service it did not provide. But Pepco is not part of county government. Perhaps that explains why what is unacceptable for Pepco is apparently acceptable for DLC.

The biggest myth of all is that DLC can be reformed from within by a series of small tweaks like this one. The idea resembles former Soviet Union leader Mikhail Gorbachev’s concept of “perestroika,” under which his communist government was expected to reform itself. The Soviet Union ultimately collapsed. But with its powerful protectors, DLC goes ever on.

Share

Why No MoCo Transit Authority

brt-photo1

Bus-Rapid Transit

Only a few days after I wrote a post outlining County Executive Ike Leggett’s proposal to create an Independent Transit Authority (ITA) for Montgomery County, the state legislative bill towards that end was withdrawn at his request as it didn’t seem likely to pass.

While MCGEO’s Gino Renne would probably like to think that the bizarre circus he created around the bill’s hearing, analyzed yesterday (“Ready for His Closeup”), had a lot to do with it–and it didn’t help–ultimately many other factors played a far greater role in the decision not to move forward now.

Playing Captain Hindsight and analyzing what went wrong is sometimes a little frustrating to those involved. Still, analysis can serve as food for thought for next time, not a bad idea since Tom Street in Ike Leggett’s office told me that the County Executive hasn’t given up yet: “He is soliciting ideas and alternatives but still believes, absent hearing about anything better, that he has the right approach.”

The Process

At the hearing, there was much outrage expressed about the political process. Except that this is the normal process for how bills become laws. The General Assembly meets only for 90 days every year and a lot has to get done in the session. Late-filed bills occur in every session and the hearing was moved to Rockville from Annapolis to make public input easier.

Many often complain that the state legislative delegation doesn’t work well with the County government. In this case, the delegation responded quickly to a request from the County Executive, who was just reelected to a third term, to aid with a top priority.

Nonetheless, the Executive needed to think more about the unofficial process (i.e. do more to get his ducks in a row in advance). Though many people testified in favor of the bill, they were for the bill rather than FOR the bill.

If there were clarion calls from the organizations that should emphatically favor this legislation (e.g. Action Committee for Transit), I sure didn’t hear them. More consultation with key players probably would have served the Executive well.

Executive Leadership

County Executive Ike Leggett deserves credit for getting the discussion started on an ITA. While not without drawbacks, it provides a means for Montgomery to move forward in a meaningful way on its transportation priorities and to make sure that tax dollars for the purpose stay in Montgomery.

Nonetheless, the WaPo editorial lauding the County Executive for his leadership  doesn’t mention that he walked out of the hearing early without talking to any of his constituents as he departed. County Executive Leggett normally excels at listening–a key part of the job–so I was surprised to hear this. If he wants something of this magnitude that will inevitably engender some controversy, he needs to be willing to stand his ground and argue for it.

To Do What?

More needed to be done to outline specifically the intended purpose of the ITA with various ideas floated. While the County Executive  proposed this with something in mind, it was not made sufficiently clear to the public.

He needs to outline for the community what he wants to do. In particular, he should explain that we need to build the Corridor Cities Transitway (CCT)–already advanced into the design phase–and one other BRT line in the network approved in the County Master Plan as a demonstration project before doing the rest of the planned system.

The CCT is widely supported and will give the County a real economic boost. As Tom Street explained: “The CCT has more documented job creation potential than any other proposed transit project in the County. It is a very high priority for the Executive.”

Additionally, the Viers Mill BRT route provokes less controversy than others as most of it can be built in the median. The operation of one line will likely help answer questions many residents have regarding a mode of transit new to them.

The Business Community

The business community is hesitant to get fully behind an ITA because, like everyone else, they don’t want to pay and balk when asked to trust the tender mercies of the County Council on the amount. But business would be more supportive of a finite amount utilized to build projects that it wants.

One potential solution would be to create special tax districts geared toward capturing revenue from commercial landowners who stand to benefit tremendously from this project to provide the capital needed for construction but not operating costs. The county already has the authority to do this without an ITA.

These tax districts would shift capital costs away from residents, which they would like, towards commercial beneficiaries. Capping the costs at capital expenditures would reassure business, however, that they are not on the hook for unlimited amounts.

Residents and the Charter Limit

Montgomery County currently charges the highest property tax and highest income tax legally permitted. Residents are naturally suspicious when asked to pay more. Their suspicions rise even further when shifting expenses from the current budget to the ITA would allow more spending in other areas than possible under the current Charter limit.

The County Executive will never assuage all concerns. Some will oppose all taxes and just don’t want any BRT lines. But there are steps he could take to build greater trust with the public. Making clearer the purpose of the ITA in conjunction with the County Council would be a good start.

Additionally, any tax expenditures shifted over from the budget to the ITA–for example, if the ITA managed the Ride-On system– should still continue to count towards the Charter limit. This should reduce concern that the ITA is simply a ruse to raise spending on non-transportation measures.

The taxes designated for the ITA should also focus on operating rather than capital expenditures. If special tax districts targeted at business pay for most of the capital costs, it is easier to make the case that we should then pay to maintain this infrastructure. It would also reduce the new taxes required from residents.

County Council Leadership

The Executive and the County Council could have worked more closely together with the Council signally support by vocally backing a proposal earlier. This time, the Council appeared to lead from behind and to distance themselves from the ITA proposal.

Council President George Leventhal projects himself as a transit leader despite his tepid support for BRT. But he missed a real opportunity to take a leadership role here in crafting a proposal and building support. The Council President should take the lead with County Executive Leggett to present a united proposal.

Both could then claim credit for having moved Montgomery off the dime on public transit. The Council has a key role to play here due its extensive authority and because its commitments are critical to establishing support from key players.

Alternatively, the Council could find the means to construct the Viers Mill BRT line within its existing budget as an initial more affordable step toward building a larger system.

 

Share

Winners and Losers: MoCo Edition

This is an off-the-cuff first glance assessment of last night’s primary election results.

WINNERS

1. Incumbents. Did any of them lose? Even the ones facing strong challengers seem to have made it safely to dry land. In the Council races, Hans Riemer, George Leventhal and Roger Berliner all made it home safe. While Leventhal lagged notably behind the other incumbents, he still had a relatively nice margin over Beth Daly who ran strong. Ditto for executive and legislative offices.

2. Sidney Katz. The Mayor of Gaithersburg’s campaign was consistently underrated by many as Ryan Spiegel scooped up union endorsements and Tom Moore garnered support from the Washington Post. But Katz’s longtime service and knowledge of the area just mattered more.

3. Minority Representation. The legislative delegation will have  new African-American (Will Smith), Latino (Marice Morales), and Asian (David Moon) representatives. Additionally, appointed Del. Fraser-Hidalgo fought off a tough challenge. Susan Lee just became the first non-white to win a Senate seat. And Ike Leggett will return for a third term as county executive.

4. Cheryl Kagan. Second time is a charm for the former delegate who sought election to the Senate previously in 2010. Despite Luiz Simmons’ incumbency and seemingly endless barrage of self-funded negative mail, he could not overcome her strong campaign or problems created by his own legislative record.

LOSERS

1. MCGEO President Gino Renne successfully positioned his union as the leader of the county public employee unions outside the school system, including the FOP and the Firefighters. His efforts backfired hugely yesterday as preferred county council candidates lost across the board with the exception of Tom Hucker, who won a tight race over newcomer Evan Glass.

2. Sam Arora and Ben Kramer. Arora was more or less forced out of the legislature after his last-minute switch against marriage equality led to national outrage. His effort to extend his influence through his endorsement of Charlotte Crutchfield also failed. Kramer also lost in betting against Maricé Morales, the choice of Sen. Roger Manno and Del. Bonnie Cullison.

3. Kevin Gillogly didn’t have much success as a campaign operative, having worked for unsuccessful legislative candidates Jonathan Shurberg and Dana Beyer.

4. Duchy Trachtenberg had lots of money but incumbent Roger Berliner just cleaned her clock. This ought to be Duchy’s last stand but that doesn’t mean that it will be.

Share

Effects Bargaining and Endorsements

Effects

MCGEO is the Municipal and County Government Employee Organization. FOP is the Fraternal Order of Police. AFL is the MD-DC AFL-CIO. IAFF is the International Association of Fire Fighters. There might be additional endorsements than those recorded here, particularly for the IAFF.

The government employee unions are placing heavy bets behind candidates who favor effects bargaining despite its repudiation by the voters, especially Duchy Trachtenberg and Tom Hucker. In a recent debate, Duchy speculated that the decline in police morale resulting from the removal of effects bargaining had caused crime to increase. Except that crime has declined–as Ike Leggett loves to remind us–which renders the theory untenable.

Ryan Spiegel has positioned himself as extremely pro-labor despite his unwillingness to revisit effects bargaining. And the unions don’t have a pro-effects bargaining choice in District 3. Ryan is clearly their candidate for the Rockville-Gaithersburg district.

In ultra-liberal District 5, Evan Glass has staked out a position as the only candidate opposed to overturning the will of the voters unless it proves to cause problems for voters. Not a bad idea since he was never going to outbid Hucker for union support.

Marc Elrich is the only incumbent councilmember to receive an endorsement from any of these four unions. At-Large Candidate Vivian Malloy is pro-effects bargaining but is not perceived as a viable challenger by these unions.

Share

SEIU Endorses Council Candidates

SEIU Local 500 has released their endorsements for Montgomery County Council Districts 1, 2, 3 and 4:

1: Roger Berliner
2: Craig Rice
3: Ryan Spiegel
4: Nancy Navarro (unopposed)

The most interesting endorsements are in Districts 1 and 3.

In District 3 (Rockville-Gaithersburg), Ryan Spiegel now has the endorsement of two major school system unions: MCEA and SEIU. Two nice endorsements in a hotly contested race with several high-quality candidates for this open seat.

In District 1, Roger Berliner has to be relieved to have received SEIU’s endorsement in his tough contest against Duchy Trachtenberg. So far, MCEA has not endorsed in that race.

The District 1 race could be shaping up as a proxy fight between the school system and county government employee unions. The latter have been mighty unhappy with the current Council and believe that the former have done comparatively well.

Roger Berliner looks among the more vulnerable Council incumbents. Duchy Trachtenberg is not labor’s ideal vehicle given her history but she is the only option if the government employee unions want to take out Berliner and exercise some muscle. Recently, Trachtenberg hired Robert Stewart, the just retired executive director of MCGEO, as her campaign manager.

High-income District 1–it includes Potomac, Bethesda and Chevy Chase–seems an unlikely locale for a labor proxy fight but stranger things have happened. Their divisions could also provide opportunities for other groups to have more influence.

Share

MCDCC Part III: Renovation or Takeover?

Kunes AlbornozDave Kunes and Gabe Albornoz

Check out Part I and Part II of this four part series on the contretemps at MCDCC.

In the wake of the boycott of the Spring Ball, the Montgomery County Young Democrats (MCYD) and labor unions started applying pressure for major changes on the Montgomery County Democratic Central Committee (MCDCC) to include more labor representation and more young people.

The prime movers in this effort appear to be Dave Kunes, Chair of MCYD at age 24, and Gino Renne, MCGEO President. Renne is the most senior of the leaders of the three unions–the others are the FOP and the Firefighters–involved in government operations in Montgomery County.

Labor talked up running an alternative slate for MCDCC. Kunes, who then worked for Del. Tom Hucker and now works for MSEA as well as chairing MCYD, organized a PAC to back candidates for MCDCC. MCGEO donated to the PAC. At this point, perspectives on the story diverge.

No one disagrees on the basic facts, essentially a meeting occurred between MCDCC Chair Gabe Albornoz and others, including Kunes, where they agreed to put together a unity slate that would incorporate significant new members.

It’s the interpretation that varies. Some see Gabe as taking advantage of the situation to renovate a MCDCC in need of new ideas and new blood. Others see it as Gabe suing for peace in order to avoid competing slates and more acrimony within the Montgomery County Democratic Party.

Either way, the result turned out the same. MCDCC set up committees of five people who were not running for MCDCC to interview people for slots on the unity slate. So far, so good.

Except that laudable step was undercut completely by the closed, secret nature of the process. Only certain people, essentially current MCDCC members and selected Young Democrats, were invited to apply. If the goal is truly renovation rather than major change to benefit specifically MCYD and labor, why keep it secret and limit applications?

The people involved may call on Captain Hindsight to lament this approach. Sorry but not buying. They organized it specifically to accomplish their goals. They own it.

Regardless, this lack of transparency and the limited nature of the invitations had the desired effect. Roughly eight members of the unity slate, or one-third of candidates, are young Democrats. As a result, the committee is set to take in a major influx of people who helped place the pressure on MCDCC to change.

Additionally, some changes were further negotiated between the major players behind the scenes after the interviews. In particular, the unity slate dropped Young Democrat Brígida Krzysztofik in favor of Kevin Walling, who had raised money for his delegate race in District 16. Both are LGBT. Krzysztofik was quietly promised that she would get a slot next time.

Some of the unity slate choices make more sense than others. I was surprised to learn that the slate didn’t include Jay Wilson, a very talented, smart Young Democrat and Vice President of the African-American Democratic Club. (I know Jay through his work for a nonprofit that we both support.) Despite passing on Jay, African Americans comprise roughly one-third of the slate.

Most of the retiring members have done so by choice but a few were defenestrated from the slate against their will. The primary example is Harold Diamond, who won a seat in District 19 challenging the slate in 2010, but was not selected for the unity slate.

Diamond chaired both the Ballot Questions Advisory Committee as well as the precinct officials meeting to vote on them. He had the nice sounding but dreadful in practice idea of populating the committee with essentially anyone who volunteered. Not the best means to recruit a group of volunteers who are particularly sensible, representative, or sensitive to the variety of interests and trends within the party.

The meeting of the precinct officials also left several key issues until very late in the evening and Diamond repeatedly tried to steer matters in the direction he favored. No surprise he was left off the slate. Nonetheless, he will be seeking reelection from District 19.

Despite labor’s grievances avowedly being a prime motive for unhappiness with MCDCC, only one of the new members has a direct link to the three governmental unions who were upset with MCDCC–Erin Yeagley works for MCGEO. However, Dave Kunes also works for MSEA and the Young Dems as a group are perceived as labor proxies.

The oddness doesn’t end there. The dispute began because labor was frustrated with the County Council. But MCDCC’s major power is to fill vacancies in the legislature. Vacancies on the County Council are filled by appointment. On the other hand, Gino Renne will likely view it as mission accomplished if he can prevent MCDCC from sending out another sample ballot endorsing a question opposed by organized labor even if unanimously supported by an all-Democratic County Council.

Some view all of this as simply an power play by Dave Kunes supported by the unions. Certainly, the idea that crisis is another word for opportunity has more than a dollop of truth. Nevertheless, harnessing ambition for public goals can be a powerful force for change. Kunes revitalized the Young Democrats and made them a force in the County. Regardless of how it came about, the changes at MCDCC provide a real chance to regenerate the party.

Politics is perhaps the only profession in which people are supposed to loudly protest their lack of ambition or desire for advancement as they move their way up the ladder. So what if ambition played a role in his organization of this renovation/partial takeover? All our officials should be so skilled and talented.

The final part in this series will explore the upcoming election for MCDCC as well as its future.

Share