Category Archives: Adam Pagnucco

Adam Pagnucco

The Worst Part of Campaigning

By Adam Pagnucco.

What’s the worst part of campaigning for office?  Well, there is a lot of work, but most of it is not inherently awful.  You have to show up at a bunch of events, but that’s OK if you like bad food and flat soda.  You have to talk to a bunch of self-important stuffed-shirts, but you eventually learn which ones have something to contribute and which ones should be avoided.  (Hint: the ones who talk the most know the least.)  Door knocking takes time, but you get to meet real live regular voters (and their vicious guard dogs).  Here’s a bonus: 2002 District 18 House candidate Sam Statland once lost 45 pounds from door knocking.  Fundraising bites, but that’s only the second-worst part of campaigning.  The worst part is:

Filling out all the [expletive deleted] questionnaires!

This is a part of campaigning that no one on the outside ever sees.  MoCo candidates are absolutely deluged with questionnaires from anyone and everyone.  OK, new candidates, we know that you have not received many yet.  But just wait!  In the 2014 cycle, roughly fifty of them went out.  There are sure to be more this time.

Now we are not questioning the legitimacy of questionnaires in general.  Citizens and organizations have a right to know what candidates think and what they will do if they get elected.  Endorsing organizations in particular should quiz candidates before supporting any of them.  But many of these questionnaires are sent by groups with little or no membership, no distribution and no planned electoral activity of any kind.  If you don’t distribute the completed questionnaires to anyone and will undertake no electoral activity as a result of what they say, why should you expect candidates to fill them out?

The best questionnaires are concise, focused and get straight to the point.  For example, MCEA, SEIU and the Sierra Club usually ask fifteen questions or less (sometimes with sub-questions) that relate directly to their core interests.  They do not ask about issues that are extraneous to their members.  All three are important organizations whose endorsements carry weight.  All candidates will want to fill these out.

And then there are the other ones.  As a general rule, the weaker and the less relevant the group, the longer and more tedious its questionnaire will be.  Each of them takes several hours to complete, time that would be better spent getting chased by vicious guard dogs.  See that questionnaire with fifty questions on it?  We guarantee that it will have zero impact on the election.  Truly influential groups don’t care about fifty different things.  They care about a few things that are really important to them because that’s what they are working on.  Last time, one brand-new group sent out a list of 33 questions ranging from the best way to cook an omelet to the candidate’s favorite Pokemon character.  (OK, maybe your author is exaggerating a little.)  It took a whole afternoon to fill out.  That group did nothing during the election and has never been heard from again!

Here’s how crazy this can get.  Suppose you really hate Candidate X and want to mess with him.  Tell him you represent a group called MoCo Residents United that has a hundred thousand dues-paying members.  Then send him a questionnaire with 120 questions, each one with sub-questions a, b and c.  X will go totally banana cakes.  He will yell at his staff, “Who are these guys?  I’ve never heard of them.  How dare they send in 120 questions!”  The staff will all agree, saying the group doesn’t exist and should be ignored.  But then X will think of Candidates Y and Z, who are his bitter enemies and are running against him.  What happens if Y and Z respond but X does not?

You know the end to this story.  X will fill out that questionnaire.  Every single time!

So for the love of Mike, if you are contemplating sending out a questionnaire, please observe the following rules.  First, if you really don’t care about something, don’t ask about it.  Don’t waste your time – and the candidate’s.  Second, don’t ask the same question three different ways.  Ask it once and only once.  Third, fill out your own questionnaire yourself before sending it out.  Put yourself in the candidate’s shoes.  If you find it intolerable to complete it, trim it. Fourth, be aware that if you ask fifty different questions, the answers to each one will be shorter and less informative than if you ask ten.  That’s because candidates and their staff only have so much time in the day.  In this case, less is more!  And finally, make your best effort to distribute the completed questionnaires far and wide to your members.  If you are going to ask candidates to invest the time and effort to fill them out, at least make sure that their hard work is seen by as many voters as possible.

And if you don’t follow the above rules, you just want to make people miserable.  In that case, you should send your questionnaire only to Robin Ficker!

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Adam Pagnucco, Council At-Large

Greenberger Compares County Council to Washington Redskins

By Adam Pagnucco.

In the most brutal campaign attack of the cycle, former County Council spokesman and current at-large council candidate Neil Greenberger is comparing the council to the Washington Redskins.  Under current owner Dan Snyder, perhaps the most despised franchise owner in pro sports, the team has won just two playoff games in the last nineteen seasons.  They are commonly regarded as the third-most dysfunctional institution in the Washington region after the White House and Congress.  We don’t agree with Greenberger that the council is that bad, but as a Washington Post reporter who covered the Skins in their glory years, Greenberger’s take sure is amusing!  We reprint his blast email below.

From Neil Greenberger

Candidate

Montgomery County Council At-large

Football and Montgomery County Politics

Jan. 10 and Jan. 26

26 years and $26

Why this is all about change – And making a difference

On Jan. 26, 1992, Washington’s professional football team won its last Super Bowl. In the 26 years since, not a lot of good things have happened to that organization. It often doesn’t listen or care what its fans think.

On Jan. 10, 2018, the first campaign financial reporting period will end for candidates seeking Montgomery County political offices. While candidates can accept contributions beyond the first reporting date, with at least 30 people running for the four available at-large seats on the Montgomery County Council, those that collect donations of support early in the campaign will prove to be the strongest contenders for this Super Bowl of elections.

So, what do these two things have in common?

In both Washington professional football and on the Montgomery County Council, there is a great need for better direction, better efficiency, more listening to what the “experts” regard as important and real plans for the future. In one of these cases, you can help: by supporting my candidacy for an at-large seat on the County Council and backing a progressive agenda that helps those in need and improves services while spending money efficiently and not raising property taxes over the next four years.

Those directing Washington’s professional football team do not seem to have a game plan for long-term success. My campaign is based on doing the right things that will make Montgomery County a better place to live for our future generations.

Those directing Washington’s professional football team have some very smart people offering advice on how to improve its situation—but the team leaders have opted to ignore that advice. The result has been years of failure. Over the past year, I have been meeting people throughout Montgomery County and listening to what they want to improve in the County, their neighborhoods and for the long-term future of their children.

Those directing Washington’s professional football team do not seem to have a playlist for the future. In listening to Montgomery residents, I know the priorities for our county must be a public school system that strives to get better for students at all schools around the county—and moves ahead with big and innovative steps, rather than the goal of holding the status quo. We want development that plans for realistic school capacity needs, roads to support the development and parking spaces so all people in the county can enjoy these new projects. And we want things done efficiently, without the spiraling waste of tax dollars that has been the hallmark of our county for the past decade.

Those directing Washington’s professional football team keep going to the same well when it needs more money: raising ticket prices, concession prices and parking prices—without regard to the burden it puts on its supporters. As a former Washington Post reporter and longtime County employee, I know where to find the waste in County government. And by using the county law (approved by voters) that allows one Councilmember to block an increase in property taxes, I will GUARANTEE that property taxes will not increase above the County Charter Limit (basically the annual cost of living) for the next four years.

How can you help?

You may not be able to change the future of Washington’s football team. But you can make a difference in the future of Montgomery County.

To commemorate Washington’s 26th anniversary without a Super Bowl since 1992, I am hoping you will contribute $26 to my campaign for the County Council before January 10, 2018. (Any individual can contribute up to $150, but right now, $26 will be great). It will lead to the changes you tell me you want in Montgomery County. And in this case, you get to call the plays.

Thanks for helping!

Neil

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Adam Pagnucco, campaign finance, Council At-Large, County Executive, George Leventhal, Hans Riemer, Hoan Dang, Marc Elrich, Nancy Navarro

Public Financing Update: January 2, 2018

By Adam Pagnucco.

Happy New Year, folks!  After a relatively quiet period in the fall, December saw a number of applications for public matching funds from county candidates participating in public financing.  One of the many positive things about public financing is that when candidates apply for matching funds, they have to file full reports with the State Board of Elections.  That gives data junkies like your author – and Seventh State readers!  – lots of updated data without waiting for the relatively few regular campaign finance reports in the state’s schedule.  The next time all campaign finance reports are due, both from public and traditional accounts, is on January 17.

The candidates below have met the thresholds for matching funds and have applied for those funds from the state.

A few notes.  The column titled “Non-Qualifying Contributions and Loans” refers to loans from candidates and their spouses (up to $12,000 is allowed) and out-of-county contributions, which are allowed but not matched.  The column titled “Adjusted Cash Balance” includes the cash balance in the last report plus the most recent matching funds distribution requested but not yet received.  It is the closest we can approximate the financial position of each campaign at the time they filed their last report.  The column titled “Burn Rate” is the percentage of funds raised that has already been spent.  Generally speaking, candidates should strive to keep their burn rates low early on to save money for mail season.  Mohammad Siddique’s totals are preliminary as there are a few issues in his report that will have to be resolved with the Board of Elections.  And District 4 Council Member Nancy Navarro applied for $35,275 in matching funds but cannot receive them unless she gets an opponent.

Below is the number of days each candidate took to qualify for matching funds.  Let’s remember that the thresholds are different: 500 in-county contributors with $40,000 for Executive candidates, 250 in-county contributors with $20,000 for at-large council candidates and 125 in-county contributors with $10,000 for district council candidates.

So what does it all mean?  Here are a few thoughts.

County Executive Race

Council Members Marc Elrich and George Leventhal, who are using public financing and running for Executive, have been active in county politics for a long time.  Elrich first joined the Takoma Park City Council in 1987 and has been on the county ballot in every election since.  He has been an elected official for thirty years.  Leventhal worked for U.S. Senator Barbara Mikulski and was the Chair of the county Democrats in the 1990s.  He played a key role in defeating a group of Republican Delegates in District 39 in the 1998 election.  Both of these fellows have built up large networks of supporters over many years and they have done well in public financing, raising similar amounts of money from similar numbers of people.

The difference between them is burn rate.  Leventhal is spending much more money than Elrich early, with some of it going to a three-person staff.  He had better hope this early spending is worth it because if this trend keeps up, Elrich could have almost twice as much money as Leventhal available for mailers in May and June.

At-Large Council Race

One of Council Member Hans Riemer’s advantages as the only incumbent in this race is the ability to raise money, and he has put it to good use in public financing.  Riemer leads in number of contributors and total raised.  He has also maintained a low burn rate.  This is Riemer’s fourth straight county campaign and he knows what he’s doing at election time.  His biggest problem is that his name will be buried near the end of a VERY long ballot.

The five non-incumbents who have qualified for matching funds have raised similar amounts of money so far.  As a group, they are not far behind Riemer.  The one who stands out here is Bill Conway.  Hoan Dang, Evan Glass, Chris Wilhelm and Mohammad Siddique all filed in December while Conway last filed in September.  Our bet is that when Conway files next month, he will show four months of additional fundraising that will put him close to Riemer’s total.

That said, the five non-incumbent qualifiers have so far separated themselves from the rest of the field.  Gabe Albornoz and Danielle Meitiv have said they have qualified but have not filed for matching funds with the state.  No other candidates have claimed to qualify.  Raising money in public financing takes a long time and raising a competitive amount (at least $250,000) takes a REALLY long time.  Those at-large candidates who do not qualify soon risk appearing non-viable.

Public Matching Funds Will Be Nowhere Close to $11 Million

The county has so far set aside $11 million to cover the cost of public matching funds.  That appears to be waaaaaay too much with only $1.4 million so far disbursed.  Our guess is that the ultimate total will be less than half what was allocated and will be even lower in the next election cycle with fewer seats open.

Incumbents Have Nothing to Fear From Public Financing

Five council incumbents are using public financing.  All five have qualified for matching funds and have done so fairly easily.  We will see how the challengers stack up, particularly in the at-large race, but so far the only at-large incumbent (Hans Riemer) is leading.  As we predicted last April, public financing is good for incumbents because it allows them to leverage their networks into lots of small individual contributions.  State legislators and other County Councils should take heed.

That’s it for now, folks.  Come back in a couple weeks when all reports, including those from traditional accounts, are due and we’ll put it all together for you!

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Adam Pagnucco, budget, Larry Hogan, taxes

Revenue Shortfall Undermines Hogan’s Claims on Jobs

By Adam Pagnucco.

In 2014, candidate Larry Hogan ran on three issues: jobs, taxes and reforming Annapolis.  From 2015 through the present, Governor Larry Hogan has based his agenda on three issues: jobs, taxes and reforming Annapolis.  It’s a smart and focused way to campaign and govern and has largely (although perhaps temporarily) neutralized Hogan’s disadvantage as a Republican in blue Maryland.  But now the state budget is suffering from a revenue shortfall.  That calls into question Hogan’s standing on perhaps his biggest issue: jobs.

Recent polls show that jobs and the economy are the second most important issue for Marylanders, trailing only public education.  Accordingly, Hogan relentlessly promotes his jobs record in the press and social media, not so subtly using it as justification for his reelection.  But if employment was really surging, state revenues should be booming.  They’re not.

One of countless Facebook posts by the Governor on jobs.

Last week, the Board of Revenue Estimates, comprised of the Comptroller, the Treasurer and the Secretary of Budget and Management, voted to reduce the state’s revenue projection for FY18 (the current fiscal year) by $73 million.  The reduction included shortfalls of $92 million in income taxes and $33 million in sales and use taxes, which were partially offset by increases of $18 million in estate taxes and $17 million in corporate income taxes.

A summary of the shortfall released by the Board of Revenue Estimates.

Given the fact that the November income tax distributions were down by 26% in Baltimore County, 29% in Montgomery County and 30% in Howard County, it’s not surprising that the state’s income tax projections would take a hit.  In those three counties, tax planning by the wealthy to take advantage of next year’s federal tax cuts was probably a factor in their shortfalls.  The fact that Maryland has the highest percentage of millionaire households of any state in the country leaves it vulnerable to these kinds of revenue swings.

But that’s not all.  The $33 million decline in projected sales and use taxes does not relate to tax planning by the rich.  That’s a similar situation to what MoCo is experiencing as half the county’s shortfall comes from taxes other than income taxes.  Hogan is dealing with the same problem as MoCo’s county elected officials: for all their claims that the economy is strong, healthy economies tend to not produce significant revenue shortfalls.  Recent employment estimates are often revised substantially soon after their release, but current year revenue declines are something that governments have to deal with in the near term.

Here’s what Comptroller Peter Franchot had to say about the state’s falling revenue projections:

The revenue projections that have been brought to this Board for approval were meticulously and carefully crafted based on what we know … and the trends we are seeing … and the data we are receiving. Once Congress approves a final version of the tax reform legislation, our experts here will work diligently to determine its impact on Marylanders’ income and our state’s fiscal future and propose revisions to our revenue estimates where appropriate.

In other words, we’re doing the best we can with the information we have. But, here’s what we do know and here’s what the numbers tell us. While we have undoubtedly made considerable progress after the crippling effects of the 2008 Recession, with an unemployment rate hovering around 4 percent and stock market trends that are headed in the right direction, the fact of the matter is that thousands of Maryland working families and small business owners who were affected the most by the economic crash nearly a decade ago haven’t fully recovered.

We continue to see that with declining sales and use tax revenue. With wages and salaries that are lackluster at best. Even those who are employed with good-paying jobs have – in more cases than not – elected to put their disposable incomes in their piggy banks instead of putting money back in our local economy. And who can blame them?

With all the uncertainty that’s being produced by Washington at an almost daily basis, coupled with the continued fiscal and economic challenges that our state and our communities face, it’s understandable why so many of our citizens remain hesitant and timid about how they spend their hard-earned incomes.

Let’s remember that Franchot has a famously cooperative relationship with Hogan.  Even so, Franchot is saying that the state’s economy has not fully recovered from the Great Recession – which is exactly what we wrote about MoCo before the revenue crash.

This is the opposite of Larry Hogan’s message that he has been great on jobs.  His opponents are sure to take notice.

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Adam Pagnucco, Republicans

Maryland Delegate Questions Criticism of Roy Moore

By Adam Pagnucco.

In a Facebook post in the wake of Alabama Senate candidate Roy Moore’s defeat, a Maryland GOP Delegate is questioning those who have criticized Moore’s history with teenage girls and the actions of other sexual harassers.  That history was key to Moore’s loss.

Republican Delegate Jason Buckel (R-1B), who represents Allegany County, wrote on Facebook:

I’ve not said a word about the Alabama Senate election or the swirling world of accusations, admissions, rumors and varying degrees of bad behavior by men– from the clearly criminal to the truly appalling to the unambiguous acts of poor taste to the fairly innocuous and easily overblown. I think that trying to litigate in the court of public opinion what did or did not happen 20, 30, 40 or more years ago in momentary, fleeting encounters or relationships and then view those allegations through the light of modern prism, as opposed to the conventions and norms of the time in which they occurred, is fraught with danger, although clearly rape, physical sexual assault, and pervasive, consistent, degrading sexual harassment have never been and never could be acceptable under any circumstances at any time by anyone.

Buckel went on to praise the policies of the Trump administration while bashing Steve Bannon, Moore and other GOP candidates.

In a comment later on his post, Buckel said, “But who knows – While girls Roy Moore stopped by a mall to say hi to 40 years ago are national figures, 99.9% of Americans have no idea who Doug Jones is and chances are his senatorial career will be exceedingly brief.”

Let’s review the allegations against Moore.  His first accuser, Leigh Corfman, described how he sexually assaulted her when he was 32 and she was 14.  Another woman, Beverly Young Nelson, said Moore locked her in a car and tried to force her into oral sex when she was 16.  Six of the eight women who came forward were under the age of 18 at the time that Moore pursued them.  These incidents were not in keeping with the “conventions and norms of the time” as the girls and their families were disturbed by Moore’s actions and he was banned from stalking girls at the Gadsden Mall.

Right now, there is a national debate going on about differing degrees of sexual misconduct and what levels of punishment are appropriate.  That debate will be playing out for a while before it is settled – IF it’s settled.  But the allegations about Moore’s behavior with teenage girls are far outside the boundaries of any gray areas, past or present.  He was not “saying hi” as Buckel stated above.  Elected officials who appear to make excuses for the likes of Moore should beware the voters next November.

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Adam Pagnucco, environment, Maryland League of Conservation Voters, Sierra Club

Enviro Early Endorsements for General Assembly

By Adam Pagnucco.

Yesterday, the Maryland League of Conservation Voters (LCV) released its early endorsements for General Assembly.  We present them along with the early endorsements recently issued by the Maryland Sierra Club below.

First, let’s look at early endorsements for the Senate.

All early endorsees for Senate are Democratic incumbents with two exceptions: LCV-backed Delegates Ben Kramer (D-19) and Pam Beidle (D-32), who should have little problem winning their party nominations for open seats.  In general, the Sierra Club has endorsed fewer candidates so far.  Both organizations took passes on several contested Senate races.  They notably declined to support Education, Health and Environmental Affairs Committee Chair Joan Carter Conway (D-43), who is being challenged by Delegate Mary Washington.  However, both of them did support Senator Shirley Nathan-Pulliam (D-44), who is being challenged by SEIU leader Aletheia McCaskill.

Now let’s look at the House.

Again, all the early endorsees are Democratic incumbents and the Sierra Club supported fewer of them.  Many of the incumbents who have not yet been endorsed are appointees who have not served for three full sessions, like Montgomery County Delegates Pam Queen (D-14) and Jheanelle Wilkins (D-20) and Baltimore City Delegate Robbyn Lewis (D-46).

Let’s remember that both of these organizations will be issuing more endorsements in the future.  Several incumbents who don’t appear on these lists now could be endorsed in the next few months.  Open seat candidates will also earn support.  And the endorsement decisions in the contested Senate races, especially in the City of Baltimore, will be very interesting.  We will be watching!

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Adam Pagnucco, budget, Economy, income, taxes

Is MoCo’s Budget in Trouble?

By Adam Pagnucco.

Montgomery County’s $120 million budget shortfall has set off political fireworks this election season, including attacks from Delegate Bill Frick (D-16), who is running for Executive, and Republicans who question how taxes could be going up while revenues are going down.  County Council incumbents pooh-pooh it, insisting that the budget decline is unremarkable and the economy is strong.  County Executive spokesman Patrick Lacefield, who once predicted that any loss of the county’s $30 million in liquor profits would cause a big property tax hike, now says that the $120 million shortfall is “pretty small” at just 2.2 percent of the county’s budget.

What is going on here?  Is MoCo’s budget in trouble?

First, the incumbents are right to point out that mid-year corrections, including budget savings plans, are not uncommon.  Between FY08 and FY11, the County Council approved five mid-year cut packages ranging from $30 million to $70 million each due to the Great Recession.  In FY16, the council approved a $54 million savings plan associated with the U.S. Supreme Court’s Wynne decision and disappointing income tax receipts in the prior year.  While mid-year cuts happen occasionally, it’s important to note that their history indicates that they are often – but not always – produced by looming economic problems.

So what’s causing this one?  No one is totally sure yet, but there seems to be two phenomena at work.

Declining Income Tax Payments from the Wealthy

In Maryland, the state collects income taxes on behalf of local governments and remits them in periodic distributions.  Part of MoCo’s problem originated in its November income tax distribution from the state, which includes extension filers who tend to be disproportionately very wealthy.  It’s difficult to forecast income tax payments from wealthy people because their dependence on capital gains and business income can be volatile.  The chart below from the state’s Bureau of Revenue Estimates contrasts the annual change in average federal adjusted gross income between all MoCo taxpayers (pink bars) and the top 100 MoCo taxpayers (blue line).  Income change for all taxpayers usually varies by single digits each year while income for the super-wealthy almost always varies by double digits.  This creates serious forecasting challenges for the county government since the super-wealthy have a material impact on its budget.

One relevant fact is that the November distribution may be down by 29% in MoCo but, according to the state, it is also down by 30% in Howard County and 26% in Baltimore County.  One thing these three jurisdictions have in common is that they all have substantial concentrations of very wealthy people.  That suggests that some of MoCo’s problem is not specific to the county but rather to variations in the incomes of the super rich.

Why is this happening?  One explanation lies in capital gains income.  Council analyst Jacob Sesker writes:

To a large degree, that volatility is the result of the year-to-year variations in the capital gains income of a small number of County residents. Illustrating this point, part of the projected FY18 decline in income tax revenue can be traced to a sharp drop in the capital gains of the County’s top 50 taxpayers, who realized gains in tax year 2016 that were 50% of the gains realized in tax year 2015, resulting in $21 million less in County income tax revenue (Revenue Administration Division of the Maryland Comptroller). Staff’s review of tax return data published by the Comptroller indicates that roughly 1.8% of Montgomery County returns report income of $500,000 or greater. On average, these returns explain more than half of any year-to-year increases in income tax revenue, and explain more than 100% of any year-to-year declines in income tax revenue.

Another factor could be the tax bills being considered by Congress, which contain numerous large cuts for wealthy individuals and corporations.  The super wealthy could be deferring capital gains and business pass-through income to next year when they would be subject to significantly lower rates.  If true, that would mean less income tax revenue this year but perhaps more next year when the deferred income is reported.  That’s just a theory but it can’t be ruled out.

Broader Economic Weakness

There are other facts that can’t be explained by the tax planning of the super wealthy.  First, FY17 (the year of the 9% property tax hike) closed out with $25 million less than expected.  Second, the county is writing down $206 million over the next six years in property taxes, energy taxes, transfer taxes, recordation taxes, telephone taxes and hotel taxes in addition to a $212 million income tax writedown.  The energy tax revision alone is $100 million over six years.  The reason for that is unclear, but it’s worth remembering that since commercial energy users pay roughly double the tax rates of residential users, some assumptions regarding employer energy use may be operative here.  It seems unlikely that a “strong economy” would produce such broad, multi-tax writedowns of the kind just put forth by the county.

What’s the bottom line?  Over the years, we have learned that under most circumstances, economic trends usually matter more than singular events.  One good year should not cause irrational exuberance and one bad tax distribution should not cause panic.  Whether the recent shortfall turns out to be meaningful or not, MoCo’s serious budgetary challenges are long term in nature.  They relate to decade-plus trends of lagging growth in employment and income, repeated funding of ongoing spending with one-time revenue sources and the county’s recent passage of large tax hikes and expensive employment laws at the same time, a unique combination among Washington-area jurisdictions.  That is on top of any targeting of Maryland and general economic insanity by Congress.  The big question is not about one tax distribution from the state but whether a combination of all these long-term factors will catch up with MoCo in a really bad way in the next couple years.

That’s a question for the next Executive and County Council.

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Adam Pagnucco, David Moon, Property Taxes, taxes

Moon Country Club Bill Could Generate $10 Million for MoCo

By Adam Pagnucco.

A local bill introduced by Delegate David Moon (D-20) that would end property tax breaks for country clubs would eventually generate $10 million a year for Montgomery County Government according to General Assembly analysts.  That’s welcome news for the county, especially considering its current budgetary difficulties.

Under current state law, the State Department of Assessments and Taxation (SDAT) is allowed to strike agreements with country clubs having golf courses to cap the assessed value of their land.  To be eligible for such agreements, the clubs must have at least 100 members who pay dues averaging $50 or more annually for each member; restrict use of their facilities primarily to members, families, and guests; have at least 50 acres of land; and have a golf course with at least 9 holes and a clubhouse.  In practice, the agreements limit assessed land values to $1,000 an acre.  In return for the assessed rate, a club with an SDAT agreement must agree not to sell its land for subdivision and to not discriminate on race, color, creed, sex or national origin.  If a club with an agreement does sell its land for subdivision, it must pay back taxes equivalent to what it would have been paying without an agreement.

Not long ago, your author asked SDAT for all of its agreements with country clubs in Montgomery County.  SDAT sent us ten of them but we later learned that there are actually fifteen of them in the county.  One of them was signed in 1980 and three more were signed in 1981; all four of these are fifty year agreements.  Two more were transferred from prior owners.  One agreement, for the Lakewood Country Club in Rockville, was signed in 2017.  In tax year 2016, when the agreement was not effective, the club’s 175 acres had an assessed land value of $1.94 million.  Once the agreement takes effect, the club’s assessed land value will be $175,000 – a 91% reduction.

Moon’s local bill would abolish such agreements with country clubs in Montgomery County as of their expiration or June 30, 2029, whichever date is earlier.  Because Maryland’s state constitution requires uniform rules for the assessment of land, Moon’s bill takes the form of a constitutional amendment carving out MoCo country clubs and golf courses from that requirement.  The amendment would have to be approved by voters.  We understand that Moon may also introduce a statewide bill to deal with SDAT agreements everywhere.

The fiscal note on Moon’s bill indicates that MoCo country clubs with SDAT agreements have a combined 3,000 acres currently assessed at $3 million.  In the absence of the agreements, the fiscal note estimates that the club’s assessed land value would be $983.3 million.  So once the agreements are all gone by Fiscal Year 2030, the fiscal note estimates that the state would collect an additional $1 million a year in property taxes from the clubs and the county would get an additional $10 million annually.

That’s right, folks – if the country clubs simply pay property taxes at the same rate the rest of us do, the Montgomery County Government would get an extra $10 million a year.

Delegate Moon’s country club bill is the biggest no-brainer of all time.  There is no justification for the richest of the very rich to get a property tax break that no one else does.  And if they are required to pay the same as everybody else, the county government would get a nice revenue bump to help it deal with our significant and increasing needs.

We hope every single MoCo Senator and Delegate will join David Moon and support his bill.

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Adam Pagnucco, Republicans, taxes

GOP Tax Bills Discriminate Against Maryland

By Adam Pagnucco.

Much has been written about the tax bills passed by the U.S. House and Senate in recent weeks.  Overall, both bills offer small tax cuts to the poor, modest ones to the middle class and large cuts to the wealthy and corporations.  But in order to partially offset the massive tax cuts going to those at the top, the bills do something else.

They discriminate against taxpayers in Maryland.

Why do they do that?  One key feature of both bills is that they abolish the ability of individuals to deduct state and local income taxes from their federal incomes.  (Property tax deductions would still be allowed up to $10,000.)  According to IRS data for Tax Year 2015, U.S. federal taxpayers deducted a total of $334 billion of state and local income taxes from their incomes, more than the amounts they deducted for mortgage interest ($278 billion), charitable contributions ($222 billion), real estate taxes ($187 billion) and state and local sales taxes ($17 billion).  Abolishing the state and local income tax deduction hits people who itemize their deductions and pay significant amounts of state and local income taxes.  Marylanders are targeted on both those measures.

Itemizing Deductions

According to the above IRS data, 46% of Marylanders itemized their deductions on their federal tax returns in 2015.  That’s the highest rate in the country, far surpassing the national rate of 30% and red states like Arkansas (22%), Mississippi (23%), Louisiana (23%), Texas (24%), Alabama (26%), South Carolina (27%) and Georgia (33%).

State and Local Income Tax Deductions

In terms of state and local income tax deductions per return (including non-itemized returns), Marylanders ranked fifth in the nation at $4,217 per return.  Maryland trailed New York, D.C., Connecticut and California.  Virginia ranked tenth, indicating that the abolition of this deduction will hit the Washington, D.C. metro area particularly hard.  The states least impacted are mostly red states and those with little or no income taxes.

Inside Maryland, the impact will be felt differently across the state.  That’s because residents of some jurisdictions pay much more in state and local income taxes than others.  According to 2015 income tax data from the Comptroller, MoCo and Howard County residents pay by far the most state and local income taxes in Maryland.  Residents of many parts of Western Maryland and the Eastern Shore pay the least.

Consider this.  If you itemize your deductions, are paying $5,000 in state and local income taxes – roughly the average in Maryland – and your effective federal income tax rate is 15%, you will owe $750 more to Uncle Sam because of the abolition of the state and local income tax deduction.

Does that mean you will owe more federal taxes overall?  That depends.  If you are wealthy, you could get huge offsetting cuts because of changes to the top income tax brackets and tax cuts on pass-through income from your businesses.  If you are poor or middle class, you could benefit from an increase in the standard deduction and an increase in the child credit, but that could be offset by an elimination of the personal exemption.  An analysis of the Senate bill two weeks ago by the Institute on Taxation and Economic Policy found almost all of the tax benefits from that bill going to the top quintile of Maryland taxpayers.  Changes prior to the Senate floor vote and in conference committee may tweak the details but not the overall impact.  And it could get worse: wealthy Republican donors are already complaining that their tax cuts are not big enough.

There are many evils in the GOP’s tax bills: redistribution to the one percent, big tax breaks for multi-nationals who ship jobs overseas, losses of insurance coverage under the Affordable Care Act and more.  But for Marylanders, the additional slap in the face is that the bills shift the federal tax burden away from states like Texas, South Dakota, Alaska and Mississippi and onto residents of the Free State.  All Marylanders, including Republicans, should oppose that.

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Adam Pagnucco, District 30, Ron George

Ron George: “Leftist Democrats” Believe Businesses are “Slave Plantations”

By Adam Pagnucco.

Former GOP Delegate and gubernatorial candidate Ron George, who is running for State Senate in District 30, said on Facebook that “leftist Democrats” think businesses are “running sweat kitchens or slave plantations.”  When challenged on his language by a reporter, he did not back down.

The Facebook exchange occurred on Daily Record reporter Bryan P. Sears’s page.  When Sears posted a video of Delegate Luke Clippinger weighing in on Governor Larry Hogan’s newest sick leave proposal, George wrote:

This helps no one. Employees will take it. Why not? Currently, I do not question my employees when they call in sick. It is their decision if they are too sick to work or have a personal need. But the small business owners I know in other states that have this say it is felt it is owed to them (the employees) and suddenly the business owners are simply paying for people not working. Why are the leftist democrats always thinking business owners are running sweat kitchens or slave plantations. Most treat their employees like family. I am responsible for my employees providing for their families and I feel responsible to do well for them and they feel the responsibility to do well for the business. Most owners put in many extra hours because of our responsibility to our employees and work extra hours for them. It ain’t easy.

George owns a jewelry store on Main Street in Annapolis.

When Sears raised the possibility that George’s reference to “slave plantations” might be viewed by some as “racially charged,” George replied, “In office I heard many comments speaking of business owners in disgust as if they are cold, heartless, inhumane.”  The full exchange appears below.

We get that as a business owner, George may not particularly enjoy the government setting his workplace practices.  But multiple polls find that huge majorities of Marylanders support paid sick leave.  Even Governor Hogan has introduced not one but two sick leave bills.  Are they all “leftist Democrats” who believe that business owners treat employees like slaves?  Or is Ron George as out of touch with Marylanders as he is inclined to the use of racially charged rhetoric?

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