Tag Archives: Adam Pagnucco

Washington Post Poll Shows Hogan Vulnerability

By Adam Pagnucco.

Governor Larry Hogan loves to discuss his high approval ratings in polls, which have usually been in the range of 60-70%.  But a new Washington Post poll that examines his reelection prospects shows that they are well below his approval numbers and provides hope to Maryland Democrats.

The Post poll of March 16-19 has sample sizes of 914 adults and 841 registered voters.  The margin of error for those two groups is 4 points, growing to 5.5 points for a half-sample and 6.5 points for the 317 respondents who live in Maryland’s D.C. suburbs.  These margins of error must be kept in mind when reading the poll –  effectively, only large gaps are meaningful for small sub-groups.

With that significant caveat in mind, let’s examine data on Hogan’s reelection prospects.  The Post asked respondents the following question: “Thinking about Maryland’s Governor’s race in 2018… if Larry Hogan ran for re-election as governor, do you think you would vote for him OR for the candidate nominated by the Democratic Party?”  Among adults, 39% said they would vote for Hogan and 36% said they would vote for the Democratic nominee, an advantage of 3 points for the Governor.  Among registered voters, 41% said they would vote for Hogan and 37% said they would vote for the Democrat, a margin of plus 4.  So far, this looks very much like Hogan’s 4-point victory in 2014.

But the sub-group results are more interesting.  We compiled the Post’s sub-group data on this question in the presentation below.

Let’s recall the margin of error estimates above.  Margins of 10-15 points or less for small sub-groups are probably not very meaningful.  That said, many of the Governor’s strengths are predictable.  He does well with Republicans, Conservatives, Whites and rural residents.  He is weak among Democrats, liberals, African Americans and Prince George’s residents.  One item that stands out is his strength with seniors, with whom he has a 17-point advantage.  Seniors are among the most reliable voters in any election.

Now let’s compare the geographic results of this poll with how the Governor actually performed in 2014.

The Governor appears stronger in the poll in Baltimore and the Washington suburbs, but weaker elsewhere than in 2014.  This could be statistical noise due to large margins of error.  But it could also be the result of tax fatigue in some Democratic strongholds, like Montgomery (where voters recently passed term limits by 40 points) and Prince George’s (where the County Executive proposed a 15% increase in property taxes two years ago).  It’s hard to believe that the Governor is actually weaker in Anne Arundel and Howard, both of which have Republican Executives who are strongly favored for reelection.  (And a random question: what pollster combines Baltimore City and County in one estimate?  C’Mon, Man!)

The big takeaway from the poll is this: Larry Hogan will not be coasting to reelection.  Maryland is simply not wired that way.  It has too many Democrats, African Americans, liberals, immigrants and people who are either employed by or do business with government at some level to give any GOP statewide incumbent a blowout win.  From a purely political perspective, the Governor deserves credit for his focused message of tax cuts, job growth and reform (like redistricting) while trying his best to avoid distractions from the right, the left and Washington D.C.  His approach gives him a path to victory in a rather blue state.  But if the Democrats begin preparing now, play smart and field a good candidate for Governor, Larry Hogan can be defeated.

Hogan Exploits Rape for Politics

By Adam Pagnucco.

Governor Larry Hogan is now exploiting the rape of a Rockville high school student to get a political edge over General Assembly Democrats.  It’s a clearly deplorable tactic.  But will it work?

Two big stories are colliding at the moment to further inflame the volatile issue of how to deal with illegal immigration.  First, the House of Delegates has passed a version of the Maryland Law Enforcement and Trust Act, a bill to limit state and local cooperation with U.S. Immigration and Customs Enforcement (ICE) so that immigrant communities will not hide from police for fear of arbitrary deportation.  Second, two students at Rockville High School have been arrested for raping a 14-year-old at the school and were subsequently alleged by ICE to be present in the country illegally.

Governor Hogan reacted with the Facebook post below, saying:

The post garnered 700 shares and 500 comments in its first five hours, accomplishing its purpose of throwing gasoline on the fire of the immigration debate.

The implication of the Governor’s post is that Montgomery County does not currently cooperate with federal authorities.  But in fact, it does.  The Washington Post’s Bill Turque summarized the county’s immigration policy a month ago:

Montgomery police operate under a 2009 directive that bars officers from conducting “indiscriminate questioning” of suspects, witnesses or prisoners about immigration status. Once in custody, all prisoners are fingerprinted, and arrest information goes into state databases, where it is available to ICE. If the agency identifies an undocumented prisoner, it can send the county a “detainer” notice, asking that the person remain in custody for at least 48 hours beyond the scheduled release date.

The county complied with detainers until 2014, when the Maryland attorney general’s office issued an opinion advising localities that they could be liable for damages by holding prisoners past their release date.

Since then, Montgomery officials said, the county honors detainers only if they are supported by a federal court order or warrant. It will also provide ICE publicly available release dates of undocumented immigrants who have committed felonies and whom the agency is seeking to deport.

The county has released hundreds of prisoners to ICE since 2012, though the pace of releases has dropped since the county stopped honoring 48-hour detainers.  The amended version of the House-passed Trust Act resembles county policy.  On the Rockville High School rape suspects, County Executive Ike Leggett said, “The county — consistent with our longstanding policy — will cooperate fully with ICE to see that the two are deported to their countries of origin.”

Why would Hogan insinuate that Montgomery County does not cooperate with federal law enforcement to protect its citizens?  Hogan knows that there is little support in the community for protecting violent criminals from deportation.  A new CNN poll finds that 60% of Americans believe the government should be “developing a plan to allow those in the U.S. illegally who have jobs to become legal residents,” but it also finds that 78% of Americans believe that “the government should attempt to deport all people currently living in the country illegally who have been convicted of other crimes while living in the U.S.”  Big majorities of every demographic group measured support the latter statement, including 64% of Democrats.

Depicting Maryland’s largest local jurisdiction as soft on crime is bad enough.  Exploiting a rape for political gain is even worse.  Such tactics expose just how hard the Governor can throw his elbows in partisan combat.  Forget about engaging with General Assembly leaders to develop good public policy; the Governor has never been interested in that.  But the cold political truth is this:

If Hogan can get away with characterizing Democrats as protectors of rapists and other criminals, he wins.

Will You Be Paying Dan Snyder?

By Adam Pagnucco.

The Washington National Football League franchise is perhaps the only organization in America that could make Donald Trump’s White House seem like a smoothly running model of efficiency.  The club’s savage firing of its General Manager, the subsequent exodus of red chip starters like Pierre Garcon, DeSean Jackson and Chris Baker and the failure to sign star quarterback Kirk Cousins to a long-term contract have brought the franchise to its worst point in decades.  But here’s the kicker, folks.

One of these days, whether you want to or not, you could be paying for all this.

Daniel M. Snyder, the current majority owner of the Washington franchise, has often been described as the worst owner in pro sports.  Part of this is because of the team’s woeful performance on the field.  Snyder has owned the franchise for 18 years, over which it has compiled a 125-162-1 record, six winning seasons and only two playoff wins after winning three Super Bowls under the prior ownership.  The club just posted its first two consecutive winning seasons since 1991-1992 and the owner reacted by annihilating the team’s architect.  But it’s the franchise’s activities outside of the stadium, characterized by team President Bruce Allen as “winning off the field,” that are truly eye opening.  Consider this.

  • The team sued 125 season tickets holders between 2004 and 2009 to force them to honor their purchase contracts even though many were in financial distress. One of them was a 72-year-old retiree who claimed that the team’s judgment against her would force her into bankruptcy.
  • In 2006, the team tried to profit from 9/11 by selling “Pentagon Flag Hats” which featured “the team’s trademark curly ‘R’ in gold with a patch in the shape of the Pentagon and the colors of the American flag sewn on the side.” The club was the only one in the NFL to try to sell such merchandise.

  • Unhappy with negative coverage, Snyder has been buying up local media for years. It’s hard for journalists to criticize the team when they are on the owner’s payroll.  Snyder reacted to a harsh article by the Washington City Paper’s Dave McKenna by suing the newspaper and the journalist, an action he later dropped.

We could go on and on and ON.  But we know what you’re thinking.  I’m not a fan of the team, you might say.  Why should I care?

Because soon you could be paying for all this.

Dissatisfied with his twenty-year-old stadium in Landover, Snyder is now in the hunt for a new facility somewhere in the D.C. area.  The District of Columbia, home to the franchise in its glory years, is an iffy possibility given that the current Mayor has branded the team’s nickname as “offensive.”  Virginia Governor Terry McAuliffe, an enthusiastic dealmaker, is “in a hurry” to land the team before he leaves office.  And Maryland Governor Larry Hogan has said, “We will do whatever it takes to keep them.”  That could lead to a bidding war, and an expensive one at that.  NFL teams have extracted billions of dollars in public subsidies for their stadiums over the years.  Las Vegas has offered $750 million in tax money to the Raiders to entice them to move from Oakland.  And St. Louis, which just saw the Rams move out, still owes millions in bond payments on its now-empty football stadium.

Hogan loves corporate welfare, having approved millions in disbursements to Marriott and Northrop Grumman.  But those companies at least employ thousands of people in Maryland.  Snyder’s franchise is headquartered in Ashburn, Virginia and his millionaire players are almost all Virginia residents.  NFL teams are dubious candidates for public investment at best since most of them play just ten home games a year, but the Washington team’s Virginia ties make subsidizing it even more questionable.

So what can you do about this?  Snyder is only 52 years old, so he could be the team owner for decades to come.  But Hogan is another matter.  If the Governor insists on throwing hundreds of millions of dollars at this poor excuse for a franchise, you will have the last word in next year’s election.

Just do what Dan Snyder does and fire him!

Trone Running Ads on Twitter

By Adam Pagnucco.

A Seventh State reader sent us a screenshot of a Twitter ad run by Total Wine co-owner and former CD8 Congressional candidate David Trone in the early hours of March 16.  The reader does not follow Trone’s account and the term “promoted” at the bottom of the screenshot clearly indicates its status as an ad.

Trone is known to be considering a future candidacy.  He told Bethesda Magazine’s Lou Peck that he is “focused very heavily right now” on looking at a race for Montgomery County Executive.  He has polled on the race at least once and says openly on his website that he is exploring it.  The Twitter ad joins this evidence to suggest that Trone could very well be on the ballot again.

Hell No!

By Adam Pagnucco.

A state commission charged with examining changes to Maryland’s public school funding formulas is sifting through recommendations for improvement.  And in the early deliberations, one big loser stands out:

Montgomery County.

The State of Maryland is a major player in public schools funding.  In FY17, the state will send $5.5 billion in operating aid to local school districts, about a third of its general fund budget.  MCPS gets 28% of its operating budget from the state.  Prince George’s County Public Schools gets 57% of its budget from the state.  In total, state aid accounts for 48% of Maryland public school budgets.

The state’s generous K-12 spending is driven by formulas dating back to 2002, when a state commission led by Howard University professor Alvin Thornton (commonly known as “the Thornton Commission”) proposed massive new investments in education.  These investments have helped rank Maryland’s public schools among the nation’s best.  Now another state commission chaired by former University of Maryland System Chancellor William E. Kirwan is reexamining the state’s funding formulas to see if they can be improved.  And here is where things are starting to go badly wrong for MoCo.

A consultant paid by the Maryland State Department of Education recently completed a two-year study on the state’s funding formulas.  In the interest of promoting “adequacy” in public school spending for students across the state, the consultant made several recommendations for changing the funding formulas which are now being examined by the Kirwan Commission.  One of them is that Montgomery County should get a 63% cut in state aid (a reduction of $354 million) while local taxpayers should pay 60% more (an increase of $842 million) towards MCPS.  Montgomery County Council Member Craig Rice, a member of the commission, said “that would be devastating” and termed the suggested local dollar increase for MCPS “impossible.”  Indeed, the County Council just levied a 9% increase in property taxes in part to increase funding for MCPS.  The consultant’s recommendations don’t just apply to MoCo: they would phase out all state aid for schools in Kent, Talbot and Worcester Counties while sending massive increases to St. Mary’s, Harford, Charles, Calvert and Prince George’s.

MoCo is already short-changed on state aid because of wealth formulas that disadvantage the county because of its high property values and high incomes but don’t recognize its high cost of living.  The result is that MoCo taxpayers get back just 24 cents for every dollar in taxes they pay to the state.  The state average for all residents is 42 cents.  Howard County, which has a higher average household income than MoCo, gets 30 cents.  Only Talbot and Worcester Counties get back proportionately less than MoCo.  If anything resembling the consultant’s report winds up being recommended by the Kirwan Commission and passed into state law, this imbalance will get a lot worse.

Your author has been told that the report is merely a “conversation starter” and thus is irrelevant.  But we are reminded of the last conversation the state had about public school funding.  For decades, the state covered the cost of teacher pensions as part of its commitment to K-12 education.  The program was particularly valuable to MoCo, which has higher teacher compensation costs than other jurisdictions because of its high cost of living.  A decade ago, state leaders began to have “conversations” about having the counties pay these costs despite the fact that Boards of Education, not county governments, set teacher compensation packages.  A spokesperson for the Speaker of the House said it was “a philosophical argument that we definitely need to have.”  In 2010, almost all MoCo state legislators promised to oppose a shift in their election campaigns.  But just two years later, Governor Martin O’Malley proposed a partial pension funding shift, backed by both the Speaker and the Senate President, and most MoCo lawmakers voted to support it.  The cost of the shift to the Montgomery County Government increased steadily from $27 million in FY 2013 to $59 million this year, with $6 million offset by the state.  This far exceeds the cost to any other local government and is more than a third of the amount collected by the county’s recent 9% property tax hike.  The county government now pays more for teacher pensions than it does for libraries, recreation, courts, IT, housing or environmental protection.  Its teacher pension payments easily swamp any money earned from the liquor monopoly, which will return $21 million to the general fund this year.

So goes these conversations.  Now that this new conversation has started, here is a suggested response from all of our state legislators and county leaders to this consultant’s report.

HELL NO.

Give Kathleen Matthews a Chance

By Adam Pagnucco.

Former WJLA anchor and Congressional District 8 candidate Kathleen Matthews has been picked as the Interim Chair of the Maryland Democratic Party.  And as someone who was asked to run by the party’s senior elected leadership – namely, U.S. Senators Ben Cardin and Chris Van Hollen and Representative Steny Hoyer – she seems likely to be named the four-year Chair as well.  That has set off a round of protest among some liberals in the party, with echoes of last year’s primary battles.

Two comments are noteworthy.  First, former Montgomery County Council Member Valerie Ervin said that Matthews’s appointment “missed an opportunity to open up the space for a new and different kind of leadership.”  That was essentially the rationale for the U.S. Senate campaign of Ervin’s good friend, Donna Edwards.  Second, Maryland Matters columnist Josh Kurtz blasted Matthews as “an especially thin reed” and “the wrong candidate at the wrong time” who could not connect with either progressives or Hogan voters.

In evaluating these criticisms, it’s worth contemplating just how much trouble Maryland Democrats are in right now.

  • Governor Larry Hogan has rung up a string of job approval ratings of 60-70% or more, including majority approval in some polls among Democrats. He is on pace to raise tens of millions of dollars for his reelection campaign.  He is absolutely dominant in social media.  And he is only seven GOP votes away from having his vetoes sustained in the House of Delegates.  If Hogan returns to Annapolis with enough Republicans to support his vetoes, Maryland will have a real two-party state government.
  • Outside Annapolis, the Democrats’ hold on county offices has collapsed since the 2002 elections. The Democrats are almost extinct in most of Western Maryland, the Eastern Shore and Harford County.  The Republicans firmly control Anne Arundel and are competitive in Baltimore County.  The Howard County Executive is a Republican.  The Democrats dominate in Baltimore City, Montgomery, Prince George’s and Charles.  That’s about it.
  • The Maryland Democratic Party apparatus has degraded. It could not help Anthony Brown get elected Governor in 2014.  Some local parties complain about lack of support.  The party’s federal receipts in the 2016 cycle ($2.8 million) were the lowest in any two-year cycle since 2004.  The party’s state-level account raised just $6,650 last year, about one-eighth of what the Republicans raised.  There is little in the way of an aggressive communications program on the Governor’s record in office.  Individual Democratic state legislators complain about issues like Hogan’s Facebook page and his executive order on Labor Day, neither of which will result in electoral harm to the Governor.  The party lacks a battle plan for taking on the Governor other than associating him with Donald Trump.  It needs a plan, and fast.

Enter Kathleen Matthews.  As a candidate in CD8, she did a lot of things right: raising money, getting the Washington Post endorsement and running a competent, professional campaign.  She lost because she did not have David Trone’s money, did not spend ten years building a grassroots base like Jamie Raskin and did not sufficiently address local issues.  Since the campaign, she has played a key role in helping women run for office through Emerge Maryland, unquestionably a hugely important exercise in the Era of Trump.  Let’s recognize that unlike many other losing candidates who disappear after the election, Matthews has remained engaged.

Some of the criticisms of Matthews relate to her positions and conduct as a candidate.  But Matthews is not going to be a candidate for government office if she is Chair of the party.  Other people will run for Governor, state legislature and county office and they will face the judgment of the voters.  As Chair, Matthews’s job will be to raise money and rebuild the party’s communication and field capabilities.  She is as plausible a choice as anyone to accomplish those tasks.

Consider this.  One of the most effective techniques of political communication is story-telling.  Imagine a video interview with a Baltimore City teacher or family affected by Hogan’s cuts to city schools.  Or an interview with a provider of developmental disability services who would earn fast food industry wages under Hogan’s budget.  Or a profile of a family who would lose Affordable Care Act health insurance coverage while Hogan stands idly by.    Or a story about a positive initiative from a local Democratic elected official fixing a problem for constituents.  Imagine a mass email and social media program spreading these pieces to hundreds of thousands of voters.  Who in the entire state party is better suited to this kind of video story-telling than Kathleen Matthews?

Of course, we’re the Democrats.  We often fight harder against each other than against Republicans.  We could criticize Matthews as not liberal enough, not working class enough or not local enough.  We could keep fighting the Bernie vs Hillary battles, the Donna vs Chris battles or the Tom vs Keith battles.  We could keep arguing over who’s perfect and who’s not.  Sure, let’s do that.  Hogan would love it.  That’s exactly what he wants us to do.

Or we could unite all of our various factions, our passions and our abilities and take our case directly to the streets of Maryland.  We could spread far and wide what we know to be true, which is that Maryland can do a lot better than Larry Hogan and Donald Trump.  And we could take advantage of the fundraising and media skillsets that Kathleen Matthews has to help us do it.

Democrats of Maryland, the choice is yours.

Will Taxpayers Fund Ficker’s Next Campaign?

By Adam Pagnucco.

As MCM and Seventh State have reported, MoCo political heckler Robin Ficker is running for County Executive.  That’s not shocking – Ficker has a long history of running for office and almost always losing.  What’s new is that Ficker is planning on acquiring a new source of campaign funds.

You, the public.

Ficker’s campaign website explicitly refers to the county’s new public financing system, under which the county matches campaign contributions made by individual residents (but not PACs, corporate entities or non-residents).  The system is opt-in; candidates can use the traditional financing system if they wish.  Ficker created a public financing account to run for Executive on February 8.  But that doesn’t mean he will necessarily get public funds.

Ficker’s campaign website home page.

The county’s system does not distribute taxpayer money to everyone who participates.  Instead, it sets up a number of thresholds candidates must reach before they are eligible for public matching funds.  Under the law, a candidate for Executive must receive at least 500 contributions of $150 or less from county residents totaling at least $40,000 before he or she is eligible for public funds.  The candidate cannot accept money from PACs or businesses and cannot take individual contributions of higher amounts.  Once eligible, the candidate can collect up to $600 in taxpayer funds for each $150 contributed by an individual.  Lesser matching amounts apply to smaller contributions on a sliding scale.  Lower thresholds and different match levels apply to those running for County Council at-large and district seats.

Could Ficker get public money?  Ficker has used two campaign accounts over the last decade, the Robin Ficker for Homeowners Committee (which he used in two runs for County Council) and the Fickers for 15 Slate (which he used to run for the General Assembly along with his son in 2014).  The two accounts together raised $262,762.  Of that amount, Ficker self-financed $259,108, or 99% of his take.  A total of 33 individuals other than Ficker gave to the two accounts.  So Ficker has a long ways to go to get public money.  However, he does plan to use his term limits petition information to raise contributions.  Ficker gathered 17,649 signatures.  If just three percent of those folks contribute $150 or less to his campaign, Ficker will qualify for public matching funds.

And so here is the cost of public campaign financing.  If taxpayers are to fund the campaigns of candidates they might support, they may also have to fund the campaigns of those they do not.  Even the clown prince of political hecklers.  Even Robin Ficker.

Ike Leggett’s Dump Fire

By Adam Pagnucco.

No one knows exactly when the worst dump fire in Montgomery County history started.  It was first reported to authorities on October 22, 1994.  A 40-foot high pile of trash at the Travilah Road dump had ignited and begun spreading airborne foulness throughout the vicinity.  The Washington City Paper reported, “The slow smolder spewed clouds of acrid smoke—filled with floating ashes and shreds of trash—and a putrid odor that engulfed the North Potomac area for miles around. The noxious fumes temporarily shut down Stone Mill Elementary School and forced residents from their homes; some had to take temporary refuge in motels.”  More than 200 people reported respiratory problems.

Incredibly, the county government did not act immediately to put the fire out.  Rather, it wanted dump owner Billy Mossburg and his family to put it out themselves despite their long history of bad blood with both the county and their neighbors.  The Washington Post reported, “The county doesn’t have the equipment to do the job, and it’s better for the company to spend its money under county supervision than for the county to spend tax money and bill Travilah Recovery later, said Capt. Ray Mulhall, a fire department spokesman.”  The county posted two environmental inspectors and three fire officials to the site to “ensure everything is done right.”

Internally, the administration of outgoing County Executive Neal Potter debated what to do.  Meetings of county officials went on for two hours or more without resolution.  Some in the administration worried about liability.  Others were concerned about who would pay to put out the fire.  Some worried about the difficulty of getting trucks into the dump or whether lights could be installed for night-time fire-fighting.  Just as a course of direction seemed in reach, someone would bring up more questions and the meetings would resume.  And the fire kept burning.

It was Paralysis by Analysis, then and now.

County Executive Ike Leggett has a dump fire, too.  It is otherwise known as the Department of Liquor Control (DLC).  Maligned for many years for its poor service to licensees and consumers, it was the subject of a landmark Washington City Paper story during Leggett’s first year in office.  The DLC is not a threat to public safety as Billy Mossburg’s dump once was.  But it chases away consumers, stunts the county’s restaurant industry and costs the county and state nearly $200 million a year in economic activity.  After a number of scandals including employee theft, employees drinking and driving on the job and use of an inventory system run with sticky notes, the County Council proposed a bill allowing private distributors to fulfill some special orders.  Delegate Bill Frick (D-16) went further, proposing a bill that would have allowed voters to decide whether to continue the liquor monopoly.  After initially supporting the council’s bill, Leggett opposed both of them and promised that he would fix the DLC through a task force.

The result of the task force?  Paralysis by Analysis, of course.  The task force’s eleven members included just two licensees and no consumers.  It had three meetings during which invited speakers extolled the benefits of government liquor monopolies.  It concluded with no task force statement and no proposal.  The administration completely ignored a proposal to recover DLC’s profits and pretended for months that the proposal never existed.  The Executive offered a tweak that no one else supported and later withdrew it, alleging that DLC’s problems were solved.  This is despite the fact that DLC suffered massive supply failures during the Christmas and New Year’s Eve week the prior two years.  On each occasion, Leggett defended the liquor monopoly just prior to its meltdowns.

The pattern here is the same as the reaction of County Executive Neal Potter to the Travilah dump fire.  Be cautious.  Worry about money.  Pretend that things aren’t so bad.  Play for time.  Maybe the problem will go away by itself.  Maybe public interest will move on to something else.

In the end, the Travilah dump fire was undone by an event it could not burn away: an election.  Incoming County Executive Doug Duncan raced from his inauguration directly to the Executive Office Building and demanded that county officials do everything possible to put out the fire.  Eight days later and roughly seven weeks after it was first reported, the fire was out.  The county later sued the dump owner to recover the cost of fighting the fire.

Here is the great lesson of the Travilah dump fire for today’s dump fire at the DLC.  Meetings and task forces won’t put it out.  Neither will consultants, financial analyses, promises, tweaks, defensive blog posts or PR campaigns.  One thing is needed to deal with the liquor monopoly.

Bold action.  From a new County Executive.

A Reply to the County Executive on the Liquor Monopoly

By Adam Pagnucco.

Thanks to County Executive Ike Leggett for responding to my post on how his administration ignored my proposal to make up revenue for the Department of Liquor Control (DLC).  I stand by my piece and reply to several of his points as follows.

1.  Contrary to the Executive’s contention, my proposal was in fact never analyzed during the time of the DLC task force.  His consultant’s report never mentions it despite the agreement of his staff to include it.  Try finding my proposal, my name, a reference to Seventh State or an analysis of my idea for using cable funds to finance DLC’s debt in the report.  They are simply not there.

2.  The Executive alleges that I made a “basic math mistake” by omitting DLC’s debt service from the revenue needing to be replaced.  Not at all.  Anyone reading my proposal can see that I did not omit it.  I simply dealt with it separately from the return DLC sends to the operating fund since the two revenue streams require different fixes.

3.  The Executive is correct that the state has imposed numerous unfunded mandates and fees on the counties in recent years.  I should know.  I helped organize a campaign against the teacher pension shift in 2012 that included county governments, school boards, community groups and elected officials in both parties.  But rather than merely complain about the state, let’s recognize that it has a role to play in dealing with the liquor monopoly and the revenue question since DLC was created in state law.  A visionary Executive with a plan to transition away from the liquor monopoly would be invaluable in securing the state’s cooperation.

4.  The Executive is wrong about my proposal to use cable funds to service DLC’s debt in two ways.  First, he claims that I proposed raising the 5% fee the county currently levies on cable bills.  That’s not what I said, and in any case, the fee is already at the maximum level allowed by federal law.  Second, he claims that “Cable fund money cannot legally be used for purposes other than cable-related needs: technology and communication purposes. We cannot take Cable Funds to build roads and schools.”  That is absolutely wrong.  The county’s own cable lawyer advised the County Council in 2012 that the county has discretion over how the 5% fees can be spent, but not on amounts collected over that level or on behalf of municipalities.  Those amounts not subject to county discretion were excluded from my analysis.  In fact, the Executive transfers some money from the cable fund to the general fund right now.  The approved FY17 budget states, “Funds are transferred from the Cable Fund to the General Fund to cover the cost of certain administrative services provided by the County to the Cable Fund ($654,353) and other contributions ($5,163,433).”  That’s right, folks, the Executive’s statement in his reply to us is contradicted by his own budget.

Why is the Executive so resistant to the idea of using cable funds for DLC’s debt service?  Perhaps one reason is because cable fees are the source of millions of dollars for County Cable Montgomery and Montgomery Community Media, two public “news” outlets that provide “coverage” for county elected officials.  Try to locate an unflattering “news” article about county elected officials in any of the “coverage” provided by these outlets.  Good luck finding any because one of them is part of county government and the other is a non-profit that gets more than 80% of its budget from the county.  What’s the better use for this money?  Financing Pravda-style public relations or helping to fix the liquor monopoly?

5.  The Executive notes that Worcester County’s former monopoly on spirits may be coming to an end.  He is probably right about that.  Worcester’s monopoly, while not including wine and beer as Montgomery’s does, did an even poorer job of customer service than MoCo and was busted by the Comptroller for breaking numerous laws in 2010.  After Worcester’s monopoly was opened to competition in 2014, the county lost 42% of its wholesale business after a year (while keeping 96% of its retail volume) and its leaders may decide to exit alcohol sales altogether.  But if they do so, it will be because they have decided they can’t compete with private distributors.

That seems to be the rationale the Executive has for shielding DLC from competition: since (in his view) it can’t compete, competition shouldn’t be allowed.  How is that a good thing for licensees and consumers?  Isn’t there a chance that open competition could cause DLC to improve while making private wholesalers pick up their game?

Also, the Executive says, “In the liquor business it is the suppliers/manufacturers who decide which ONE distributor/wholesaler will sell their products.”  That may be true under most circumstances in Maryland, but COMAR 03.02.01.12 exempts county liquor dispensaries from this arrangement.  In other words, state law allows manufacturers to sell to both county liquor sellers and private distributors.  That is what happens now.  In fact, DLC couldn’t exist without this exemption.  Competition between DLC and the private sector can occur if the state allows it.  The Executive simply opposes it.

The County Executive’s response shows that he is sensitive to criticism on this subject.  If only that were enough to make real progress on the county’s shameful liquor monopoly.

Exclusive: Ike Leggett Responds on the DLC

Today, I am pleased to present a guest blog by Montgomery County Executive Ike Leggett:

REALLY Setting the Record Straight…

Adam Pagnucco’s blog entry, Setting the Record Straight, does anything but set the record straight. Let’s be clear – I did not “throw in the towel” on privatizing the County’s Department of Liquor (DLC). The record clearly shows that I introduced State legislation that would have privatized our DLC while also protecting and maintaining the significant revenue stream of over $30 million a year it contributes to the County budget. Some on our County Council and in the State Delegation felt that, given the progress we’ve seen in DLC since we brought in a new management team with considerable liquor industry experience, and a number of substantive changes we had made to the organization already, we should give them additional time to make even greater improvements.

Philosophically, I am not opposed to privatization, but I also stand by my statement that not one of the critics of the County’s Department of Liquor Control (DLC) put forth a viable privatization proposal that would hold the County budget harmless by replacing the DLC’s profits. The County DLC is a taxpayer asset that produces a net profit of over $30 million a year and to privatize without replacing the revenue would be a disservice to our taxpayers.

After months of soliciting proposals, not one person or organization offered a viable plan to privatize DLC while maintaining the approximately $30 million in profits, including groups that assured us they would. While Mr. Pagnucco claims that his plan would have done so, his route to privatization, simply put, was based on faulty assumptions.

Mr. Pagnucco’s proposal was not ignored. It was carefully reviewed by us in the County and it was also reviewed by a consultant hired to review privatization options It was judged not viable because the underpinnings of the proposal were either unworkable, not legal or just plain wrong. Here’s why:

First, Mr. Pagnucco made a basic math mistake. He estimated that the County receives $20 million in “profit” in FY17, therefore starting with the faulty premise that to make the County whole, only $20 million in DLC profits each year need to be replaced. Unfortunately, he ignores that in FY17, the Department of Liquor Control earmarked $20.7 million for transfer to the General Fund and another $10.9 million to pay debt service on Liquor Bonds – bonds that have paid for road, and school construction in our County.

Therefore, the revenue to be replaced equals $31.6 million, not $20 million.

Mr. Pagnucco’s proposal then makes the argument that there will be a huge economic spinoff from privatizing by increased sales. He relies on a report done by the Comptroller’s Bureau of Revenue Estimates, which was itself built on an amazing number of alternative facts. But, for the sake of argument, say it was a sound analysis. Even Mr. Pagnucco admits that the tax revenue estimates presented in the report actually proves the county’s point that opening the alcohol market really only benefits the State coffers. He himself noted the county would receive less than $1 million of the revenue, while the rest of the estimated $35 million in economic spinoff benefit would go to the state’s general fund.

So he suggested that we pass a State law to compel the State to share its new revenue with us. The consultant, and everyone familiar with how Annapolis works, rightly pointed out that first, it requires the state to be a willing partner, and second and more importantly, there exists a legitimate concern about revenue sharing with the State. What the State giveth, the State taketh away. Just in the 1990s alone, the following County revenue sources were reduced or eliminated by the State:

  1. Liquor tax revenue sharing: eliminated; loss of $4.4 million to counties
  2. Beer tax revenue sharing: eliminated; loss of $4.2 million to counties
  3. Tobacco tax revenue sharing: eliminated; loss of $12.7 million to counties
  4. Property tax grant: eliminated; loss of $82.5 million to counties
  5. Teacher social security: eliminated; loss of $145 million
  6. Financial institution franchise tax sharing: eliminated; loss of $17 million to counties
  7. Transportation taxes revenue sharing (not highway user): eliminated; loss of $19.6 million to counties
  8. Abandoned property revenues: eliminated, loss of $5 million to counties
  9. Corporate filing fee revenues: eliminated; loss of $1.6 million to counties
  10. Security interest filing fee revenues: eliminated; loss of $1 million to counties

Mr. Pagnucco claims that the County can replace the bond money by raising our cable franchise fee and siphoning off dollars from the Cable Fund. With this statement he negates his own argument that his proposal would be “cost neutral” since it would in fact require raising fees.

But what he more importantly failed to realize is that Cable fund money cannot legally be used for purposes other than cable-related needs: technology and communication purposes. We cannot take Cable Funds to build roads and schools. Plus, utilizing this revenue would just create a budget hole elsewhere.

Another faulty assumption in Mr. Pagnucco’s proposal is using Worchester County as an example of how privatization in Montgomery County would work smoothly. He claims that after privatizing its liquor business, Worchester experienced reduced revenues but that the loss was negligible and that such a loss would equate to a mere $5 million per year for Montgomery. However, in reality, the unhappy ending to the Worchester story of privatization is that Worchester County is now going out of the liquor business forever and will generate exactly zero revenue for its budget in the future.

The final faulty assumption in Mr. Pagnucco’s proposal is his assumption that the county could just open up more liquor stores, which he notes would create additional profits.  See paragraph above: Worchester’s unhappy ending is testament that it just won’t happen.

Finally, Mr. Pagnucco says he was not proposing getting rid of the DLC – he just wanted to provide competition (i.e.; “end the monopoly”) by allowing our licensees to decide from whom to purchase products. But that’s not how it works. In the liquor business it is the suppliers/manufacturers who decide which ONE distributor/wholesaler will sell their products. The so-called monopoly doesn’t end, it simply transfers from the County to the private sector. Why turn over this asset that belongs to our county residents to the private sector for nothing?

We should be looking forward, not back. The DLC is, as they say, under new management. It has a new director, and is on course to continue making positive changes to improve operations and customer service.

Ike Leggett
County Executive