Category Archives: Adam Pagnucco

Adam Pagnucco, taxes

State Audit: Thousands of MoCo Homeowners Overcharged on Property Taxes

By Adam Pagnucco.

The state’s Office of Legislative Audits (OLA), which is part of the General Assembly’s Department of Legislative Services, is one of the most useful offices in all of state government. Its many audits of state agencies are often must-reads for those who care about the proper functioning of government. And this week, OLA dropped a bombshell:

Because of mistakes made by the state in calculating homeowner tax credits, thousands of MoCo homeowners have been overcharged on their property taxes.

In most states, local governments assess property values, send property tax bills and handle appeals. Maryland uses a hybrid system in which the State Department of Assessments and Taxation (DAT) calculates assessments and tax credit values which the local governments use when they send tax bills. The state handles appeals.

OLA audits agencies all over state government. On October 5, OLA released an audit of DAT that contained many troubling findings. Of most significance is its finding that a mistake in calculating homeowner tax credits resulted in thousands of MoCo homeowners being “improperly” – yes, that’s the word OLA used – overcharged on taxes.

OLA’s Finding 5 starts with this statement.

DAT did not ensure HTCs [homeowner tax credits] were properly calculated. As a result, HTCs awarded to thousands of homeowners in certain jurisdictions were improperly reduced by at least $4.4 million in fiscal year 2019. Most HTCs are calculated automatically by DAT’s automated system based on applicant income data entered in the system by DAT employees. Certain HTCs are calculated manually by DAT employees when a homeowner does not receive an individual real property tax bill (such as in the case of a housing cooperative) or for new home purchases where the tax credit must be prorated for less than a year.

The improper HTC calculations that we address in this finding were the result of DAT’s incorrect treatment of certain additional tax credits offered by certain local jurisdictions. Because each local jurisdiction may or may not provide its residents with other tax credits, which are in addition to the HTC provided for in State law and are paid for by the State, each jurisdiction could be impacted differently or not at all by this finding.

Let’s recall that Montgomery County offers MANY property tax credits and exemptions.

OLA continues:

DAT did not periodically review the programming of its automated system to verify that it was calculating HTCs in an accurate manner and in accordance with the law. As a result, DAT was not aware that it had incorrectly programmed the system and that HTCs for residents of at least one jurisdiction (Montgomery County) were not being calculated consistent with the law as further described below…

DAT’s automated system improperly deducted the income tax offset credit (ITOC) administered by Montgomery County from homeowners’ State and County real property tax liabilities, resulting in the HTCs awarded to homeowners in Montgomery County being improperly reduced. Specifically, individual homeowners under the age of 65 had their State and County HTCs improperly reduced by amounts up to a total of $692, and homeowners at least 65 years old had their HTCs reduced by amounts up to a total of $1,038. Based on our analysis of HTC applications processed in DAT’s automated system for Montgomery County residents in fiscal year 2019, the improper reduction of homeowners’ tax liabilities resulted in reduced HTCs awarded to 5,388 applicants totaling $4.4 million. We determined that, based on the automated system’s programming for Montgomery County, DAT improperly calculated HTCs dating back to at least 2005 in the same manner. We could not readily determine the amount by which HTCs were improperly reduced for years prior to fiscal year 2019…

DAT received advice from its legal counsel on January 23, 2019 that confirmed our determination that DAT’s HTC methodology commented upon above was incorrect.

OLA offers this example of DAT’s miscalculation of the homeowner tax credit.

As the above example shows, the state’s miscalculation of the homeowner tax credit increases the homeowner’s tax liability, resulting in an overcharge on property tax bills. One of OLA’s recommendations was that DAT “consult with legal counsel on how to proceed regarding any refunds resulting from the HTC miscalculations including the $4.4 million noted above.”

DAT (which refers to itself as SDAT) was not having any talk of refunds. DAT responded:

SDAT disagrees with the sentiment of impropriety in the statement “HTCs awarded to thousands of homeowners in certain jurisdictions were improperly reduced by at least $4.4 million.” Before OLA began their audit, SDAT made a policy determination that increased the amount of tax credits received by certain jurisdictions in future years. Subsequent conversations with SDAT’s Assistant Attorney General confirmed that this is the appropriate course of action moving forward, but the Department does not feel as though prior year calculations were inaccurate as they were consistent with the Department’s practice at the time and implicitly upheld by PTAAB and Maryland Tax Court decisions.

OLA shot back:

DAT’s statement that the PTAAB and the Maryland Tax Court “implicitly upheld” the specific calculation method we addressed in our report is not consistent with its position during our audit fieldwork or subsequent to the audit when we discussed the finding with DAT management. Furthermore, the statement is questionable since the specific calculation method we addressed was demonstrably improper, and our assessment that the calculation method was improper was consistent with advice DAT received from its legal counsel in January 2019 as noted in our report.

So the two agencies are deadlocked. OLA can’t force DAT to give anyone any refunds. But the General Assembly can and OLA is an arm of the legislature.

MoCo’s 8 state senators and 24 delegates need to get all over this like white on rice. Government bureaucrats don’t get to screw up, get caught and then say, “Sorry, we’re keeping the money.” If OLA’s findings hold up, our delegation must ensure that any MoCo homeowners who were overcharged must be identified and paid refunds.

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Adam Pagnucco, Economy, Unemployment

Instability Continues at WorkSource Montgomery

By Adam Pagnucco.

WorkSource Montgomery (WSM) is a non-profit designated by the county government as its workforce development organization. WSM helps match job seekers with employers through its job centers and a range of other services designed to enhance the functioning of the county’s labor market. It is funded with a combination of federal, state, county and private money. But at a time of the greatest need for its services – a devastating recession – WSM is in a leadership crisis that the county council is blaming on County Executive Marc Elrich.

The council’s dissatisfaction with WSM peaked last year after a number of revelations suggested that the organization was struggling to fulfill its mission. The council responded by passing legislation enabling – but not mandating – the designation of a “public educational institution” as the county’s workforce development organization, thereby potentially revoking WSM’s portfolio. The public educational institution the council had in mind was Montgomery College, but to date, my sources tell me that the college has not taken over WSM’s work. WSM survived but its CEO announced her resignation in August 2019.

Eventually, WSM landed Leonard Howie as its interim CEO. Howie is a well-regarded former state labor secretary who also held senior positions in the U.S. Department of Labor. The council enthusiastically supported him and told the executive branch that they wanted Howie hired as the full-time CEO. Technically, the CEO reports to WSM’s board but informally the county executive has influence over the hiring process. Furthermore, WSM’s relationship with the executive branch is critical to its ability to operate. The council was optimistic that Howie could get WSM to a better place.

But something went wrong and Howie is leaving. Multiple sources report that Elrich wanted another candidate to be considered but that person withdrew. According to the council, when WSM offered the full-time job to Howie, he also withdrew. Now WSM is back to square one.

Three council members – Sidney Katz (the current council president), Craig Rice (the education and culture committee chair) and Hans Riemer (the planning and economic development chair) – wrote a blistering letter to Elrich accusing him of fumbling the ball. This quote from the letter conveys its tone:

As the County’s highest elected official, you are directly chartered with great responsibility for our workforce programming by the Federal and State government. To be here at this point, without a permanent CEO for Worksource Montgomery, with a skeletal staff and few if any programs in place during a period of unprecedented workforce change and high unemployment is causing tremendous distress for county residents, and is unacceptable.

Wherever the responsibility lies, the tumult within the agency is a huge problem for the county. According to the U.S. Bureau of Labor Statistics, MoCo’s unemployment rate was 6.8% in August – lower than the 9.0% reported in May but still double the county’s pre-COVID rates. Nearly 39,000 county residents are unemployed and seeking work. WSM’s functions are more badly needed than ever. In the wake of this incident, what highly qualified applicants will be interested in leading WSM now? That’s a question that has to weigh heavily on the county’s leaders.

The letter from Katz, Rice and Riemer to Elrich is reprinted below.

October 6, 2020

County Executive Marc Elrich
Executive Office Building
101 Monroe Street, 2nd Floor
Rockville, MD 20850

Dear County Executive Elrich:

As the Council President and Chairs of the Council Committees charged with overseeing workforce development policy in Montgomery County, we were disturbed to learn that Leonard Howie, former Maryland Secretary of Labor and presently the Interim CEO of WorkSource Montgomery (WSM), recently declined the organization’s offer to be named full-time CEO.

Since Mr. Howie was first announced as Interim CEO, Councilmembers have repeatedly and publicly expressed great confidence in his leadership. We have stated our belief that he has the ability to get our workforce programming back on track from the debilitating crisis of the past year and a half. Not only have Council members noted Mr. Howie’s capabilities, but when we were consulted in July about how we wanted to participate in a hiring process for the position, the Council communicated to your office and WSM’s chair our strong support for hiring Mr. Howie rather than reopening a hiring process.

Since learning about his planned departure, Councilmembers have heard conflicting information about the search process and reason for Mr. Howie’s decision. To discuss this issue and your process to ensure the County’s workforce development system is well-positioned for our residents as we seek to recover from COVID-19, a joint Planning, Housing, and Economic Development (PHED) and Education and Culture (E&C) committee session is tentatively scheduled for 1:30pm on Wednesday, October 28.

As the County’s highest elected official, you are directly chartered with great responsibility for our workforce programming by the Federal and State government. To be here at this point, without a permanent CEO for Worksource Montgomery, with a skeletal staff and few if any programs in place during a period of unprecedented workforce change and high unemployment is causing tremendous distress for county residents, and is unacceptable.

Below are questions that we ask you and your staff to answer in preparation for the upcoming meeting.

Please provide written responses before the meeting, so we can include them in the public record.

The Council has been actively and deeply involved in enhancing and improving our workforce development system. The second section of the memorandum details our more recent work for your reference.

Questions regarding WSM’s CEO search and future direction

● Can you provide a list of the actions your administration took to address the deficiencies in the County’s workforce development system from the announcement of Dr. Giles resignation as the WSM CEO to the announcement of Mr. Howie’s decision not to accept the position?

● What instructions did you or your staff provide to the Workforce Development Board regarding the CEO position for the organization?

● What were the reason(s) that Mr. Howie shared for his decision to not accept the board’s offer to be CEO of WSM?

● Does the Workforce Development Board have any additional vetted candidates for the CEO position?

● If there are no additional vetted candidates for the CEO position, what is the anticipated timeline and approach for the new CEO search?

● If a new CEO search must be conducted, what is your administration’s strategy and approach to ensure continuity in the organization’s mission and obligations?

● What is the status of the “combined” Workforce Development Board and the WorkSource Montgomery Board?

● What is your administration’s strategy and approach, generally, to the County’s workforce development system?

A recent history on the Council’s efforts to enhance the County’s workforce development system

The Council and its committees have conducted several discussions and worksessions on this topic since the new Council was elected in 2018. Below is an abbreviated history of the major items that were before the Council or its committees. This list does not include the numerous meetings between you and individual Councilmembers and our staff about this topic.

● The Council discussed the workforce development continuum on March 5, 2019. Many Councilmembers communicated their disappointment at the quality of the efforts of WSM since its inception in 2015. The Council indicated its support of reconstituting the Workforce Development Board as an immediate action by your administration to “right the ship.”

● To strengthen the Correctional Facility job center, the Council added resources to the Department of Corrections and Rehabilitation (DOCR) budget in the FY20 Operating Budget. Following the March 5, 2019 discussion and subsequent follow up by WSM, the Council was not satisfied with WSM’s efforts with the Correctional Facility’s job center and provided these critical resources to DOCR.

● The Council adopted legislation to expand its options to designate the County’s Workforce Development Entity in October 2019. The Council continued to be dismayed at the lack of urgency from your administration and WSM’s leadership to address the issues plaguing the County’s workforce development system. This legislation provided an option to change the designation of the workforce entity to a new organization should Council action be required.

● The joint committees (PHED and E&C) discussed an update with WSM and Mr. Fletcher, Assistant County Administrative Officer, on November 19, 2019. After nine months of engagement, it was unacceptable to learn from Mr. Fletcher that the executive branch lacked a detailed vision and that efforts to reconstitute the Workforce Development Board were still in process.

● The Council in various resolutions appointed your designated members to the Workforce Development Board in April and May 2020.

● The joint committees (PHED and E&C) received an update from WSM and Montgomery College about the County’s workforce development efforts, with particular focus on issues due to COVID-19 on June 18, 2020. The committees were thrilled with Mr. Howie’s efforts to orient the reconstituted Workforce Development Board and address the many of the previous deficiencies of WSM. The joint committees, and subsequently the Council, voiced their support for Mr. Howie to become the full-time CEO for the organization believing he would generate the workforce development product our County sorely needed.

Sincerely,

Sidney Katz
Council President

Hans Riemer
Chair
Planning, Housing and Economic Development Committee

Craig Rice
Chair
Education and Culture Committee

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Adam Pagnucco, budget, MCPS, taxes

Would Question B Harm Schools?

By Adam Pagnucco.

One of the key claims made by some opponents of Question B (Robin Ficker’s latest charter amendment on taxes) is that it will harm schools by limiting growth in property tax revenues. For example, former County Council Member Bruce Adams wrote on Maryland Matters: “Ficker’s amendment would not let even a unanimous council act to preserve our quality schools and services.” Former County Executive Ike Leggett also told MCM in an interview that it could “certainly impact schools.”

Is that true?

First, let’s remember what Question B would actually do. Right now, the county charter limits annual growth in property tax receipts to the rate of inflation (with a few exceptions) unless the county council unanimously votes to go over the limit. The last time that happened was in 2016, when the council voted to increase property taxes by 8.7%. Question B would remove the ability of the council to exceed the limit, thereby imposing an absolute cap on property tax revenue growth at the rate of inflation. (Question A, a competing tax limit charter amendment authored by Council Member Andrew Friedson, would raise far more revenue than Question B over time.) Because of Question B’s limit on revenue growth, some opponents criticize it for potentially damaging many different kinds of county services, including schools.

But school funding is different from most other kinds of funding when it comes to charter limits. The reason for that lies in a fight between the counties and the state back in 2012. At that time, the counties were struggling with the budgetary effects of the Great Recession and several of them had cut local per pupil school funding below the floor established by the state. The state responded by passing SB 848, which made a number of changes to the state’s maintenance of effort law on school funding. One of them allowed counties to circumvent their charter limits to fund school budgets. (State law preempts county charters.) The exact language of this part of the bill, which is now contained in Md. Education Code Ann. § 5-104(d)(1), reads:

Notwithstanding any provision of a county charter that places a limit on that county’s property tax rate or revenues and subject to paragraph (2) of this subsection, a county governing body may set a property tax rate that is higher than the rate authorized under the county’s charter or collect more property tax revenues than the revenues authorized under the county’s charter for the sole purpose of funding the approved budget of the county board.

That means that a county can exceed its charter limit for the purpose of funding its school budget. A majority of county council votes are all that is required to raise property taxes for MCPS’s operating budget regardless of what MoCo voters put in the charter.

Five counties in Maryland have charter limits on property taxes: Anne Arundel, Montgomery, Prince George’s, Talbot and Wicomico. Since the maintenance of effort law was changed in 2012, three of them – Anne Arundel, Prince George’s and Talbot – took advantage of their new authority under state law to circumvent their charter limits and raise taxes for schools. (Talbot did it three times.) Montgomery County Executive Marc Elrich proposed doing the same in his FY21 recommended budget, but the council rejected his tax hike. (It’s not a coincidence that then-budget director and current Chief Administrative Officer Rich Madaleno was one of the architects of the school funding exemption when he was in the State Senate.)

There are two ways in which Question B would indirectly affect MCPS. First, property taxes are a major source of revenue to pay off debt service, which is required to finance bonds issued for school construction. If reduced growth in property taxes impacts debt service, MCPS’s capital budget could become tighter. Property taxes also generate cash that goes into some school capital spending (like technology modernization). Second, county departments outside MCPS contribute ancillary services that benefit the schools. Examples include health and human services (school health nurses, health room technicians, childhood wellness, linkages to learning), police (crossing guards and school resource officers), libraries (research and internet resources) and recreation (sports academies). These services are not inside MCPS’s local appropriation and would be impacted by Question B.

Over time, Question B if passed would probably result in two pots of property tax money – one exclusively for the MCPS operating budget requiring a majority of council votes to increase, and another for everything else with growth capped at inflation. Smart people like Madaleno and the county’s budget analysts can figure out how to move money around to avoid the worst effects of this. Question B would still be a challenge to the county’s finances, a distortion to its budget process and an impediment to funding police, fire service, parks, libraries, road maintenance and more. That’s reason enough to vote against it. But the bottom line is that Question B would do far less to hurt MCPS than the rest of county government.

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Adam Pagnucco, campaign finance

Will the Council Make Public Financing More Expensive for Taxpayers?

By Adam Pagnucco.

As MoCo faces a crippling financial shortfall projected at $190 million this year and a billion dollars over the next six years, the county council will be considering increased spending in legislation tomorrow – on political campaigns. The issue at hand is a change in public financing matching formulas that would send more taxpayer dollars into politicians’ campaign funds.

As currently written, the county’s public campaign finance law sends matching funds to participating campaigns for individual contributions made by county residents up to $150. The current formulas appear below.

County Executive candidate

First $50 of individual contribution: matched by 6 public dollars for each dollar collected from a resident.
Second $50 of individual contribution: matched by 4 public dollars for each dollar collected from a resident.
Third $50 of individual contribution: matched by 2 public dollars for each dollar collected from a resident.

County Council candidate

First $50 of individual contribution: matched by 4 public dollars for each dollar collected from a resident.
Second $50 of individual contribution: matched by 3 public dollars for each dollar collected from a resident.
Third $50 of individual contribution: matched by 2 public dollars for each dollar collected from a resident.

In the current system, individual contributions are capped at $150 so no matching funds are made available for contributions greater than that amount. Individuals from outside the county may contribute up to $150 each but such donations are not eligible for matching funds. Contributions from entities other than individuals (like businesses and PACs) are prohibited for candidates in public financing. Self-funding of up to $12,000 from a candidate and spouse combined is permitted. Future contribution limits will be updated in future election cycles for inflation.

Bill 31-20, a package of changes to the public financing law, is on the council’s agenda for action tomorrow morning. For the most part, the bill makes a series of benign tweaks to the law. But it does one thing that increases the cost of public financing: it raises eligible individual contributions from $150 to $250 and creates a dollar-for-dollar public match to the hundred dollar increase. So for a candidate accepting a maximum individual contribution, the matching funds formula would be:

County Executive candidate

Old system: $150 individual contribution, $600 public matching funds, $750 total.
New system: $250 individual contribution, $700 public matching funds, $950 total.

County Council candidate

Old system: $150 individual contribution, $450 public matching funds, $600 total.
New system: $250 individual contribution, $550 public matching funds, $800 total.

How much more would this cost the taxpayers? That’s hard to estimate. The bill’s fiscal note assumes that everyone who gave the maximum $150 contribution in 2018 would give a $250 contribution if allowed and uses the 2018 election as a baseline. (Those are big assumptions, but the fiscal note is what it is!) Using those criteria, the fiscal note estimates that matching funds for $250 contributions would have generated an extra $487,034 in taxpayer costs in 2018, or a 9% increase.

Now let’s not set that number in stone. First, 2018 saw a genuinely contested county executive general election, a very rare event in MoCo politics. Second, there is no guarantee that 2022 will see as many candidates as last time primarily because there may be only one open at-large seat following three open at-large seats in 2018. Third, if Question C (which adds two district seats) passes, there will be more open seats, more candidates and more costs. So if passed, the bill’s extra costs could be higher or lower than the fiscal note’s estimate. But there will be extra costs compared to the current regime.

Why does the bill increase both the maximum individual contribution and the matching funds? There is no reason to believe that public financing levels are inadequate. Six of the nine sitting council members and the county executive used public financing two years ago. All of them faced opponents using traditional financing and still won. The winning candidate for county executive, Marc Elrich, raised $1.9 million in public financing combining the primary and general elections. Four council at-large candidates in public financing (Will Jawando, Evan Glass, Hans Riemer and Bill Conway) raised more than $300,000 each, which is comparable to past totals of leading candidates in the traditional system. Two more (Gabe Albornoz and Hoan Dang) raised more than $250,000. Jawando raised more than $400,000. Again, there is no shortage of money here.

As part of its process in considering the bill, the council surveyed eleven candidates who used public financing in 2018 on their views of necessary changes. Just three candidates recommended increasing the public matching amount and only two candidates recommended increasing the maximum donation. There was little demand for this cost increase. Nevertheless, it somehow made it into the bill. All three members of the Government Operations Committee supported raising the maximum donation from $150 to $250. Sidney Katz and Nancy Navarro voted in favor of a dollar-for-dollar match for the difference between $150 and $250 while Andrew Friedson voted against a funding match for the new hundred dollar increment.

Arranging for what could be a substantial cost increase in public financing – an increase that would be even larger if Question C passes – while at the same time adding council staff, refusing to fund collective bargaining agreements and perhaps making program cuts in the near future would not be a good look for the county council. The council is also being closely watched by advocates of Question B (which would cap property tax growth) and Question D (nine council districts), all of whom will use spending increases for politics to bolster their messages. Raising the contribution limit is one thing; it costs taxpayers nothing. But the council should hold off on changing funding formulas to spend more taxpayer money on their political campaigns.

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Adam Pagnucco, campaign finance, Will Jawando

Will Jawando, A Man with Options

By Adam Pagnucco.

Several astute readers noticed something interesting about last week’s post on Council Member Will Jawando’s fundraising email – it led to a website allowing contributions up to $2,500. Here is what the donation page looks like.

It’s perfectly legal for Maryland candidates for state and county office to collect contributions that large, so why is this interesting? The answer is that Jawando used public campaign financing two years ago, and that permits individual contributions up to a $150 maximum. On June 23 of this year, Jawando established a traditional campaign account listing himself as chair, his wife as treasurer and his council chief of staff as campaign manager. This account allows him to accept contributions from individuals, business entities, unions and other political committees (like PACs) of up to $6,000 each per cycle. Because it’s a traditional account, its contributions are ineligible for county matching funds under MoCo’s public financing program.

Two years ago, Jawando was hugely successful in public financing. He raised a total of $422,571 for both the primary and the general elections, including $304,084 in matching taxpayer funds. Both of those figures easily led the field of council at-large candidates in 2018. In the Democratic primary, Jawando finished second behind the race’s sole incumbent, Hans Riemer, in the race for four at-large seats. Jawando finished first in Legislative District 20 (where he ran a strong but unsuccessful campaign for delegate in 2014), first in Council District 5 (which overlaps with District 20) and first in Takoma Park, Downtown Silver Spring, Glenmont/Norbeck and the Silver Spring East County zip codes (20903, 20904 and 20905). He also finished first in majority-minority precincts and in precincts where African Americans comprised at least 25% of the population.

So if he was so successful in public financing, why switch to traditional financing? Traditional accounts offer numerous advantages to those who use them, including access to PAC and union money (both in-state and out-of-state), contribution limits of $6,000 and unlimited self-funding. (Public financing accounts limit self-funding to $12,000.) Best of all, traditional accounts can be deployed to any state or county race in Maryland. Jawando can raise money for this account, survey his opportunities and then use it to run for county executive, governor, lieutenant governor or for reelection to his current seat. In contrast, public financing candidates are limited to county office and must declare which office they are seeking because executive, council at-large and district council races have different matching funds formulas and thresholds. Traditional accounts are the way to go for a candidate keeping his or her options open.

Is Jawando going to pay a price for eschewing public financing? The answer is a big fat NO. District 5 Council Member Tom Hucker used traditional financing in his 2018 election and blew out a rival who used public financing. Ben Shnider attracted huge progressive institutional support in his unsuccessful 2018 challenge to District 3 Council Member Sidney Katz despite using traditional financing. (Katz used public financing.) District 2 Council Member Craig Rice and District 1 open seat candidate Andrew Friedson both used traditional financing and won. On top of all of this, Jawando’s record on the council is unquestionably progressive as he has been a key leader on police reform and civil rights. However one feels about public financing, it’s hard to argue that Jawando doesn’t deserve progressive support – an argument that applies equally well to Hucker.

Jawando’s decision to use traditional financing is one of the most interesting developments in the embryonic 2022 campaign. He has always been a complete package as a candidate, combining good looks, excellent speaking skills, charisma, a knack for getting press, affiliation with Barack Obama (his former employer) and work ethic – and now he has a progressive record in office. How high could he go and when? That question is now on the minds of LOTS of people in MoCo politics.

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Adam Pagnucco, Montgomery County Council, Republicans

Developers, Help Save Maryland Director Contribute to Nine Districts for MoCo

By Adam Pagnucco.

On August 5, I reported that a combination of developers and county employee unions had accounted for most of the Nine Districts for MoCo group’s financial support. At that time, the leading contributors were:

Charles Nulsen, Washington Property Company: $50,000
UFCW Local 1994 MCGEO: $10,000 (in-kind)
Bob Buchanan, Buchanan Partners: $5,000
Fraternal Order of Police: $5,000 (in-kind)
Montgomery County Career Fire Fighters Association PAC: $5,000 (in-kind)
Gingery Development Group: $5,000
Arlene Hillerson (listed as being in real estate): $2,000

Nulsen, Buchanan, Gingery and Hillerson are all in the real estate industry. As of August 5, the four comprised 94% of Nine Districts’ cash receipts.

On August 13, I reported that a number of prominent county Republicans, including seven members of the county party’s central committee, had supported Nine Districts with cash or in-kind contributions. Republicans support a nine district council structure because they believe it might lead to a Republican council seat.

The county Republican Party is asking voters to vote for Question D, which would create nine council districts.

On August 24, Nine Districts amended its financial reports and new information about its contributors is now available. Of notable interest is that Gingery Development Group contributed another $25,000 on August 3 and Willco, a Potomac developer, directed a $15,000 contribution to the group’s campaign consultant, Rowland Strategies of Baltimore, on August 5. If Willco’s contribution, listed as in-kind but relieving the group’s obligation to Rowland, is counted as a cash contribution, that means that 96% of Nine Districts’ cash support has come from developers.

One more interesting fact emerges from the group’s amended financial report: a nine dollar contribution from Brad Botwin. The contribution is probably a response to the county Republican Party’s “$9D for 9D” solicitation for Nine Districts. Botwin is the county GOP’s contact for volunteer opportunities. But he is a lot more than that. Botwin is the director of Help Save Maryland, a group opposing illegal immigration. Help Save Maryland has been designated as a “nativist extremist group” by the Southern Poverty Law Center, provoking a counter-attack describing the center as “a demagogic bully.” Help Save Maryland’s denunciation of an “illegal alien child rapist freed by MoCo County Executive Elrich” is standard fare for the group.

Botwin’s contact info on the MoCo GOP’s website. His phone number has been redacted.

The line between Botwin and Nine Districts is already drawn through the MoCo Republican Party, which supports Nine Districts and lists Botwin as its volunteer contact. If Botwin is more directly involved in Nine Districts than that, that would be big news in MoCo politics.

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Adam Pagnucco, Montgomery County Council, Robin Ficker, taxes

Ballot Question Committee Scorecard

By Adam Pagnucco.

Over the last few weeks, a spate of political committees have formed to support or oppose the four charter amendments on the ballot. At this writing, six have filed paperwork with the State Board of Elections. This post summarizes their information. First, let’s recall what these ballot questions are.

Question A: Would freeze the property tax rate but allow a unanimous vote of the council to increase it. Authored by Council Member Andrew Friedson.
See Why Progressives Should Support the Friedson Amendment.

Question B: Would remove the ability of the county council to break the current charter limit on property taxes, thereby capping property tax revenue growth at the rate of inflation. Authored by Robin Ficker.

Question C: Would add 2 district seats to the county council, thereby establishing 7 district seats and 4 at-large seats. Authored by Council Member Evan Glass.
See MoCo Could Use More County Council Districts.

Question D: Would convert the current council’s 5 district seats and 4 at-large seats to 9 district seats. Authored by Nine District for MoCo.
See Don’t Abolish the At-Large County Council Seats, Nine Kings and Queens.

These are the ballot question committees that have formed to advocate for or against at least one of the above charter amendments. Only one (Nine District for MoCo) has filed campaign finance reports so far, but that will change on October 9, when the next round of reports is due.

Nine District for MoCo

Formed: 7/24/19
Supports Question D (9 council districts), opposes Question C (7 council districts and 4 at-large seats)
Chair: Kim Persaud (Wheaton activist)
Treasurer: Mark Lautman
Contributions so far: $ 128,959 (includes in-kind of $37,286)
Website: https://ninedistrictsformoco.org/
Supported by MoCo Republican Party, Greater Olney Civic Association, Town of Laytonsville. Contributors include MCGEO, police union, fire fighters union, developers.
See Revealed! Funders of Nine Districts.

We Support Nine Districts

Formed: 5/7/20
Supports Question D (9 council districts)
Chair: Robinson Sean Rowe
Treasurer: Serina Cheung Moy (former candidate for Republican National Convention)
Contributions so far: NA (has only filed affidavits)
Website: https://ninedistricts.org/

Vote No on B & D

Formed: 9/11/20
Opposes Question B (Ficker amendment) and Question D (9 council districts)
Chair: Ike Leggett (former county executive)
Treasurer: Larry Rosenblum
Contributions so far: NA
Website: NA
Supported by former congresswoman Connie Morella, business owners David Blair and Carmen Ortiz Larsen.
See Why Montgomery County Ballot Questions B and D are Truly Bad Ideas You Should Vote Against.

Montgomery Neighbors Against Question B

Formed: 9/14/20
Opposes Question B (Ficker amendment)
Co-Chairs: William Jameel Roberts (former Jamie Raskin staffer), Jill Ortman-Fouse (former school board member)
Treasurer: Daniel Koroma (business liaison officer, Montgomery County Government)
Contributions so far: NA
Website: https://www.mocoagainstb.org/
Supported by CASA, Metro D.C. DSA, Jews United for Justice, LIUNA, MCEA, MCCPTA, MCGEO, Progressive Maryland, Progressive Neighbors, MoCo Women’s Democratic Club, SEIU Local 1199, SEIU Local 500, SEIU Local 32BJ, MoCo Women, Greater Capital Area Association of Realtors.
See JOF, Progressives Take on Ficker.

Montgomery Countians For Question A & Against Question B

Formed: 9/14/20
Supports Question A (Friedson amendment), opposes Question B (Ficker amendment)
Chair: David Blair (businessman, former candidate for county executive)
Treasurer: Marjorie Anne Nemes Galarza (Latino Economic Development Center)
Campaign Manager: Scott Goldberg (Democratic central committee member)
Contributions so far: NA
Website: NA

Residents for More Representation

Formed: 9/17/20
Supports Question C (keeps at-large council seats and adds 2 districts), opposes Question D (9 council districts)
Co-Chairs: Marilyn Balcombe (Gaithersburg-Germantown Chamber of Commerce, former candidate for council at-large), Michelle Graham
Treasurer: Deborah G. Williams
Contributions so far: NA
Website: https://mocoforc.org/
Supported by MoCo Democratic Party, MCEA, Jews United for Justice, Association of Black Democrats of MoCo, Latino Democratic Club of MoCo.
See Balcombe Co-Chairs New Group Opposing Nine Districts.

The MoCo Democratic Party supports Question A (Friedson amendment on taxes) and Question C (Glass amendment on county council structure). The party opposes Question B (Ficker amendment on taxes) and Question D (9 council districts).

The MoCo Republican Party has taken the opposite position on the ballot questions from the Democrats.

The Washington Post editorial board opposes all four questions.

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Adam Pagnucco, budget, COVID-19, Fire Fighters, Marc Elrich, MCGEO, police

How Will We Pay for This?

By Adam Pagnucco.

Confronting one of the worst recessions in its history, the MoCo government is projecting a loss of $190 million in revenue this fiscal year and over $1 billion over the next six fiscal years. With such dire financial projections, one would think that the county would be looking for ways to save money above and beyond the low-hanging fruit it has already plucked. Instead, the county has created a new spending stream with no obvious way to pay for it.

What is this new spending stream? On April 10, County Executive Marc Elrich announced that he had reached an agreement with the three county employee unions (MCGEO, the fire fighters and the police) to provide their members with COVID-19 differential pay. The extra pay applied to two categories of employees.

Front Facing Onsite: work that cannot be performed by telework, involves physical interaction with the public and cannot be performed with appropriate social distancing. These employees would get an extra $10 per hour.

Back Office Onsite: work that cannot be performed by telework and does not involve regular physical interaction with the public. These employees would get an extra $3 per hour.

The extra pay was retroactive to the March 29 pay period and was supposed to be in effect for six pay periods “or until the Maryland State of Emergency is lifted.” At the time, county council staff estimated that the extra pay would cost the county $3.2 million per pay period. As of this writing, I am told that the COVID pay continues. (Note: this pay arrangement does not apply to MCPS or other agencies legally separate from county government.)

My sources tell me that the county’s COVID pay program is one of the most generous in the United States. It is far more generous than the state’s COVID pay, which was an extra $3.13 per hour for some classifications of public safety, juvenile center and healthcare employees plus $2.00 more for those working in quarantine areas. (The $3.13 per hour ended on September 8 while the quarantine pay continues.) The generosity of the county’s program can further be seen by its cost: $3.2 million per pay period versus the state’s $3.3 million. MoCo has roughly 10,000 employees while the state has more than 80,000.

Elrich painted this extra pay as a financial win for the county. His press release stated, “The County Executive noted that under provisions of existing county bargaining agreements (which were negotiated years ago), the unions could have insisted on much larger benefits, but they understood the importance of the ongoing fiscal health of the county.” So according to Elrich, by giving the unions something less than what their agreements gave them, he was saving the county money.

In retrospect, that was a dubious claim. The unions are indeed entitled to double pay during emergencies under their agreements. However, a careful examination of the county’s collective bargaining agreements with MCGEO, the fire fighters and the police shows that their emergency pay provisions relate to weather emergencies. The emergency pay provision in the police agreement is actually labeled “Snow Emergency-General Emergency Pay.” All three agreements contain this language:

“General emergency” for the purpose of this agreement is defined as any period determined by the County Executive, Chief Administrative Officer, or designee to be a period of emergency, such as inclement weather conditions. Under such conditions, County offices are closed and services are discontinued; only emergency services shall be provided.

The county suspended some (but not all) services early during the COVID crisis but many of them are being provided now. The county even said as far back as March 13, “While schools and public facilities will be closed, Montgomery County offices remain open for business and operations are continuing.” This status does not qualify as a general emergency under the contract language.

MCGEO’s agreement contains this additional language:

Implementation of General Emergencies shall be in accordance with Administrative Procedure 4-21, dated July 12, 1991. In addition to the above, before making a determination whether to declare a General Emergency, the CAO or designee will consider recent weather reports regarding the amount of precipitation already accumulated, as well as the forecast for further accumulations during the succeeding 8-hour period. Other considerations that the CAO or designee will take into account include whether the major roadways of the County are passable and safe for travel and whether the County public schools have been closed for the day and what actions other public sector jurisdictions in the Washington Metropolitan Region take. The decision whether to declare a General Emergency shall be based on the cumulative of all these factors and no one factor shall be conclusive or determinative. The County Executive or CAO should attempt to give employees the earliest notice of whether a general emergency or liberal leave period will be declared.

Again, this clearly relates to a weather emergency.

Either Elrich knew all this and granted concessions anyway or he didn’t bother to read the union contracts and was out-negotiated by MCGEO’s shrewd president, Gino Renne. If the latter, he is not the first executive to be cleaned out at the bargaining table by Gino! The unions were quite upset to see the council cancel $28 million of compensation increases last spring, but they have already earned more than that in COVID pay.

It’s important to note that the county council had no role in this. Normally, the council would approve economic elements of a new collective bargaining agreement inside county government. But in this instance, a renegotiation occurred of an existing agreement. Elrich did not ask for council approval and the council did not bless it.

The issue here isn’t whether employees should get COVID pay. Of course they should. If you were a police officer, a fire fighter, a correctional officer, a Ride On bus driver or another employee interacting with the public for hours on end, you would want it too! The issue is whether the county has a way to pay for it, especially given its troubled financial condition. And that’s where the matter gets complicated.

One place where the county can turn for COVID expenses is federal grant funds, especially those disbursed under the CARES Act. To date, the county has received $223 million in federal grant funds during the COVID crisis. The status of those funds is a bit murky, but my quick and dirty math from examining the county council’s spending resolutions is that close to all of that money has already been appropriated. Last summer, the county was hoping a deal in Congress would produce more federal funds but it didn’t happen. Now there is talk of covering at least part of the COVID pay through a FEMA reimbursement but who knows if that will occur. Looming over all of this is the question of how long the payments will continue.

If federal funds are not available, the county’s options for financing its COVID pay program are difficult ones. It could make offsetting spending cuts although most county spending is tied to labor in one way or another. (How crazy would it be to pay employees more and then furlough them?) It could dip into reserves, which might impact its AAA bond rating. It could raid retiree health care funds yet again (something that was hinted at in July), which has already earned it a rebuke from Wall Street. Or it could raise taxes.

Readers, what would you do?

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Adam Pagnucco, Board of Education, COVID-19, MCEA, MCPS

Harris Blasts MCEA Over School Reopening

By Adam Pagnucco.

Silver Chips, the online newspaper for Blair High School, had quite a scoop yesterday. The newspaper asked school board at-large candidates Lynne Harris and Sunil Dasgupta for their opinions on the statement issued by MCPS and its three employee unions about potential reopening for in-person instruction. According to Silver Chips, Harris said the following in an email on Saturday:

Personally I’m completely frustrated that the associations, especially MCEA, would NOT get in the boat and row since Spring to help create meaningful Covid plans for teaching and learning, especially limited in-person instruction––they were obstructionist, inflammatory, and just said ‘no’ to everything. We need plans in place NOW to bring small groups of students into schools safely––for special education instruction, for specialized arts and other programs that require access to MCPS facilities and resources to be equitably delivered, for CTE programs that can’t be delivered virtually etc.

Harris had more to say about this topic on her website.

Silver Chips also carried a reply from Dasgupta that conforms with his guest blog on Seventh State today.

Dasgupta has been endorsed by MCEA (the teachers) and SEIU Local 500 (support staff) among others. Harris has been endorsed by the Washington Post editorial board, which at various times over the years has been critical of MCEA.

During the primary, there weren’t a lot of apparent differences between Harris and Dasgupta as both were defending MCPS’s boundary study from criticism by fellow at-large candidate Stephen Austin, who finished third, and his supporters. Silver Chips has done the public an immense service by revealing a meaningful difference between these candidates.

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Adam Pagnucco, Andrew Friedson, Ethics

Real Deal Ethics Bills

By Adam Pagnucco.

The ethics scandal involving MoCo’s former Chief Administrative Officer (CAO) was a trying moment for the county government but it has produced a happy outcome: the introduction of two robust ethics bills by Council Member Andrew “Real Deal” Friedson. Together, the two bills – if passed – will ensure that the events leading to the now-former CAO’s resignation will never happen again.

Quoting the introduction packet, Bill 42-20 would:

1. Require the Executive to disclose a proposed employment contract with an appointee to a non-merit position and any employment contract with an employee currently serving in a non-merit position to the Council;

2. Include the sale or promotion of certain intellectual property by a public employee as other employment;

3. Prohibit a public employee who has received compensation from an individual or organization in the previous 12 months from participating in a procurement with that individual or organization;

4. Require a public employee who participates in a procurement process with an individual or organization seeking to do business with the County that compensated the public employee for services performed more than 12 months before the participation began to disclose the prior relationship to the Procurement Director;

5. Require an elected official or non-merit employee to disclose, with some exceptions, the source of each fee greater than $1,000 received for services in a financial disclosure statement; and

6. Prohibit the Chief Administrative Officer from engaging in other employment.

Bill 43-20 would prohibit severance pay to non-merit employees. The bill’s language says:

The Executive or a Councilmember must not authorize any payment of money or paid administrative leave to a non-merit employee in the Executive Branch or in the Legislative Branch upon separation from County employment unless the payment is expressly authorized by law. The Executive or a Councilmember must not enter into an employment agreement with a non-merit employee that provides for any type of severance pay for an employee who is terminated with or without cause.

The bill allows payments of unused leave and discontinued pensions. It expressly prohibits “severance pay for an employee who admits to or is found to have violated the Ethics Law in the 12 months prior to separation from County employment.”

These bills are an absolute no-brainer. The entire county council should be all over them like white on rice.

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