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Frank DeFilippo: State House Spending Spree?

Only a state as wealthy as Maryland can afford a General Assembly as generous as its members. The unanswered question is – to what degree will Gov. Larry Hogan (R) join the spending spree?

Maryland is regularly listed as the wealthiest state in America, with the most millionaires of any in the nation. Toss in its few billionaires and soon we’re talking about serious money. Then there are those who believe Maryland has a treasury to match.

The clucking you hear in the distance is the sound of chickens coming home to roost. When the General Assembly convenes in January, Hogan likely will have before him by its end – a $375 million program to resuscitate Baltimore’s Pimlico neighborhood and prop up one form of gambling with another, the $3.8 billion Kirwan education program, two proposed new bridges and at least two new toll roads. And that’s for starters.

The basic spending blueprint, the state’s operating budget, is approaching $50 billion, more or less, and its capital budget, the bricks-and-mortar spending program, is a grab-bag of pet projects and fungible rewards that keep coming in supplemental packages at who knows what cost. And remember, Hogan is the guy who flipped the bird to culture by refusing to release money approved for the Baltimore Symphony.

If this all sounds like a catchpenny mystery, that’s because the shell game called budgeting is a dark and devious art. By next session’s end, money will be conflated, distorted, diverted, misunderstood and misguided through angles and loopholes that the budgeting process was designed to prevent.

Follow the money.

The Pimlico bailout is a prime example of deflection detection. Moving the shells quicker than the eye can follow reveals a pattern of taking one form of successful gambling money to prop up another failing gambling venue. Is this, like most, another sucker’s bet?

This is a case where the devil truly is in the details. The entire “Monopoly” game that involves $375.5 million will be handled by a shadow government enterprise called the Stadium Authority. It’s an authority that, literally, has no authority – without General Assembly approval. (Anyone who’s read Robert Caro’s masterwork, The Power Broker, is inherently suspicious of authorities.)

To finance the Pimlico undertaking, the Stadium Authority must sell bonds, but it requires legislative authorization and a means of guaranteeing the bonds to the buyers. One suggested source of funds, among others, are casino proceeds. But, hey, wasn’t much of this money destined for an education “lockbox” by Hogan and lawmakers last year?

The Pimlico deal between Baltimore City and the racetrack owners, the Stronach family, is a transfer of properties among a number of entities other than the state, with an annual short-term lease-back over 30 years wrapped around a single race, the Preakness. But the state can sell only 15-years bonds, and not 30-year bonds.

The guarantee to the bondholders? “We have the General Assembly coming after our money,” says Alan Foreman, general counsel to the Maryland Thoroughbred Horsemen’s Association. By “our” money, Foreman is referring to a slice of casino proceeds that helps prop up the racing industry that he forewarns legislators might try to poach to help finance the Pimlico deal. (This comes at a time when casino revenues have dipped, according to the latest monthly report, and the threat of competing casinos in Northern Virginia is gaining momentum and support.)


Frank A. DeFilippo

To wit: The 87-year-old Frank Stronach, the family patriarch who’s involved in a battle for control with his daughter, Belinda, gets rid of Pimlico, which he’s been threatening to shut down; the City of Baltimore becomes a race track owner and developer; the training track at Bowie becomes ripe for housing or other development; and Laurel Park becomes the state’s premier racing site, which is what Stronach wanted all along. Nonetheless, the elder Stronach’s unhappy with the deal because his daughter did not fight for more Park Heights neighborhood benefits.

Onward and upward.

Hogan has already targeted the Kirwan report as an extravagance that won’t improve schools. The Kirwan Commission, formally known as the Commission on Innovation and Excellence in Education, might be a munificent gesture in a pauper’s will. Nobody really knows, possibly until sometime this week, under which rock the proposed $3.8 billion in funding is hiding from public view.

The full program is supposed to be introduced gradually over 10 years as a shared expense among the state and local governments. That’s news to Baltimore City, but, then, maybe it can find its proposed $100 million contribution in all of the wonderful things that are supposed to happen at the Pimlico site.

Hogan has revealed himself in full Trump mode. He’s ordered up $2 million in “dark” money to counter-attack the education lobby’s television campaign and its expected pressure-cooker approach to the next legislative session.

But education’s a tough lobby to beat, even for a popular governor. There are nearly one million kids in Maryland’s public schools and 57,718 teachers in their classrooms. Do the math. Multiply the parents, husbands, wives, PTAs, unions and other affiliates and friends, and it adds up to a pretty hefty constituency for Hogan to take on.

Reality check: Nobody objects to the goals of education – great schools, teachers making a decent wage, smaller class sizes, adequate materials, etc. Every child is entitled to as much education as they can achieve. Teaching is hard work. So is learning. There are those kids who resist, by attitude and aptitude, the time and effort required to clock in every day and thus we face more generations of squeegee kids populating the intersections of certain jurisdictions (you know who you are.)

Some kids would rather tinker than think. A companion approach might be to expand the system of vocational schools to teach such trades as automotive repair (a top mechanic makes $100,000 a year), HVAC maintenance and repair, construction and building trades, and other handicraft, rather than try to cram “Ivanhoe” and “Sir Gawain and the Green Knight” into resistant skulls. Society needs plumbers as well as philosophers, as John Gardner, the founder of Common Cause, observed. Not every kid is equipped to become a Rhodes Scholar.

What is more urgent, though, is a crash course that teaches kids to recognize opportunity when it jumps up and kicks them in the butt.

Hogan hues to the horse-and-buggy transportation formula in the age of rocket trains that Maryland should be two-thirds roads and one-third mass transit. His “Change Maryland” constituency is in the counties outside the I-95 corridor where there is more geography than population, so asphalt has priority over people-movers.

Maryland transportation officials, as well as Hogan, have acknowledged that the state’s vaunted unified transportation fund is depleted, if not broke. Repeated question: So why does Hogan keep reducing tolls which are (were) intended to be a continuing source of replenishment and constant cash flow to satisfy bondholders as well as future expansion and maintenance of bridges and tunnels?

(Hogan is not the only guilty party. His Republican antecedent, Robert L. Ehrlich Jr., floated GARVEE bonds to underwrite transportation projects. GARVEE bonds – Grant Anticipation Revenue Vehicles – allowed the state to borrow money against future transportation revenue. Put another way, Ehrlich hocked the future and the bill is due.)

In addition to all the other money demands facing him, Hogan now has two bridges – a third Bay crossing and a replacement for the Harry W. Nice bridge – and at least two proposed toll roads he’s angling to build with private partners. All of which would turn a nice profit for the private sector at the expense of taxpayers and users. (Are the Bay Bridge backups inspired by the New Jersey Bridgegate fiasco at the George Washington Bridge to underline the need for a third Bay span? Just askin’.)

All of the above add up to a whole bunch of money. And therein lies the problem of mix-and-match funds. There are several different pots of money whose sum total was supposed to add up to a budget. But that was before such terms as “fenced off,” “lock box,” “mandated” and “dedicated” came into play.

There are any number of constituencies competing for state dollars and none is above raiding the other’s share to satisfy its own needs and wants. And that’s about where Maryland is now. The competition for dollars will be fierce. We’re about to find out if Hogan is willing to Make Maryland Great Again.


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Frank DeFilippo: State House Spending Spree?