Prompted by a news report that raised questions about whether state transportation spending has benefitted the governor’s real estate holdings, a group of state lawmakers has introduced a measure to strengthen Maryland’s ethics law.
If the bill becomes law, Gov. Lawrence J. Hogan Jr. (R) would have to disclose more about the sprawling development firm that bears his name starting next year, backers said on Friday.
With the fate of several high-profile measures not likely to be decided for weeks, it’s unclear if the legislature’s new presiding officers have much appetite for a measure likely to cause tension with the state’s powerful chief executive.
In an interview, the measure’s chief sponsor, Del. Vaughn Stewart (D-Montgomery), said the Conflicts of Interest Act of 2020 (House Bill 1404) would boost annual reporting requirements for public officials in Maryland by requiring that they disclose not just what companies they own but the subsidiaries as well.
“The way the real estate industry works — and other industries as well — is that the holding company of a corporation doesn’t invest in or own any property but in fact the subsidiaries do,” Stewart said. “So the bill plugs that gap by requiring more financial disclosures for subsidiaries.”
Washington Monthly reported in January that Hogan’s real-estate business has grown since he became governor.
Prior to taking office, his company had ownership in 30 real-estate limited-liability companies, or LLCs, the magazine reported. Now he has 43.
After his victory in the 2014 gubernatorial race, Hogan received a “financial interest exemption” from the state’s Ethics Commission. That agreement allowed him to retain ownership of the firm, which he launched in the 1980s, provided he turn over control to his brother and three former employees.
Hogan has consistently maintained that his disclosures exceed what the law requires.
If HB 1404 became law, the public could gain greater insight into where his firm owns property — and whether state spending on highways, interchanges, sidewalks and other enhancements have boosted the value of his parcels and developments.
It would also mandate greater disclosure about the source of outside income earned by the governor, lieutenant governor, attorney general and comptroller.
“We know the governor has been making hundreds of thousands of dollars a year in outside income,” Stewart said, “but we don’t really know who’s paying him. And that seems to be extremely problematic from a transparency perspective.”
Hogan is paid $178,000 as governor, but Washington Monthly reported that he earned approximately $2.4 million in each of his first four years in office.
According to former Secretary of State John Willis, a Democrat and a Maryland historian, Hogan is the only governor to have made millions of dollars while in office.
The governor’s spokesman, Michael Ricci, said ”Governor Hogan’s record of transparency goes above and beyond what is required by Maryland’s ethics laws.”
“This looks to me like a bill about transparency that allows for less transparency,” he added. “That said, the governor is willing to consider any legislation that reaches his desk.”
HB 1404 would impose new burdens on any future business-owning official who takes office in 2023 or after. They would be required to either divest their assets or enter into a blind trust.
What troubles Stewart and others ― mostly Democrats ― about Hogan’s arrangement with the ethics commission is that his trust agreement isn’t blind.
“The ethics agreement that he signed with the Ethics Commission allows him fully to get information from his business partners and his brother about the goings-on of the company,” Stewart said. “He’s already able, legally, with the ethics agreement that he entered into, [to get] full access to the books.”
Stewart has attracted a dozen cosponsors, but none are in upper leadership and there is no Senate cross-file.
On Friday, House Majority Leader Eric G. Luedtke (D-Montgomery) was noncommittal when asked about the bill.
“We have a range of options for ethics and accountability improvements this session,” he said. “I think we’re going to take a hard look at all of them.”
The legislature’s new presiding officers ― Senate President Bill Ferguson (D-Baltimore City) and House Speaker Adrienne A. Jones (D-Baltimore County) ― are hopeful they can find common ground with Hogan on big-ticket items like education reform, or at a minimum keep his public opposition muted.
One Annapolis veteran suggested this week Democratic leaders might glean value from the existence of the Stewart bill, which was introduced just hours before Friday’s bill filing deadline, even if they don’t explicitly endorse it now.
Stewart insisted that he has no personal vendetta against Hogan. Both men are non-Hodgkins Lymphoma survivors. “I actually really like the guy,” he said. “This isn’t about me trying to throw mud.”
He also acknowledged that recent headlines involving corrupt politicians in the state have focused on his party, not the governor’s.
“It’s Democrats that have normally gotten in trouble,” he said. “So I’m not trying to throw stones. But taxpayers deserve public officials that they can trust.”