Category Archives: Montgomery County

Department of Liquor Control, Ike Leggett, Montgomery County

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

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County Executive, Montgomery County

Leventhal and Trone Duke It Out: Both Lose

George Leventhal and David Trone, two prospective candidates for county executive in 2018, made comments seemingly designed to make news–and they did in Bethesda Beat–as they debated the issue of pay-to-play politics. Leventhal charged that Trone’s contributions amount to pay-for-pay politics while Trone called Leventhal “a fool, F-O-O-L, and a bully.”

Trone’s Contradictory Statements

Leventhal’s attack centered on Trone’s political contributions:

“[T]he Trone brothers made enormous political contributions in order to get access to the Wisconsin market for their product,” Leventhal said. “They’re indicative of just one trend in the industry of paying off politicians to get what they want. The Trones have done that over a long period of time.”

Indeed, during his congressional campaign, Trone admitted bluntly “I sign my checks to buy access.” Now, he’s trying to walk it back:

Trone said he and his brother make donations to elected officials whom they believe have an interest in furthering “the common good” and who support economic initiatives that benefit the consumer.

Not Leventhal’s Best Issue Either

Leventhal attacks Trone for making supposedly corrupting donations to buy access. However, Leventhal has accepted hundreds of thousands of dollars of campaign contributions from business:

Leventhal says that he has never allowed any contributor to “buy access” but is well known for his support of development interests. While he contends otherwise, Leventhal’s situation is no different from that of any other person who accepted money from the Trone brothers.

Now, George Leventhal sidesteps this past showering in funds from business and touts his participation in the public campaign finance system as evidence of new purity:

“That’s precisely why I’m so delighted to participate in the public finance system,” Leventhal said. “That option wasn’t available to me previously, but I believe it will take the influence of big money out of politics.”

Except that not all of his colleagues took as much “big money” in the past as Leventhal. Marc Elrich, another rival for county executive, received very little from business. The 32% share of Elrich’s contributions from individual donations under $150 was also twice as high as the 16% of Leventhal’s contributions.

Leventhal’s Lurch Left

Following the debate on raising the minimum wage, this is now the second issue in a very short period on which George Leventhal has hugged Marc Elrich tightly. Abandoning his past business ties, Leventhal touts a $15/hour minimum wage with the fervor of a convert, and regularly plugs his embrace of public financing.

The strategy of imprinting himself in the media as the true progressive tribune is not a bad one. In recent weeks, his combination of abrasive outspokenness has gained him more media attention than his rivals. As Trump showed in the Republican primary, that can work wonders.

On the other hand, Leventhal has a long record. Will his new embrace of a much higher minimum wage and attacks on major campaign contributions gain him progressive support? Or will it just leave primary voters wondering why they should vote for mini-Marc when Marc is also on the ballot?

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Montgomery County

Leventhal Continues Soft Executive Announcement

Councilmember George Leventhal (D-AL) has not announced formally for county executive but has all but done so. First, he allowed local Boycott, Divestment, Sanctions (BDS) leader Saqib Ali to launch a website promoting him for County Executive.

Now, Leventhal has started raising money under Montgomery County’s new public financing system using the fundraising limits in place for the position of county executive. He sent an email blast out the other day to supporters.

Leventhal touts that, thus far, he is the “only candidate to opt into the system” and reiterates the message “There is only one!” in red with an arrow pointing to his name.

LevClean

While technically true, Leventhal is the “only” candidate in the system simply because he is the first to set up an account. Councilmember Marc Elrich (D-AL) also plans to run for County Executive and has made very clear that he too plans to opt into the system.

Unlike Leventhal, Elrich has refused contributions from developers in the past and run much less expensive campaigns in the past. Focus on campaign spending is a new tactic for Leventhal.

Other potential candidates, such as Councilmember Roger Berliner (D-1) and Sen. Rich Madaleno (D-18) may also participate in the system. I imagine that wealthy businessman David Trone would not if he jumps into the race since he spent an extraordinary amount on his unsuccessful congressional bid.

So Leventhal heavily implies that he has a uniquely clean approach to politics while never actually stating anything that is factually untrue. The fundraising email contains no other message about past accomplishments or future goals.

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Montgomery County

Planning Board Approves Highest Tower Ever for Bethesda

The Montgomery County Planning Board has approved a 295 foot tower in Bethesda for the location of the current Apex Building at the corners of Wisconsin Ave. and Elm St. The building sits atop the proposed Purple Line stop and until recently was mainly known as the home of a movie theater.

This tower will be the highest building in Bethesda and far higher than the buildings currently atop the Red Line stop.

  • New Tower, 295 ft.
  • National Naval Medical Center, 264 ft.
  • Chevy Chase Bank East and West Towers, 250 ft.
  • Clark Building, 215 ft.
  • Air Rights Center, 149 ft.

The second highest building, National Naval Medical, isn’t even in downtown Bethesda but part of the Walter Reed campus near the Medical Center Metro stop.

Putting the new building in the broader DC context, it will be taller than the U.S. Capitol and just short of the National Cathedral.

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Casino, Montgomery County

BREAKING: Brookeville to Open Montgomery’s First Casino

brookeville-acadBrookeville Academy

Comptroller Peter Franchot’s discovery that the Town of Brookeville owes $7.2 million to the State of Maryland due to his office’s miscalculation of municipal tax receipts for many years placed the Town in quite a bind, as the municipality of just 134 souls had no idea how it could repay the debt.

Today, Brookeville Commission President Katherine Farquhar announced that, after working on the issue with the County and the State, Brookeville will open a casino in historic Brookeville Academy (pictured above), which is owned by the Town, to raise monies to pay off the debt to the State.

Franchot praised the decision, stating that he “appreciates the Town’s gratitude to my office for finding the errors” and plans to award the Town the Comptroller’s Medal for its “creative solution” to the Town’s financial difficulties.

Members of the County Council had initially expressed concerns regarding the project. But Council President Roger Berliner (D-1) has now announced that the casino will be the first recipient of the microloan program he has advertised on Facebook in anticipation of his 2018 County Executive bid.

In a press release, Berliner said “I’m so pleased that the microloan program will make the casino possible. It will help jump start Federal Realty’s development of the outbuildings for future expansion, showing the importance of partnerships like these.”

After initial opposition, Councilmember Tom Hucker (D-5) came on board once the Town agreed to hire MCGEO workers transferred from county liquor stores. “They know as much about gaming as beer, wine and liquor, so this is a great opportunity,” said MCGEO President Gino Renne.

Montgomery County Chamber of Commerce President and CEO Gigi Godwin agreed with the union president, as she commended the County for brushing aside development concerns with the adoption of a special Zoning Text Amendment (ZTA) over the objection of the Civic Federation. “We need the County to take a more proactive approach on business.”

Councilmember Hans Riemer (D-AL) also applauded the project, saying that he was happy to learn that Brookeville “is open to serving craft beers” that an official taskforce determined were crucial to revitalizing nightlife in the County.

The sole casino opponent, Councilmember Marc Elrich (D-AL), pointed out that Georgia Ave. is already a parking lot and that the development violated County traffic tests. His statement was interrupted by George Leventhal, who brusquely asked Elrich “Why do you care about people coming from Howard County? Haven’t you figured out we ignore you yet?”

In contrast, Councilmember Nancy Floreen (D-AL) expressed optimism regarding transportation: “SafeTrack has been such a success. We should use the projected savings on Metro to initiate a study on extending the Purple Line to Brookeville.”

The casino will have a War of 1812 theme, reflecting Brookeville’s role as the “U.S. Capital for a Day” in 1814 during the British occupation of Washington. The building’s exterior will be preserved as the interior is redesigned in a “modern Madisionian” style.

(P.S. I think most have figured out by now, but yes, this is satire. Happy New Year.)

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Adam Pagnucco, Montgomery County, Robin Ficker, Term Limits

MoCo Revolts

By Adam Pagnucco.

In a thundering rebuke to Montgomery County’s governing establishment, voters have passed term limits by a 38 point margin with early votes and election day votes counted.  Folks, let’s call this what it is.

A Revolt.

This year will see one of the largest electorates in Montgomery County history.  While the absolute number of voters may be declining in our mid-term elections, it has been steadily rising in presidential general elections.  County residents voted overwhelmingly for Hillary Clinton over Donald Trump (by 54 points as of this writing).  But they also voted for term limits despite the fact that most county voters are Democrats and all county elected officials are Democrats.  This year was reminiscent of the 2008 general election, during which MoCo voted for Barack Obama by 45 points but also approved Robin Ficker’s charter amendment restricting property tax hikes by just 5,060 votes.  This demonstrates the capacity of county voters to keep national issues and local issues separate when they so desire.  The big difference between 2008 and now is that the margin of term limits’ passage was so titanic that it’s possible that half of all Democrats voted for it.

The scale of this upheaval is virtually unprecedented.  Sure, County Council incumbents have been defeated here and there and a sitting County Executive was beaten in 1990.  But the voters voted against all the incumbents this year, or at least put an expiration date on their services.  To find something comparable, you would have to go back to 1962, when five of seven Council Members were ejected, and 1966, when six Council Members were defeated.

Former County Council Member Steve Silverman astutely characterized term limits supporters as “a convergence of strange bed-fellows.”  County employees upset about reduced raises, business people unhappy about what they see as an unfriendly business climate, residents opposed to new master plans with more density, Republicans and unaffiliated voters angry about being marginalized, opponents of the county’s liquor monopoly, people upset about the recent Giant Tax Hike and nanny state laws, and those who genuinely regard term limits as facilitating good government came together as they never have before.  As David Lublin wrote, these groups may have had incompatible visions of what county government should be, but all of them believed the way to get there was to get rid of the incumbents.

Term limits opponents made two primary arguments.  First, they described term limits as “an attack on progressive government.”  This had the effect of making the term limits question a referendum on current county elected officials, a perspective actually shared by many supporters.

term-limits-opposition-fundraiser

And second, they tried to make term limits toxic by emphasizing their support by figures like Donald Trump, Robin Ficker and Help Save Maryland.

term-limits-trump-ficker

That strategy didn’t work for two reasons: the opponents were vastly under-funded as they were going uphill and the message itself was not calibrated for a general electorate that is less liberal than Democratic primary voters.  Social media proved to be the weapon of choice for both sides, and in terms of Facebook likes, supporters outgunned opponents by a ratio of 13-1.  Opponents were counting on the Democratic sample ballot and the Apple Ballot, both opposing term limits, to win.  But whereas the sample ballot is often mailed to all county Democrats, this time around it was mailed only to those who had newly registered.  And the teachers union did not supplement its Apple Ballot poll coverage with multiple mass mailings as they do in mid-term years.  Accordingly, the impact of both ballots was blunted.  Opposition organizer Tom Moore made a valiant effort, but this was an unwinnable campaign from the start.

To be fully understood, this year’s vote must be put into the context of recent history.  Since 2008, county voters have decided four major ballot questions and each time they took what was arguably the less progressive position.  Put those four votes together and here is the message from the voters:

We don’t want more property taxes.  We don’t want more government fees.  We don’t want a labor union running the police department.  And even though most of us are Democrats, we are telling the Democrats who run the county government that twelve years in office is long enough.

This is pretty much the opposite of the long-standing posture of the county’s political establishment.  And it’s not just coming from flakes, fanatics and fringe types like Robin Ficker and Help Save Maryland – it’s coming from a majority of county voters.  If there was ever a moment for the governing class to do some soul searching, this is it.

Opponents of term limits may be right about one thing – they may change the names of elected officials, but not the type of them.  Democrats, often very liberal ones, will continue to be elected because of our closed primary system.  But the combined message of the last four ballot questions imposes a hard choice on the elected officials of today and tomorrow.  They can try to balance the interests of various constituencies across the political spectrum at the possible cost of losing the progressive support that influences Democratic primaries.  Or they can stay the course and watch more moderate general election voters pass even more restrictive ballot questions, including perhaps the ultimate bane of progressivism – a hard tax cap.

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Adam Pagnucco, Department of Liquor Control, Montgomery County

MoCo Solicits for Liquor Monopoly Propaganda Video

By Adam Pagnucco.

The Montgomery County Government has issued a solicitation seeking bids on a propaganda video defending the county’s liquor monopoly.  The solicitation comes after the County Executive’s task force on the issue concluded its meetings with (so far) no apparent resolution.

The informal solicitation, captured in a screenshot from the county’s website below, invites companies in the county’s Local Small Business Reserve Program to bid on an opportunity to create a video about the Department of Liquor Control (DLC).  The solicitation describes the project scope as, “The creation of an impactful, high quality, television ready, 2-3-minute video. To include videographer, audio services, design and editing of a short film or commercial on the benefits of a control jurisdiction, and dispelling myths. The short will be directed at educating the general public. We hope to have the project completed by December 30, 2016. A high quality public service announcement in a format that can be shared and posted on a website for public access.”

video-solicitation

This is not the first time the county has used public resources to spread political propaganda supporting the liquor monopoly.  Last January, the county distributed flyers defending DLC at county liquor stores while the county’s state legislators were debating its fate.  The flyer distribution ended shortly after it was exposed by Fox 5.

The cost of the video will not be known until a bid is accepted, although the solicitation’s fine print states that it cannot exceed $25,000.  The cost of distribution could be much more, especially if the county runs the video as an ad on private television channels.

All of this comes after the county’s state legislators, who have purview over DLC since it is established in state law, asked the County Executive last year to consider various models of liberalizing the liquor monopoly.  The Executive agreed and convened a task force to study various options, but the task force’s three meetings ended without a visible result.

With this solicitation, the county appears to be digging in to defend the monopoly despite its massive failures and the protests of thousands of residents against it.  The liquor monopoly is one of several reasons why MoCo residents voted for term limits and yet the county is staying the course.

Will they ever learn?

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Adam Pagnucco, Montgomery County

MoCo’s Two Electorates, Part Three

By Adam Pagnucco.

Part Two presented a host of demographic data comparing Democrats who voted in all three of the 2006, 2010 and 2014 primaries (“Super Dems”) to voters from all parties who voted in both of the 2008 and 2012 general elections (“Super Generals.”)  Let’s compare the two groups more concisely below.

In summary, when compared to Super Dems, Super Generals are more likely to:

  1. Be age 29 or younger.
  2. Be ages 30-39.
  3. Live in Clarksburg.
  4. Live in Damascus.
  5. Live in Germantown.
  6. Live in Council District 2.
  7. Live in Legislative District 39.
  8. Live in precincts that are 25% or more Asian.
  9. Live in Legislative District 15.
  10. Live in Montgomery Village.

When compared to Super Dems, Super Generals are less likely to:

  1. Be ages 70-79.
  2. Be age 80 or older.
  3. Live in Takoma Park.
  4. Live in Chevy Chase.
  5. Be ages 60-69.
  6. Live in Legislative District 20.
  7. Live in Bethesda.
  8. Live in Kensington.
  9. Live in Legislative District 18.
  10. Live in Council District 5.

The above items are ranked in order of likelihood.  So for example, the biggest difference between the two electorates is in age, but that is far from the only difference.

Super Dems are mostly from Downcounty, tend to be seniors or close to it, have a lot of voting history and may be majority liberal.  They elect MoCo’s county officials and state lawmakers, who tend to be responsive to them.  Super Generals are geographically diverse, younger in age, have less voting history and are much more diverse ideologically.  Liberals probably do not account for a majority of Super Generals.  It is the Super Generals, not the Super Dems, who decide charter amendments and ballot questions, including this year’s amendment on term limits.

Two more facts are relevant to Super Generals.

First, on the last three major county ballot questions, the general electorate voted in favor of stricter limits on property tax hikes, against the ambulance fee and against broad collective bargaining rights for the police union.  These were arguably the less progressive positions on all three questions.  If these questions were submitted only to Democratic primary voters, they may all have had different outcomes.

Second, a Washington Post poll in September found that MoCo voters from all parties together gave Governor Larry Hogan a 66% job approval rating.  This was not significantly different from the Governor’s statewide approval rating of 71%.  It’s hard to imagine a majority progressive electorate approving of an anti-tax GOP Governor to that extent, but this is further evidence that liberals may not in fact be a majority of MoCo voters.

Term limits is the issue of the day and will be decided soon enough.  But a broader question looms.  Given the differences between MoCo’s Two Electorates, what happens when elected officials cater to one of them at the heavy expense of the other?  The recent large property tax hike, which was spread all across county government, was aimed at the priorities of liberal Democratic voters.  It also became the core of the push for term limits which is aimed at the general electorate.  This suggests a need for balance and restraint by those running the government.  Because if one of the two electorates feels unheeded, either one has the tools to strike back – either by unseating incumbents or by shackling them with more ballot questions and charter amendments.

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