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So Far, So Good for Hogan – Maybe

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What kind of governor is Larry Hogan turning out to be?

Not very much different from what he promised, though with a few surprises thrown in here and there. He is a moderate Republican, with a simple focus on reducing spending and taxes, and no desire to stir up social issues.

Republicans are mostly smiling and Democrats are frowning, with an occasional angry word thrown in from each side.

Democratic progressives and their union supporters are most agitated; but others, including environmental groups, are giving mixed marks, waiting to see what comes next.

Hogan is less than five months into his 48-month term — just about 10% of the way through — but in terms of budgets and legislative sessions, he’s done one out of four, for 25%. Promised across-the-board budget trims have yet to be spelled out.

Hogan was expected to have a hard time with the Democrat-dominated legislature. Despite his lapses into campaign rhetoric that annoyed Dems, he promised a bipartisan approach, but it takes two to tango. Hogan wanted to lead; the Dems preferred to stick with their usual line dance.

When the music stopped, everybody at the State House was a bit annoyed with each other, a fairly typical state of affairs with a new governor, regardless of party. Long-time legislative leaders expect to do some “training” of a new chief executive. When things weren’t going smoothly, Senate President Mike Miller — now the longest serving member of the legislature and presiding officer — would refer to Hogan’s lack of experience in elected office. House Speaker Michael Busch referred to Hogan and his proposals with muted disdain, while he tried to get a handle on the 60 new delegates.

While the media would focus on the high drama on the dance floor, the legislature was slow dancing with hundreds of bills that got little, if any, coverage. The pace was slower than usual, because of all the new members.

Scorecard

Here’s a scorecard as Hogan headed off to Asia for his first foreign economic development trip.

When he couldn’t get the gas and business tax cuts he proposed, Hogan took a whack at tolls.

Tolls and fees were actually part of the original enumeration of “40 consecutive tax hikes” Hogan still refers to. By cutting tolls on the bridges, tunnels and the InterCounty Connector, Hogan provided $54 million in middle-class tax relief, since flat tolls are inherently regressive, costing low-income people a greater share of their earnings. Some households who use the Bay Bridge will save hundreds of dollars.

The governor couldn’t cut tolls on his own, since they are set by the appointed board of the Maryland Transportation Authority. But he had his transportation secretary find a way to make the case and the board complied.

Only the representative from Southern Maryland objected, because the loss of revenue endangers the replacement of the Harry Nice Bridge that carries Route 301 over the Potomac River into Virginia. The toll cut may also harm the ratings of the bonds that are used to finance improvements on the bridges, tunnels and their approaches.

A few legislators were unhappy, but there is nothing they can do about it. Hogan’s political base was thrilled.

School Aid

Hogan’s decision not to release an extra $68 million in school aid could have more lasting negative effects on his tenure. The teachers union, school boards, PTAs and county executives predicted dire consequences, but he stood his ground, refusing to add the money to the $6.1 billion he had already budgeted for public schools.

Ultimately, he surrendered to lawmaker’s wishes that he fully fund the Geographic Cost of Education Index (GCEI) in future years. He said he would allow a bill forcing him to fund the GCEI to become law without his signature because he could not get the votes to sustain a veto.

“We’re not thrilled with [the bill],” Hogan said, because 81% of every dollar in the state budget is mandated spending. Hogan says he can only control the other 19%.

GCEI was not mandated, though Gov. Martin O’Malley had fully funded it for six years.

Hogan said Democrats in the legislature had enough votes to override his veto, and he didn’t want to go through that process.

He said he was going to use the education money to fund the $75 million in pension funding the legislature had cut. However, he can’t do that directly. Only if there is money left over at the end of fiscal 2016 can he use about half of any surplus to reduce future pension liabilities.

Vetoes and the Hotel Tax

Hogan vetoed more than 191 pieces of legislation, but he only rejected six bills for substantive reasons. The other 185 were duplicate bills in which both a House and a Senate version of the same bill was enacted. (Some governors choose to sign both bills, pleasing the sponsors in both houses.)

In one of his policy vetoes, Hogan punted on legislation that came to be called the Hotel Tax. This would have mandated that Internet travel sites, such as Orbitz and Expedia, pay the state more in sales tax. Currently, the web sites pay the state sales tax based on the discounted rate they pay the hotel for the room, rather than the full amount the customer sees as the room rate, plus tax on the web site.

Hotel chains such as Bethesda-based Marriott International favored the change, wanting the Internet middlemen to pay the same tax they do. The Internet companies opposed the measure, which would have cut into their profit margin. Hundreds of Maryland travel agencies also would have had to pay more, depending on how they charged for hotel bookings.

National taxpayer groups had classified the bill as a new tax, while sponsors insisted it was simply enforcing current tax law.

Rather than tick off either side, Hogan relied on one of the compelling arguments that had been made against the legislation. The comptroller had already sued the Internet companies to collect the tax. That suit is still pending in Maryland tax court.

Hogan said he wanted to let the court case run its course. Once that lawsuit is decided, the General Assembly can determine whether legislation is needed, he said. This lets the tax-cutting governor to put off any action on this taxing issue for at least a year or two.

Felon Voting, Drug Paraphernalia

Hogan also vetoed bills allowing felons on probation to vote and decriminalizing possession of drug paraphernalia. Neither bill had passed the House by veto-proof margins.

Hogan allowed two others bills on potentially controversial social issues to go into law without his signature. One mandated insurance coverage of in vitro fertilization procedures for same-sex couples. A second allowed transgender persons to have their birth certificates changed to reflect their new sex.

Equality Maryland, the leading gay rights lobby, cheered Hogan’s decisions, but the governor may have been avoiding fights he couldn’t win. Both bills passed with enough votes to override a veto.

Transit Hazards Ahead

There are major political hazards in the months ahead for the new governor. He must make a decision soon on whether or not to build the Purple Line, the rail line from Bethesda to New Carrollton. The governor has continued to raise objections to its costs — at least $1.5 billion or more in state funds.

While some elected officials and citizen groups continue to oppose a transit line they say will do little to reduce traffic congestion, the majority of business organizations and elected leaders in the Washington suburbs are totally on board with the project. The similar Red Line from Woodlawn to East Baltimore is not directly tied to the funding for the Purple Line, but politically it would be hard for Hogan to justify building one line without building the other.

If Hogan chooses to kill both expensive projects, his rural supporters would cheer because they resent paying for urban transit out of the Transportation Trust Fund filled with their gas taxes. But killing either rail line would outrage business and elected leaders in the affected jurisdictions, along with environmental groups and many average citizens who support more public transit.

Some of these groups did not support Hogan’s election, but antagonizing them in his first year could make governing in the next three even more difficult.