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A Miner Detail: The 2019 Annapolis Session Winners and Losers [EXCERPT]
April 12, 2019
Baltimore Brew: Q&A: Comptroller Peter Franchot slams ‘corrupt’ culture of Annapolis, talks booze laws, State Center, school funding and more
November 6, 2018
Peter Franchot pulls no punches when discussing his Democratic colleagues in Annapolis. During the late 1980s, in his first years spent representing Takoma Park and Silver Spring in the Maryland House of Delegates, he says he was “ecstatic when someone came and told me 15 minutes before everybody else what I had to vote on and how to vote.”
But since his later years as a veteran legislator in the General Assembly—and increasingly over his past three terms as comptroller of Maryland—he’s grown not just tired, but outright critical, of the mechanics of the State House, in which leadership dictates how members vote if they want to remain in the party’s good graces.
“After 40 years of that, where nobody is sending anything back up the chain of command, it becomes corrupt, and it’s corrupt right now,” he says. His criticism is bipartisan, he claims: “If it were Republicans, it would be the same thing, because it’s just human nature.”
A lifelong Democrat, Franchot was first elected as the state’s chief financial officer in 2006. After serving through two terms with Martin O’Malley and one so far with Gov. Larry Hogan, he’s set be elected for a fourth time next Tuesday, barring a surprise upset from his Republican opponent, Anjali Reed Phukan.
To the chagrin of Democratic Party leaders, Franchot and Hogan became fast friends when Hogan was elected in 2014, bonding over a shared enthusiasm for fiscal conservativism, publicly grilling state employees over contracts and doing battle with Baltimore City and County schools officials over a lack of adequate or functional heating and air conditioning in schools.
Things came to a head this past spring, when Franchot came out campaigning against the two top Democrats in the State House after the legislature voted to strip the Board of Public Works—of which he and Hogan are members, along with Treasurer Nancy Kopp—of its role in school construction- and maintenance-funding decisions.
Lawmakers also killed his championed overhaul of craft brewing regulations for craft brewing, and passed legislation creating a task force to examine whether the comptroller’s office should even maintain any oversight of alcohol policy. He’s still smarting over the fact that Eric Best, an executive with the distributor Bob Hall, LLC, came out against the reform effort in an interview with The Sun and said there were concerns about excessive drinking, only to later release 77-packs of Natural Light in College Park.
“They came after me on the public health issue and then they got caught. Eric Best… got caught with his pants down,” he says. “College Park, it’s the only place they sold it in Maryland, and the only time was homecoming. It’s cheap beer, binge drinking, young people, underage drinking, all of it was kind of embodied body by that.”
Ahead of the election, Franchot’s doubled down on his message of contempt for entrenched party leadership. “The insiders always win, and everyone else is left behind,” asserts an ad for Franchot’s campaign that’s been circulating in the Baltimore area recently, painting Annapolis as a cesspool of corruption and backroom deals.
The comptroller, his chief of staff, Len Foxwell, and press secretary, Alan Brody, stopped by Baltimore Fishbowl this week for a nearly hour-long conversation with managing editor Brandon Weigel and senior editor Ethan McLeod about booze regulations, government, federal tax policies, Franchot’s decision not to support fellow Democrat Ben Jealous in the gubernatorial election and more. Here’s an edited transcript of the conversation:
Brandon Weigel: You spent a lot of the last year talking about the Reform on Tap Task Force and championing craft beer in Maryland. And, as you of course know, the bill died in the house committee. Given how much involvement you and your office put into this initiative, how much did that defeat sting?
Peter Franchot: It didn’t sting at all. I spent 20 years in the legislature and regularly see developments like that turn into bigger victories down the road. So it’s just a matter of putting it back before a different-looking legislature next January. Whoever is governor, I assume, will be a little more liberated to stick up for family-owned small businesses. The sector is growing despite all the restrictions, and we just need to get a little common-sense approach to what should be a sector which is two or three times as big as the almost $1 billion that they currently represent.
And it’s not just them. It’s also Maryland-crafted spirits and Maryland-crafted wine. I foresee modernization of their statutes, both at the state and the county level, i.e. clearing out some of the impediments. And then I foresee a large national campaign that the state could embark upon to reintroduce Maryland–after the University of Maryland football crisis dies down–to the rest of the nation as a good place to come and visit and partake of Maryland-crafted alcohol products. We’re not put off at all by the embarrassing situation down in Annapolis. In fact, some of the worst offenders are looking for new work right now. So we’ll see how it all goes.
No, I’m very energized about this, I think, representative sector of what is attractive to millennials. I’m not exactly sure what the total strategy is for the legislature. I think we have to see what the election brings next week.
Brandon Weigel: One of the delegates here, Luke Clippinger, supported the bill, but told The Sun after it died that you left brewers “in the lurch” with your advocacy and “screwed this up for them in the worst possible way.” The legislature instead passed a bill examining whether your office should maintain oversight over alcohol in the state. Do you think this became too personal, or that your advocacy got in the way?
Peter Franchot: Well, I like Luke Clippinger quite a bit. He’s the new chair of the Judiciary Committee, which is quite a promotion for him, and I look forward to having him perform well over there. But that criticism is completely off-base. The problem for the craft brewing industry is not the comptroller. It’s the legislature.
And they have enacted a thicket of economic protectionism equivalent to old medieval guilds, without the excellence. Medieval guilds actually were superior to what we have right now in Maryland for craft beer because they had an ethos of excellence. That’s why they were forming these protective organizations that wouldn’t let anybody new in–because they wanted to keep their standards up.
This is the opposite. We have lousy beer imported from out of state, and we have a group in the legislature that is bought, sold and delivered on the Economic Matters Committee to defend not the interests of Maryland small businesses, but Budweiser and MillerCoors.
I served 20 years in the legislature, so I know I know of what I speak when I say that there’s about 90 percent pettiness in that particular statement by Luke. He knows exactly what the situation is. Which is why I’m delighted that he’s moving off the committee.
Now, whoever moves on, within two weeks, tends to be co-opted. But hope springs eternal. They can look and see some of their colleagues who were thrown out of office, and perhaps a few more might join them by the end by the election next Tuesday, I guess.
And no, I sleep very easily at night.
Len Foxwell: It’s an asinine statement that’s completely dismissive of history. It wasn’t Peter Franchot that set up a legal and regulatory framework that was, by far, the most restrictive among Mid-Atlantic states. That predated Peter Franchot’s arrival in the comptroller’s office not by years, but by decades.
And it wasn’t because of Peter Franchot that a small and exclusive group of lobbyists and senior lawmakers went into a back room the day before the crossover deadline for legislation and adopted amendments to House Bill 1283 in the 2017 legislative session that, had they been passed clean, would have put the Maryland craft beer industry out of business.
Peter Franchot: Around the country, Maryland is very similar to most states, including the go-to states for beer like North Carolina and Oregon. But they all have this approach of going to the legislatures–most of whom are similar to Maryland’s legislature–hat in hand, begging for crumbs and a little bit here and a little bit there and, Oh my goodness, don’t say anything harsh about the treatment that you’re getting because you’ll offend the powers that be. Well, I have a different approach to that, which is, Let’s go bold, go with a big idea, let’s seek to make Maryland something special in the country, and if we succeed, let’s do a national campaign around it. We’ll see who prevails.
Brandon Weigel: So what are your plans for Reform on Tap in the coming months and the next session?
Peter Franchot: Well, we’re taking, I think, the reform package that we had with a few subtractions, but basically putting that in again. Let’s be honest, the brewers are like any other sector: They get spooked by comments like Luke’s; they’re not familiar with how the legislature is structured. They have their own lobbyists and they can move forward on their own steam if they think that’s a good complementary path.
My view is you need a big group of reforms to indicate that the state is leaping ahead of Oregon, California, Vermont of all places, North Carolina. And if we can do that, then we’ve got something special.
We tried this with wine. Eight years ago, we tried to modernize the state’s wine laws, and we got this same response from the legislature. And we ended up with having to just take one or two provisions like direct shipment. It proved to be very, very helpful to Maryland wineries. But I always regretted not going for the big reform package.
Len Foxwell: It was wine clubs and things like that, wine of the month. What the comptroller is referring to is a more incremental legislative strategy. Some said, “Why did you try for everything within a comprehensive omnibus bill?” And our experience was informed by the wine issue.
We passed the Winery Modernization Act in 2010, which created a framework that allowed wineries to hold tastings and host events and sell at farmer’s markets. That was followed in 2011 by the direct ship bill. And those were good, incremental steps, but because it only allowed us to do direct ship from wineries, as opposed to out-of-state retailers, wine-of-the-month clubs, things like that, the thinking at the time was we could come back next year for another bite of the apple. And that next year never came.
So our concern is that if we adopt a more incremental approach, what happens in Annapolis is you pass at that kind of small stutter-step bill, and then that’ll freeze the clock because then the advocates on the other side will say, “Let’s give it a few years to work. Let’s see how it plays.”
Alan Brody: And it happens on issues that are not just alcohol. We’ve seen it happen on policy issues.
Ethan McLeod: When you said “paid for and bought,” were you were referring to lobbyists?
Peter Franchot: Well, that’s their main interaction. But the lobbyists are simply representatives of the distributors–most of them are in Maryland, but they have these unbelievably tight relationships with the big out-of-state beer companies. So it’s something where everybody on the inside says, we can only do a tiny little thing here, baby steps, because we don’t want to put someone else who contributes to us out of business, in an awkward position.
“Bought, sold and delivered” is a rather colorful way of describing the situation. Put it this way: Since I was part of this exercise for 20 years, we often held our paws out, and all of a sudden money for our campaigns was deposited. But when you look at some of the news coverage of the legislature recently, last year, it wasn’t just campaign contributions. So that’s the basis of the ad I’ve been running up in the city and around the Baltimore region. I think it’s a very accurate, tough ad on the perception that it’s most of us are on the outside looking in.
Ethan McLeod: I wanted to ask, since you are a champion of this issue, and you did this with wine before–you’ve noticed these sectors as opportunities for the state, and not just with revenue, but room for growth. Do you see other untapped revenue opportunities here? A few that come to mind being cannabis–legal recreational, or expanding medical–sports gambling and green energy.
Peter Franchot: Well, all of those are terrific I suppose, if they could be implemented in a smooth way. I have my concerns about the cannabis situation just because of, as you know, the stuff that we’re running into with the medical marijuana. But they’re all just a drop in the water compared to the federal tax cut, which has a provision in it that allows the governor of a state like Maryland to establish economic opportunity zones, new ones.
Hogan has already designated 149 of them in Maryland, one in every county, but a lot of them are in Baltimore City. Why is that important? There’s $5 trillion in capital gains profit. It currently is held by the private sector around the country. And the tax cut articulates a very appealing tax break for those rich individuals.
And it means that if someone in this area opened up a hardware store or, even in theory, an internet startup company, whatever money is invested in that startup is tax-exempt for seven years, then you get a 15 percent tax break. After 10 years you get a 30 percent tax break on that.
The initial IRS regulations, unfortunately, have something in it that Len and others have picked up on, and we’re going to try to get the IRS to change it by the end of their comment period, which is in December. But that kind of California gold rush in reverse could happen in Maryland. And all of the things you mentioned were of interest to me, but nothing like this. Because it’s really a game changer.
Ethan McLeod: You had pulled your support for State Center back during the O’Malley administration, years before the lease was nixed via lawsuit. What is your vision for the complex?
Peter Franchot: My vision is Amazon Junior. Originally, Hogan and I both wanted the Amazon East Coast headquarters to be in Baltimore. Since they nixed that, we’re now both in favor of it going to Montgomery County.
Let’s say it goes to Northern Virginia, which is what everybody’s talking about. OK. What about going out and recruiting four or five smaller versions of Amazon on the West Coast that also would be interested in an East Coast headquarters in a vibrant town like Baltimore?
State Center needs some job-producing new investments that will then promote the hardware store, the grocery store, the ball fields, the brewery. But you’ve gotta have a State Center anchored, in my opinion, not by state offices paying rent at a questionable, high rate, but by the private sector using some of these capital gains profits that can be attracted to Maryland.
These dollars around the country will go to any state that has got the welcome mat out, and I would suggest that State Center could be a center for a couple of these West Coast companies that are not as big as Amazon, but in the same kind of area where they’re going to attract people that will be folks that live in the community.
I think the Amazon experience has been an eye-opener for me because, you know, they’re the ones who announced it, and then everybody ran to compete. Well, what about the next 25 companies under Amazon based in California, Oregon and Washington?
Brandon Weigel: As a member of the Board of Public Works, you have decried conditions in public schools, particularly as it relates to air conditioning and new construction in the county. In your view, how did we get to this place?
Peter Franchot: We got there out of political arrogance. It was the county executive in Baltimore County and the then-mayor of Baltimore City, both told me to go jump in a lake. They’re not interested in somebody coming in from the outside and saying, “Fix the lack of heat during the winter and the lack of cooling during summer.”
I have advocated that there be units–not individual air conditioning units, necessarily, but what are called these split units that are in use around the state. They should be put in as an interim measure. They could have been put in six years ago for $5 million, and $7 million would have taken care of both jurisdictions which, alone among the state, lack these basic climate controls in their classrooms. It’s been pulling teeth, but they’re making some progress in correcting the problem.
Governor O’Malley was disinterested in the issue, saw it as an attack upon local Democratic elected officials. I didn’t see it that way. I just saw it as, Let’s help the kids. It was always two-to-one against me. Now Hogan is two-to-one with me. And we’re going to continue to hold people accountable for making sure that these classrooms are taken care of sooner rather than later.
Brandon Weigel: Some of this is being hashed out in the Kirwan Commission, but do think there’s more the state could be doing in City Schools in particular?
Peter Franchot: Well, I support the 21st Century Schools [program]. But once again, the question I have for the 21st Century Schools is, I’m going back in at six months and 12 months after the new schools have opened, and checking out what it looks like. Maintenance. How do you take care of it? How do you make sure it’s here 50 years from now? So that’s number one.
Number two, on the overall issue of schools in Baltimore City, I just simply do not see it as a resource problem. Fundamentally, it is a management administrative oversight issue. And it requires people who are elected and people that are appointed to do their jobs. And sitting back and saying, Oh, well the infrastructure is crumbling, and, We’re not getting enough money–I don’t mind putting more resources into education in Baltimore City and Baltimore County. But first there’s gotta be an improvement in how you spend it. That’s my view. And I think education improvement will flow from that.
Brandon Weigel: In a similar move that echoed the one with the Comptroller’s Office being studied for whether it can maintain oversight of alcohol, the Board of Public Works was removed from the school construction process by the legislature. Did you see that as a personal attack as well?
Peter Franchot: Of course. They said it on the floor of the House and the Senate. They said, We don’t have any problem with Governor Hogan. We’re just doing this to punish Franchot and see if we can’t make him shut up. It’s all personal. Retaliatory. Petty. But it is what it is. It doesn’t affect me at all.
And you know, we’re giving as good as we get, and hopefully we will be able to represent citizens on school construction, and I think you’re going to see a lot of it. Who is it that recommends how much money is spent on school construction? Governor Hogan. Let’s just imagine, despite my party’s best efforts, that he’s re-elected. The issue is, well how much are you going to put into school construction this year? Well, let’s bring in all the school superintendents. And let’s bring in the state senators too, because they seem to have so much beef about them, and the state delegates.
Len Foxwell: It’s not a beg-a-thon so much as a budget briefing.
Peter Franchot: Yes, a budget-thon. They can play their games and try to cut the oversight, but it’s not going to succeed.
Len Foxwell: The real losers here are the parents, the parents of these kids and the teachers who are in these sub-standard learning conditions, because the Board of Public Works was formed to publicly express their concerns and their grievances. Now that public platform is being compromised because of the legislature moving it from the Board of Public Works to the Interagency Committee on School Construction, which is a non-elected body that meets in relative privacy in a small room in which public access and public comment, if not prohibited, are not encouraged.
Peter Franchot: But this is not our opinion. This is what they said on the floor of the House of Delegates, that we don’t like the comptroller interfering with local jurisdictions. Well, if I’m lucky enough to win, get used to it for another four years. I hate to sound caustic, but you asked.
Ethan McLeod: To get back to that ad, it goes right in line with what you just said. It paints Annapolis as an amusement park ride through an Orwellian hellscape and Tammany Hall with backroom wheeling and dealing. That doesn’t inspire a lot of confidence in how things work in Annapolis. Is it really that bad?
Peter Franchot: Yeah, I’m describing accurately what people don’t ever see, because it’s in the back rooms. And, you know, it’s the Kumbaya out in front, in the public, where we’re all talking about working together across party lines and we’re all bipartisan. And then you go back in the room with your party’s leadership and they’re like, How do we put a knife in this person’s back that we were just putting our arm around?
Tammany Hall is absolutely spot on, and the problem there is not Democrat or Republican, it’s that absolute power corrupts absolutely. I know that for a fact. That’s kind of been a governing principle of mine.
And so I believe in checks and balances, and right now you go into the backroom in the House of Delegates or the Senate–there might be Republicans in there, too, participating, because they’re veterans and everybody’s on the same page–but it’s basically [Senate President Thomas V. Mike] Miller and [House Speaker Michael] Busch, and their chiefs of staff that are [one clap] ‘Here’s what we’re gonna do.’ And everyone falls in line.
I can remember in the legislature, when I was a newly elected legislator, I was so ecstatic when someone came and told me 15 minutes before everybody else what I had to vote on and how to vote. For a new legislator, that was kind of the Balm of Gilead or something.
Ethan McLeod: You’d been tapped.
Peter Franchot: I was like seven or eight levels down from the decision being made, but just learning about it slightly in advance of you guys, for example–and they were probably telling you the same stuff–but that was like, Oh boy I’m really part of this team. Well, after 40 years of that, where nobody is sending anything back up the chain of command, it becomes corrupt, and it’s corrupt right now. If it were Republicans, it would be the same thing, because it’s just human nature.
Now, what’s the solution to that? Independent redistricting, let unaffiliated people vote in the primaries. Then the other thing, particularly in Baltimore City: get rid of these slates. I mean, the idea that you have to go and beg somebody to be put on their slate, come on. So those are some ways to deal with the Tammany Hall situation, and reform will happen. It’s like holding back progress, they can’t do it.
Brandon Weigel: A lot of progressives in Maryland are upset that the party hasn’t really supported Ben Jealous, in their view. And you chose to remain neutral. Why was that?
Peter Franchot: Because of my relationship with Hogan, which is very positive, which I value in fiscal matters.
And I said, “Look, I have a good relationship with Jealous. He’s a classy guy, lot of experience in the private sector, not so much in Maryland politics, but I’m going to stay neutral.” And then The Sun asked me, “Well, come on, who are you going to vote for in the booth? I know you’re neutral, but who are you going to pull the lever for?” And I said I’m not voting in that category, because I said I was going to be neutral, I am gonna be neutral. I’m not voting for Hogan, I’m not voting Jealous.
Len Foxwell: But you are voting.
Peter Franchot: I am voting for every other office. But I get, every once in a while, confronted by someone saying, You should be ashamed of yourself because you’re a Democratic leader and you’re not endorsing the Democratic nominee. If I were a young activist on the outside who was deeply involved in Jealous’ campaign, I might feel that myself. It’s human nature. But I hear it very rarely.
Brandon Weigel: What do you say to that when you hear it?
Peter Franchot: I say to them, I understand what you’re feeling. You know, this is unique to me, and furthermore, I think you exaggerate way too much the value of these endorsements. I can remember as a young delegate campaigning, I lived or died by whether the teachers would endorse me, or whether labor would endorse me. I mean, my God, I felt like I was competing for my right to live, practically. If they didn’t pick me out of the pack, I somehow was a failure. And, you know, they have almost no impact on the other voters. That’s their complaint, that my not working for Jealous means that he’s going to get less support. I, humbly, disagree with that.
Brandon Weigel: Your ad refers to you as an “independent Democrat.” What do you define that as? Do you see it as sort of like a John McCain maverick role?
Peter Franchot: No. Well, what do they say about me? The only thing silent about me is the “t” at the end of my name. I don’t advocate for people to have the maverick title, but I do advocate for them to be independent, and not just toe the party line. I say I’m a Democrat, but not a robot. And I think that’s important.
I haven’t recommended that anybody vote for Republicans. You asked, “What do they say to you?” They say, “Well you’re not a good Democrat because you’re not supporting Jealous.” And I say, “Just tell me one issue in the last 30 years that I’ve been involved in that you would say is not within the values of the Democratic Party.” And they never come up with anything, because it’s all just the machine saying, He’s not part of us, therefore he’s gotta be the enemy.
Len Foxwell: If the machine had as much power as they used to, and as they thought they did, Mary Washington wouldn’t be a senator.
Peter Franchot: Corey McCray would have been out, or they would have had a wolf character running against