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Baltimore Business Journal: Maryland Comptroller Franchot to lawmakers: Put money into the Rainy Day

Maryland Comptroller Peter Franchot wants lawmakers to save additional revenue that is pouring into the state instead of spending it all.

Franchot, a Democrat, said Maryland is anticipating a windfall of more than $1 billion in tax revenue because of the 2017 federal tax reform law and the implementation of a Supreme Court decision allowing states to collect sales tax from online retailers. That money could be put to use in many different ways by the state, but Franchot implored lawmakers Tuesday to put the money into the Rainy Day Fund.

"If you could possibly communicate to your elected officials in Annapolis that they should put all of that money into the Rainy Day Fund, I would be grateful," Franchot said during a luncheon hosted by the Maryland Association of Certified Public Accountants in downtown Baltimore. "The tendency is to just go ahead and commit it and I'm not quite sure that the trends of the economy right now are positive enough to let us make those commitments despite the fact that we have some cash."

The comptroller's comments come just more than a month ahead of the start of the General Assembly's next legislative session in January. The state's Commission on Innovation and Excellence in Education is expected to release its final report by the end of the year recommending billions of dollars in spending. The commission is chaired by William E. "Brit" Kirwan, chancellor emeritus of the University System of Maryland.

"I like everybody want to spend money on education and transportation and infrastructure and the needs of our people," Franchot said. "That is always something that the legislature and elected officials want to do. I just think we need to be very cautious given the situation globally and nationally."

"The jury is out" on the direction of the national and state economy, Franchot said. Tax cuts "turbocharged" the economy, he said. However, he cautioned that there are dangers to putting cash into an "overheated economy." He concluded that it would be better for the state to save the money and evaluate long-term trends before spending it.

"It is very easy to look at money in the bank and say that is going to be there on a renewing basis forever," Franchot said. "Sometimes that does not occur."

During the wide-ranging speech Franchot brought up his friendship with Gov. Larry Hogan, a Republican. Although the two men are from opposing political parties, they have developed a close bond over the last four years and often team together while serving on the Board of Public Works.

Franchot also took a not-so-subtle shot at previous Gov. Martin O'Malley, saying the State Department of Assessments and Taxation and the Department of Labor, Licensing and Regulation have become "infinitely more functional" under Hogan. He joked that he used to have the hold the phone a foot away from his ear when people called complaining about issues with those departments. People would call Franchot's office because they assumed he oversaw those departments.

Heading into the General Assembly's session Franchot also expressed optimism about his craft brewery legislation.

This past spring Franchot proposed legislation that would have eased limits on the brewing industry by getting rid of many caps on production, distribution and sales. The bill died weeks before the session closed and many blamed Franchot for being too contentious with the leaders in the Democratic-majority General Assembly.

"They blamed it on me and said, 'Well, we don't like Franchot so we're going to act like jerks to these Maryland businesses,'" Franchot said. "They humiliated them and sent them packing."

Franchot said he thought the way the General Assembly treated craft brewers was "a travesty." With several new faces elected into the legislature, he is hopeful his proposal will have more success next year.

"I think we'll have a different reception down there because on that issue people understand that we need to be responsive," Franchot said. "There are no Republican businesses or Democratic businesses. There are just businesses we need to reasonably, moderately and in a centrist way promote."

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