Thursday, November 29, 2007

A Tribute to Jane Lawton

Jane Lawton was not only a great state delegate. She was also a warm, wonderful person and no one who knew her will ever forget her.

I first met Jane at the Wheaton Arts District kickoff last summer. At that time, we were launching our guerrilla campaign for a new Forest Glen Metro entrance and we were busily accosting every politician we could find. But Jane was different from everyone else. She was funny, curious, chatting, laughing and utterly without pretension. And she didn’t even mention she was running for office despite the intensity of the campaign season (and the nearby presence of several opponents). Can you imagine that?

But Jane was full of surprises. When ten of us showed up at a state hearing to testify about the horrible Georgia-Forest Glen intersection, Jane actually cheered us on. She told us, “I love you guys! Keep it up!” Far from retreating from us, she embraced us and treated us as if we were her kids.

Others will comment on her political career, including her apprenticeship with U.S. Speaker of the House Carl Albert, her long service as mayor of Chevy Chase, her dominance of the 2006 District 18 delegate election and her remarkable effectiveness on environmental legislation. It is a great shame for Maryland environmentalists that she only served through two general sessions because she had a lot more to offer on protections for the Bay.

But the Jane I will never forget is the sweet, beautiful lady with a great big laugh, a great big smile and a great big hug. Sure, Jane liked to talk about politics, policy issues and the rapacious cable companies she chased in her day job. But she also liked to talk about food, her neighborhood, what was happening in my life (or anyone else she was talking to), and especially her daughters. Jane loved her daughters and could not stop talking about how proud she was of them. She was a sheer delight to be with. Any room Jane entered was a happier place once she walked in. If you were lucky enough to know Jane, you trusted her and you loved her. And she loved us in return.

There will be other state delegates in District 18. But there will never be another Jane Lawton.

Sunday, November 18, 2007

Why Progressives Should Not Punish Legislators Who Voted for the Slots Referendum

In two of the most critical, hotly contested votes in at least fifteen years, Maryland’s state legislators recently voted to send the issue of slots to a referendum. Anti-slots voters howled with betrayal. Gambling bosses munched their cigars in glee and stroked the cash in their wallets. The forces of evil massed at the gates of I-95, poised to let loose the dogs of addiction and vice into the Free State. So naturally, liberals should punish the traitorous legislators who signed Maryland over to the armies of immorality. Right?


Here are five reasons progressives should not punish legislators who voted for the slots referendum:

1. A special session collapse would lead to more tax hikes and/or spending cuts later

Throughout the special session, Senate President Mike Miller repeatedly warned that failure to pass a slots referendum might lead to general impasse. If that happened, the legislators would have to take up deficit reduction again in the general session in early 2008. But since new revenue collections would be delayed from the end of 2007 to the summer of 2008, the hikes would now have to be about $500 million greater. The most likely source of further tax hikes would be related to the sales tax as Montgomery County’s delegation would no doubt block any further attempt to raise income taxes on the rich. Alternatively, spending cuts would inevitably affect education aid and state government staffing. No wonder labor unions were urging wavering legislators to support the referendum.

Would more sales tax hikes and reduced education spending really be in the interest of progressives? Of course not, so the legislators faced a “lesser-of-two-evils” choice. In fact, this pattern of decision-making was the hallmark of the entire special session.

2. Relationships with the Governor and the leadership are important

A politician’s effectiveness is to a great degree based on relationships with others, the pursuit of mutual gains and resulting negotiating leverage. In Annapolis, the most important relationships are with the Democratic leadership and the Governor’s office. The leadership has exclusive control of committee assignments, committee chairmanships and, by extension, bill appearances on the floor. The Governor has unusually tight control over budgeting as well as the giant apparatus of state government. Every legislator has to negotiate this set of relationships to accomplish his or her priorities as well as to meet the needs of his or her district. Politicians without relationships become pariahs, howling at the moon while the rest of the pack feasts on the night’s catch.

The slots referendum vote was, to this point, the most important vote in the Governor’s political career. It was also a test of the Democratic leadership’s ability to work together (not always an easy task between the two chambers) and clear the table of troublesome budget problems prior to the next round of elections. Any legislator who rejects both the Governor and the leadership in their hour of greatest need runs the risk of ruining their ability to deliver grants, aid, transportation projects and general services needed by their district. After all, should such a legislator later approach the Governor for help, he or she might well be the recipient of an icy glare and a cool, “Where were you when I needed you?”

Again we see a “lesser-of-two-evils” decision. Don’t blame those legislators who acted to preserve their effectiveness on other liberal priorities and constituent service.

3. No one demonstrated ideological purity

One of the great ironies of the special session is the behavior of some of Montgomery County’s “liberal” delegation. The tax hikes that encountered the greatest resistance among such members were the Governor’s increased income tax rates on Maryland’s wealthiest residents. Their opposition was based on competitiveness with Virginia, but why shouldn’t the same arguments apply to the sales tax or the tobacco tax? Why the selective outrage?

Some of the legislators who opposed slots worked to reduce the added taxes on the rich in the Governor’s income tax proposal and did not utter a peep of protest against the $730 million sales tax hike – yet they still call themselves “progressives.” If you are looking for ideological purity, you may find it in church, but you will not find any in Annapolis.

4. Slots will keep coming back unless they are defeated with a referendum

Slots have been on the verge of passing for years. In 2005, both chambers of the legislature approved slots bills but could not reconcile them. Anti-slots activists have known a painful truth for years: all it takes is a handful of changed votes to get a pro-slots majority in the legislature. Given the rates of turnover in state legislative elections, it is possible that sooner or later slots will finally pass.

Everyone knows that a vampire will not die until a stake is driven through its heart. Defeating slots at the ballot box may be the only way to destroy the creature once and for all.

5. Heed the people

There have always been two sets of arguments around slots. First are the economic arguments. Some consider gambling fees a voluntary levy (putting aside addictions) and therefore superior to involuntary taxes. Others say gambling revenues are at least matched by health and welfare spending (and more intangible costs) associated with remedying the problems of addiction. Second are the moral arguments. Some see gambling as a victimless crime, or not a crime at all, and say the state has no business outlawing it. Others criticize gambling as inherently immoral and destructive of our culture.

Those who argue against a referendum are implying that the citizens of Maryland are too ignorant to weigh the economic arguments and are too corrupt and/or weak-minded to evaluate the moral arguments. These sorts of decisions are beyond the capabilities of average citizens and can only be decided by those who manage to get elected. Is this really what progressives think about the masses?

Why should progressives fear democracy? If the reasons for opposing slots are truly superior, Maryland’s progressive community is more than capable of triumphing at the ballot box. And victory is entirely possible. While polls suggest that a majority of Marylanders favor slots, anti-slots activists are much more motivated than pro-slots voters. Liberals may very well win by getting out their vote in anti-slots strongholds like Montgomery County, Prince George’s County and Ocean City. If that happens, perhaps those who voted for the referendum should be thanked by allowing the people to slay the monster once and for all.

Thursday, November 1, 2007

Adam Pagnucco on the Budget: Part III

Part Three: Are There Any Alternatives?

Some politicians would like to repeal the 1997 income tax cut. Others suggest higher taxes on alcohol or other “sin” products. The Republicans would like to avoid new taxes by dramatically cutting education spending. Senator Rich Madaleno reports that as many as 80 bills may be filed by legislators for the special session, many of them related to the budget problem. Here’s my idea.

Your correspondent is a researcher for the United Brotherhood of Carpenters. One of the issues we encounter on many construction job sites is worker misclassification as independent contractors. Under state and federal tax laws, workers are supposed to be classified as employees when they operate under an employer’s direction (such as under established hours of work), use tools and equipment owned by the employer and do not bear business risk. Employers are required to withhold income, Social Security and Medicare taxes and pay premiums for workers compensation and unemployment insurance for their employees. However, many employers misclassify workers as independent contractors and pay none of the above. Workers may (or may not) receive Form 1099 to report income as independent contractors, but these forms are often discarded. This problem is especially severe in construction but also afflicts trucking, janitorial services and other industries.

Employers have a huge incentive to misclassify. FICA payments (Social Security and Medicare) account for 7.65% of an employer’s payroll costs. In Maryland, state unemployment insurance premiums average 7.5% of payroll. Workers compensation premiums can range into the double digits depending on the occupation. All told, cheating contractors can shave 16% off their labor costs – not including workers compensation – when they misclassify. That is a huge advantage in an ultra-competitive industry like construction. Law-abiding employers face a grim choice between holding the line on compensation, cheating themselves or leaving the industry entirely.

State governments can lose massive amounts of unemployment insurance premiums and income taxes due to misclassification. A 2004 Harvard study found that Massachusetts was losing $12.6-35 million per year in unemployment insurance premiums and $91-152 million per year in income taxes. A 2006 University of Missouri-Kansas City study found that Illinois lost $53.7 million in unemployment insurance premiums and $149-248 million in income taxes in 2005. A 2007 Cornell University study found that New York was losing $176 million in unemployment insurance premiums alone per year.

Some states are finally cracking down to recover these lost revenues. Connecticut, New Jersey and Illinois all passed anti-misclassification laws in 2007. Connecticut’s law allows its Labor Department to issue stop-work orders for construction projects with misclassification. New Jersey’s law would send some cheating employers to prison. New York and Washington state both have task forces to assist enforcement efforts. And the Internal Revenue Service has formed partnerships with state authorities in California, Michigan, New Jersey and North Carolina to track down misclassifying employers.

How much money is Maryland losing due to misclassification? No one knows. Peter Franchot told the Mid-Atlantic Regional Council of Carpenters when he was a candidate for Comptroller last year, “Misclassification costs the State of Maryland millions, maybe billions of dollars.” If Harvard found that Massachusetts (a state with a similar population size as Maryland’s) was losing $104-187 million per year, it is conceivable that Maryland’s losses are in the same neighborhood. Why wouldn’t every politician in the state want to have a hard estimate of these losses, especially before voting on tax increases?

Even if Maryland could recover its losses due to misclassification, that would not raise close to the amount of money that a sales tax increase could. But a serious effort to crack down on cheating employers would show the public that their elected leaders understand that tax enforcement is at least as high a priority as tax hikes. And if the state ever did get the problem under control, perhaps the more regressive elements of the current deficit reduction plan could be scaled back over time.

Adam Pagnucco is the Assistant to the General President of the United Brotherhood of Carpenters and has been employed in the labor movement since 1994. The views in this column are his alone and do not represent official statements from the union.