A Spy Chat with Comptroller of Maryland Peter Franchot

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Maryland Comptroller Peter Franchot

Peter Franchot, Comptroller of Maryland, is up for re-election this fall. In a recent visit to Chestertown, Franchot met with the Spy editorial team for a free-wheeling interview. The session took place in the back room of the BookPlate bookstore on Cross Street, and Franchot took the opportunity to purchase several recent political books recommended by bookseller Tom Martin.  The store cat, KeKe, circled around once or twice to supervise the interview.

The Spy began by asking what issues Franchot saw as central to the upcoming election.

The key issue for me as Comptroller is customer service,” Franchot said. “People expect to get their refunds quickly. We returned $3 billion in refunds this year to Maryland families. We averaged 2.1 business days upon receiving their refund claim and putting their money back in their bank account. That’s a big operation. People expect that money. It’s their money, so we do a lot of bells and whistles as far as making sure they get good customer service. We answer 800,000 phone calls a year on the 800-MDTAXES number. We average 40 seconds from the first ring to getting a live, friendly helpful employee of my agency on the line. And that’s pretty unusual these days. I’m just emphasizing from my agency’s perspective that we have a top priority. I carry that across the state as a reason for people to reelect me. It’s not a Democratic issue, it’s not a Republican issue – it’s just a service issue, and I think that people are hungry for that in government.”

Asked if he has goals for another term – if re-elected, it would be his fourth – Franchot said, “Well, we’re going to continue obviously doing the things we’ve been doing. And it depends on who the next governor is. If it’s Larry Hogan, he and I have developed a very strong relationship around fiscal issues, and I’ll continue to look for areas where we can agree and work together. I think that’s the lighted path forward for American politics, for the parties to drop a lot of their partisanship, where we can. We’re different parties and different kinds of people, but where we can combine on things like procurement reform on the Board of Public Works, school maintenance on the Board of Public Works, doing things like starting school after Labor Day, which I think is a great thing for the state, I’m happy to work with Gov. Hogan. If the Democrat is elected, whoever that may be, that creates a different climate for me on the Board of Public Works.”

Speaking of the Board of Public Works, consisting of Franchot, Hogan, and state Treasurer Nancy Kopp, the General Assembly made two changes in that body’s responsibilities at the end of the 2018 session. Franchot characterized the actions as “what happens when legislative leaders are all-powerful and have no checks and balances,” and expressed hope that Hogan will veto them. One was a statute barring the Comptroller from serving as chairman of the board of trustees of the state retirement system – a $51 billion fund that covers some 400,000 current and former state employees. Franchot has been vice-chair for his entire term (12 years to date) in office. “It jeopardizes the triple-A bond rating of the state,” Franchot said. “It injects a lot of politics into the pension system,” he added, hinting that the change also directly benefits one of the leaders of the Assembly.

The other change, which Franchot said annoyed Hogan more than it did himself, was an amendment removing the Board of Public Works from jurisdiction over school construction. He said, “Gov. Hogan and I together have revolutionized the procurement system for school construction, and we’ve emphasized taking care of school buildings so we don’t have to constantly build new ones. (…) We made a lot of progress, but it irritated some of the local political bosses so this is what they served up – once again, behind closed doors, backroom. I don’t take it personally, I just take it as the dying spasms of a political boss system that is alive and well for, hopefully, just a short time more in Annapolis.”

Franchot has some ideas how the General Assembly could be made more responsive to the wishes of the voters. “I tell people if we could have independent redistricting and open primary voting, we’d have a lot better legislature. They’d be a lot more moderate and a lot less partisan, and a lot less dependent on the extremes of either party. I certainly hope we advance to that point at some time, so everybody’s not invulnerable. I mean, right now we have Democrats and Republicans and so-called “un-enrolled,” who are generally young people who don’t want to sign up to be Democrats or Republicans. There’s 700,000 of them in the state, and my suggestion is that we allow them to go to vote on primary day. They can either vote in the Republican primary or the Democratic primary – whatever they want to do – and that day they can vote in that party’s primary. I don’t know how you’d do it – some states allow an independent, as they’re called, to register, literally on the day, by picking the party. They go and vote. On their way out of the poll, they re-enroll as independents. But the key is, get them involved. I don’t care what party they pick; I just want them involved. They deserve to vote.”

Asked what he saw as important economic drivers for rural counties like Kent to pursue, Franchot turned to a favorite topic. “I’ve told Chestertown and Kent County that they’re doing great as far as getting new craft breweries, craft distilleries – there are a couple of wineries, I think, in the county. That’s terrific, that’s a manufacturing sector currently in Maryland that produces $650 million in economic activity from the beer side alone. We’re talking a billion and a half dollars when you put in the wine industry and the distillery business. So emphasizing Maryland-based craft alcohol products is a great sector for the Shore, because not only do you generate economic activity that stays local, but you also attract a lot of people from New Jersey, Delaware, and Pennsylvania who want to come down and visit.” He noted, “We’re not talking about more alcohol; we’re talking about substituting in-state produced, wonderful craft alcohol products for out-of-state stuff that gets imported.”

While his efforts to pass a bill making life easier for craft breweries were stymied in the 2018 Assembly session, Franchot was optimistic about the future of the industry. “We’re going to go right back in with a big bill that’s got even more provisions in it. We’re going to let the brewers – because they’re maturing as far as their presence in Annapolis – we’re going to let them take the leadership role in it. And I think that they’ll be very successful in terms of getting rid of some of the antiquated laws and statutes that stand in the way. As I mentioned, they already have 6,500 jobs in the state; it could be five times that within five years if we just let them brew good beer and sell it to consumers. The funny system we have – it’s called capitalism – it might actually work if we ever let it.”

Franchot said Hogan supports the craft brewers, but that the Governor decided to stay out of the issue because of the politics involved. “I think next year we’re going to send back the bill, it’s going to be stronger, it’s going to get a much better reception. I think the legislature realizes that not only did they miss the opportunity to make us the number one state in the country; because of what they did, it’s the worst state in the country for craft beer. I mean, we have breweries that are ready to pack up and move out to Virginia and Pennsylvania, right now.”

On a broader scale, Franchot suggested a new way for Maryland to invest in the future of its youth – many of who, in rural counties like Kent, leave home after high school and never return. “We need a state-wide youth employment program where veterans are brought in as team leaders. They’re assigned 15 to 20 kids. The kids come in at $10 an hour pay; they work for a year or two years, they learn skills, they get educated about the state, about the country. It’s as if they were in the army, but. They’re doing some kind of infrastructure work, and the state and the federal government should put an extra $10 in a trust fund for them, so at the end of two years, they actually have something to show for it. And the key is that we offer full employment and a real serious environment for these young people. A lot of kids will jump at it. If we can get them to be serious about their future in Maryland, they’ll stay in Maryland. No more “you have to go apply for a job” – you have a job. You’re going to have a former drill sergeant as your team leader, so it’s not going to be a gift. You’ve got to show up, you’ve got to conduct yourself with some direction, but if you do, you’re going to get $20,000 at the end, and you’ll make $10 an hour, say. And God knows, we have enough to do.”

Franchot also had some observations on the impact of the new federal tax laws on Maryland residents. “We did a very innovative analysis. We took two-and-a-half million returns, real returns from the year 2014 and ran them through a simulated version of the federal tax law and gave that information to the legislature and the Governor. They made some small adjustments, but what we found was very interesting. For example, the federal tax cut is going to benefit a lot more people than we thought. It’s going to total a net of 2.7 billion new consumer dollars in the state of Maryland this calendar year. Combined with the $3 billion in refunds that I mentioned, that’s almost $6 billion in disposable income going into consumers’ pockets. I anticipate it’ll have a big impact on small businesses, like this wonderful bookstore that we’re in.”

How does that break down for individual taxpayers per income bracket? Franchot said, “I’m a Democrat – I was told the federal tax cut was terrible, it’ll hurt the middle class. Well, facts are facts: 71 percent of Marylanders, almost the entire middle class, benefit from the tax cut. Some of it is smaller, on a percentage basis, than some of the rich people are getting. But only eight percent of Maryland individuals are going to pay more, net, on their taxes – federal and state taxes combined. Half of them are very, very, very wealthy; and the other half are people that have big business losses. But anyway, the middle class does better than I thought in the overall. We’re going to see a lot of disposable income being put in people’s pockets, and I’m hopeful they’ll spend it in Maryland.”

In closing, Franchot said, “I’d like to thank everybody for paying my salary — literally. I’m honored and privileged to be the Comptroller of the state of Maryland. We spend a lot of time on the three R’s – respect the taxpayer, respond to the taxpayer, get results for the taxpayer. And our 1,200 employees are very sensitive about that and try to do the best they can. I’m not the IRS; I’m your Comptroller. You elect me. Well, I don’t have an opponent really, this year, in the primary. In the general election, I have a very nice person who I think said she wants to beat me. And when she does beat me – she’s a Republican – she actually kind of thinks I did a good job and she’s going to hire me back as a consultant. So I figure I win either way, this election.” He smiled at this closing observation.

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