Thursday Night Smackdown!

Last night, business and labor squared off on the CARR bill in one of the more entertaining bouts of the state hearing season. But there is a lot more to this story than the controversy over just one bill. Tensions are on the rise between two of the county’s most influential groups as Budget Armageddon builds steadily to its bloody climax.


Delegates Susan Lee (D-16), Brian Feldman (D-15), Anne Kaiser (D-14), Roger Manno (D-19) and Bill Bronrott (D-16)

But first, supporters and opponents of the CARR bill made their case at the House Delegation’s hearing on local bills. Five supporters testified, including three from labor: Bonnie Cullison, President of MCEA; Bob Stewart, Executive Director of MCGEO and Sean Dobson, Executive Director of Progressive Maryland. Their main points were:

1. The bill authorizes commercial property tax hikes by the County Council but does not mandate them.

2. The residential share of the county’s assessable property base has been climbing steadily for many years.

3. Splitting the residential from the commercial property tax rates would make it easier for the County Council to raise taxes without incurring a homeowner property tax revolt.


Sean Dobson, Delegate Al Carr (D-18), Bob Stewart and Bonnie Cullison

Nine opponents testified, including representatives from four Chambers of Commerce, one trade association and four businesses. Their main points were:

1. Residential property owners benefit from the homeowners property tax credit and the 10% annual cap in principal residence tax bill increases, neither of which are available to business.

2. The cumulative impacts of the special session tax hikes and county commercial property tax increase under the CARR bill would put the county at a crippling disadvantage.

3. Businesses are reeling under the terrible economy and further cost increases will put some of them over the edge.

The arguments on both sides have some merit and mirror my blog posts on the issue. But politicians are creatures of the moment. They want to know why something must be passed now. While the supporters talk about correcting what they see as historical inequities, opponents talk about the devastating consequences of tax hikes in the current environment. Alexandra Whitaker’s Get Real Consulting was named the Emerging Business of the Year when it was in the Rockville incubator. Shortly after leaving, Ms. Whitaker claims that her business is in a “delicate state of growth” and would lose customers if they must pass on the cost of a lease increase. David Fraser Hidalgo of Sandglass Systems in Kensington said, “Any increase in property taxes would have a devastating impact on our margins and our employees.” These arguments are particularly strong in a bad economic climate and are reinforced by an anti-tax disposition among the state’s politicians. The supporters find it difficult to counter them and as a result, none of our sources believe the bill will pass next year.


Alexandra Whitaker from Get Real Consulting, Kathleen Kittrick from Verizon, MoCo Chamber VP Lisa Fadden, Joshua Bokee from Comcast

But the CARR bill debate has illuminated a number of changes in Montgomery’s body politic. Three of them are:

1. The Re-Emergence of Business
Labor is a long-time power center in the county. Of the eighteen most-influential non-elected citizens in our recent poll, six are active in the labor movement. The leaders of MCEA, MCGEO and SEIU are especially visible. But last night spotlighted an increasingly important hidden hand in the county’s policy debates: Montgomery County Chamber of Commerce Vice-President Lisa Fadden. Brainy, relentless and occasionally combustible, Ms. Fadden attracts many comments from our spies.

“Smart and talented,” says one. “I think she's an intelligent advocate for the business community,” says another. One old hand comments, “She’s more effective than most lobbyists many years her senior.” And one particularly effusive spy gushed:

Lisa Fadden is young, smart (really smart), brash, cute and knows what she thinks. She has no fear. She is not cut out of the old mold, in fact she represents what the future for leaders in this county look like. They are not waiting for anybody to give them permission to do or say what they think. Look out – the future has arrived.

Your author would not go that far, though we certainly enjoy covering brash characters on this blog. But Ms. Fadden is part of a youth movement that is slowly infiltrating many parts of the county’s political life. Business is one example. The Chamber of Commerce was once personified by its brilliant and imperious former CEO Rich Parsons and was thought to be primarily interested in development and the ICC. But the Chamber has diversified its interests over the last two years and is starting to mobilize its membership in ways reminiscent of civic associations. (See their revolt against Nancy Floreen’s parking space tax.) The economy is damaging the business community, but it is as politically relevant as ever.

2. Distrust is Building Between Business and Labor
The business and labor communities have a common interest in pursuing a revitalized economy. Labor in both the public and private sectors benefits from job creation, and job creation only happens when businesses are profitable. But the CARR bill dispute has interfered with their ability to work together.

Last spring, labor’s top priority was defending its cost-of-living adjustments. Many individuals inside the business world grumbled about those raises, but the business associations stayed out of the COLA debate. And none of the county’s major business associations opposed the recently-passed prevailing wage law. That silence benefited labor and isolated its opponents. But in advocating for the CARR bill, labor is pushing a measure that business considers “discriminatory” and “punitive.” Business feels the same outrage that labor would have felt had business opposed their COLAs.

School Board President Nancy Navarro offered substantial appeal to both business and labor during the County District 4 Special Election. Her campaign combined dozens of union member volunteer canvassers with influential business fundraisers. In the current atmosphere, that level of cooperation would be unlikely to occur if such an election were held today. Both business and labor may pay the price if an opening is created for candidates hostile to both of them.

3. Distraction from Armageddon
Even if passed, the CARR bill would not offer a total solution for the county’s budget problems. Judging from Senate President Mike Miller’s comments at the Committee for Montgomery breakfast on Monday, those problems are about to get a lot worse. Ann Marimow scooped the room in obtaining this post-speech quote from Big Daddy, which warrants repeating here:

“There are going to have to be some adjustments,” Miller said after his formal remarks. “The county that gives big salaries and big benefits is going to have to make some adjustments.”

This is an existential and naked threat to labor, and not just in Montgomery County. Baltimore City and Prince George’s County also benefit from the Geographic Cost of Education Index (GCEI), which directs education aid to jurisdictions with higher schooling costs. All counties benefit from the state’s assumption of teacher pension liabilities. Both of these items are now at risk. If they are cut by the state, the public employee unions will be hit with layoffs and permanent budget difficulties in addition to the loss of their COLAs.

Labor’s political capital is limited. The more that is spent on the CARR bill, the less will be available for more important items. Refocusing on the priorities that really matter may be the only way to fend off Budget Armageddon.