By Marc Korman.
A recent Gazette article highlighted Councilman Knapp’s efforts to resurrect the DC United stadium in Montgomery County. Councilman Knapp said “we certainly ought to be making a phone call,” meaning to DC United. I hope that the rest of the Council disagrees.
Councilman Knapp’s goal to bring DC United to Montgomery County marries two poor ideas I have written about before, the soccer stadium and a Montgomery County arena.
All of the negatives of putting the stadium in Prince George’s, including the costs and infrastructure needs, exist in Montgomery County too. The stadium would not pay for itself and would require borrowing, through the issuance of bonds, by the county and the state. Neither level of government can afford to increase its debt load for an amenity.
An arena in Montgomery County has also been studied by the overzealous Maryland Stadium Authority. As I wrote last year, that study failed to take into account two important factors. First, it did not account for the costs of construction or infrastructure, which was the same problem as the soccer stadium in Prince George’s. Second, the study did not fully account for competing venues in the region.
Councilman Knapp is one of the few elected officials championing the idea of an arena in Montgomery County. He is using the Prince George’s County Council’s wise decision to reject a soccer stadium as an opportunity to advance his pet project. He is advancing his goal by trying to minimize the infrastructure problem by putting a DC United stadium closer to the Shady Grove metro than the arena study’s presumed Germantown location. But even with Metro access, further infrastructure improvements would be needed. A DC United stadium would also need about double the capacity of the 8,000 to 10,000 person arena studied for Montgomery County.
Adam Pagnucco has done a terrific job documenting the state and county’s budget problems and the massive transportation needs and I need not repeat them here. But I hope it is as obvious to Councilman Knapp’s colleagues as it is to me that when the Council is facing a deficit, debating furloughs, and discussing shutting down nighttime access to police stations, a soccer stadium is not a serious option.
Wednesday, April 15, 2009
We Certainly Should Not Be Making a Phone Call
Tuesday, April 07, 2009
What We Are Watching in Annapolis
While the mainstream media titillates itself with the University of Maryland porn scandal, here’s what we have our eyes on in the rest of the General Assembly session.
Misclassification Bill
Despite heavy lobbying by anti-union hired guns Lisa Harris Jones and Sean Malone, the O’Malley administration introduced a bill to crack down on tax cheating by employers who misclassify workers as independent contractors. Other states have found that they are losing tens and sometimes hundreds of millions of dollars in income taxes and unemployment revenues every year due to such scams. The bill was nearly crippled by two poison pill amendments adopted by the Senate. The bill is now in conference and if the Senate’s amendments survive, the odds of any actual crackdown on tax cheats will be very low.
Prince George’s Stadium
Marc Korman says the stadium is a bad deal for Maryland and he’s right. But it could be a good deal for Prince George’s County if only they could get the rest of the state to pay for it. After all, with Senator Ulysses Currie (D-25) chairing the Senate Budget and Taxation Committee, you might figure the county could grab a bit of cash for it. Instead, the Prince George’s County Council voted against the stadium, pulling out the rug from delegation supporters and throwing the whole plan into limbo. It seems that the Prince George’s politicians can’t work together even to implement bad ideas, which may actually be a good thing.
Expungement Bill
Delegate Lou Simmons’ (D-17) odious abuser expungement bill is technically still alive in the House Judiciary Committee but we have not heard about it in awhile. We hope that it will not re-emerge from its lair.
Bill Frick’s Credit Card Bill
Delegate Bill Frick’s (D-16) bill to crack down on credit card abuse has passed the House 136-1 and is now before the Senate. We ask the Senators to read Marc Korman’s excellent post praising the bill.
WSSC
Several months after the disastrous pipe break on River Road, the momentum for structural reform at WSSC has petered out. If nothing emerges from the General Assembly, the Montgomery and Prince George’s delegations will have to flee to Antarctica when the next pipe inevitably explodes.
Reregulation Bill
The bill to reregulate new power plants is the ultimate “do-little-but-hype-a-lot” bill. It will have virtually no impact on electric bills and distracts attention from real measures that could make a difference. The Senate passed it but some members of the House Economic Matters Committee dislike it. The General Assembly would do well to return to the issue with different legislation next year.
MCPS Disclosure
Delegate Al Carr’s (D-18) local bill requiring online vendor disclosure by the Montgomery County Public Schools passed the House on a 139-0 vote. This bill is badly needed and we hope the Senate supports it.
Will Anything Positive Happen on Transportation?
The Governor and the General Assembly are doing nothing to raise revenue for transportation even though the Transportation Trust Fund (TTF) even though its money is disappearing before our eyes. A bill by Delegates Susan Krebs (R-9B) and Brian Feldman (D-15) limiting raids on the TTF was killed by the House Appropriations Committee. Senator Rob Garagiola’s (D-15) task force bill may or may not get a vote from the Senate Budget and Taxation Committee. Even if it does, time is running out on a House vote.
We’ll report back on how all of this turns out. In the meantime, don’t forget to check out Senator Andy Harris’s (R-7) latest anti-porn coverage.
Monday, March 30, 2009
One Step Forward for the Stadium, One Step Backward for Maryland (Updated)
By Marc Korman.
Maryland Moment has announced that the House Appropriations Committee has voted 17-7 in favor of a feasibility study for the proposed DC United stadium in Prince George’s County. The legislation does not authorize any bonds, just a study which of course does carry a cost of a few hundred thousand dollars.
The no votes and their party affiliation were: Gaines (D), Clagett (D), Stocksdale (R), Bates (R), Levy (D), Beitzel (R) and Eckardt (R).
Delegate Gaines is one of three Prince George’s county delegates on the panel. Delegate Proctor, also from Prince George’s County, was excused from the vote.
From Montgomery County, Delegates Heller, Gutierrez, and Bronrott all supported the legislation. Delegate Mizeur was absent.
Update: Now the bill has constitutional problems.
Friday, March 13, 2009
Either People Read This Blog or The World Is Full of Great Ideas
By Marc Korman.
I woke up this past Saturday morning to two good pieces of news on the policy front. Either folks in Annapolis are reading this blog or they have had some of the same great ideas we have discussed here. Either way, these two developments left me smiling.
Party Change Deadline
On Friday, the Maryland House of Delegates passed HB 589, Delegate Jolene Ivey’s bill harmonizing voter registration deadlines for new registrants and those changing parties. We raised the same issue in a post last September, which discussed the problem in the law which requires current registrants changing or selecting a party for the first time to do so three months before the election, while the deadline for entirely new registrants is just three weeks before the election.
The Montgomery County Democratic Central Committee endorsed Ivey’s bill and one of our members, Karla Walker from District 20, testified on its behalf. Common Cause also testified in support. The bill passed the House unanimously and now heads over to the Senate. The bill was not cross-filed, but hopefully its broad support in the House will mean a smooth ride in the other chamber.
Prince George’s Soccer Stadium
Even better, the Washington Post ran an article on the ill conceived plan to bring DC United to Prince George’s County. We discussed the plan, which uses state money to fund stadium construction, in a previous post. The Post article demonstrated some reluctance in the plan by its most likely supporters, Prince George’s legislators. Delegates Dereck Davis and Joanna Benson both expressed concern with the cost. The Gazette also recently covered the “tepid reception” for the proposal from the Prince George’s County Council. Hopefully, others share their good sense and the General Assembly will not approve the financing.
Compared to some of the major issues before the General Assembly such as the budget, gay rights, and the death penalty, the two issues above are small ball. But a lot of the legislature’s impact comes from the cumulative effect of the small actions, or in some cases inaction, as discussed above.
Thursday, February 26, 2009
A Soccer Stadium?
By Marc Korman.
About seven years ago I was sitting at a College Democrats meeting listening to a speaker from the California Governor’s office. She was explaining all of the great programs the Governor was supporting on the ballot in California, including Proposition 40. Prop. 40 provided funding for local assistance grants for environmental programs and parks. It was a worthwhile proposition. But at the time, California was in the middle of a budgetary crisis (isn’t it always). I asked how the program was going to be paid for. The woman responded that we didn’t have to pay for it, because it was a bond bill. That probably sums up the current state of California pretty well. I was reminded of that discussion when I began hearing about the proposal to build a $195 million, 24,000 person soccer stadium in Prince George’s County.
At a time when government at all levels is in a fiscal crunch, our existing infrastructure is in need of massive repairs, and the state is considering cuts to education and healthcare (temporarily delayed by the stimulus), should Annapolis even be discussing a soccer stadium?
Elected officials and DC United have rushed to assure us that taxpayers will not be on the hook for the cost of the stadium. The argument is that the stadium DC United is looking to the state to fund will be paid for by a combination of rental payments by the team in future years (amounting to 25% of the total cost) and state issued bonds, which will be repaid by tax revenue generated by the stadium. Unfortunately, the plan does not take into account a few things:
1. Infrastructure
The $195 million cost does not include infrastructure improvements that may be needed. Roads and transit improvements are obvious, but a new stadium may also require utilities improvements. Proponents have said infrastructure costs will not be that high due to the presence of the Metro, but of course Metro itself is in need of a funding infusion. It is also not realistic to think everyone will take the Metro, unless we eliminate parking at the stadium which I am confident DC United is not ready to do.
2. Projections
We cannot assume the stadium will be full, even when the flagship team is playing. I have no idea what calculations they used to figure out the $195 million cost or the idea that the bonds could be repaid by taxes associated with the stadium. I do know that DC United’s average attendance in 2008 was 19,835 people, a drop of over 1,000 from 2007. Given the economy, we can probably safely predict a further decline in the coming years. Another question that should be studied is whether DC United’s audience will follow the team to the ‘burbs, or whether attendance will plummet. Marc Fisher’s recent Washington Post column discussed these issues in greater detail.
3. Bonds are Not Free
Government bonds are issued to provide the government a lot of money up front that it can pay back a little bit at a time over a period of years. The repayment is called debt service and it is a required part of annual government budgets.
The debt-service ratio indicates how much of the total budget goes towards servicing debt. At the federal level, the ratio is 9%. In Maryland is appears to be just 2%, a healthy number and part of why the state maintains its AAA bond rating. By comparison, California is projected to have a ratio of 6%, which partially accounts for its low bond rating and budgetary problems. All of these number projections will probably rise due to increased borrowing as a result of the current economic situation.
But the point is increasing Maryland’s debt obligation through bonds can have an adverse effect on its bond rating, which can make it difficult to borrow for other obligations. Also, given the credit crunch, how well will these bonds sell? In addition, Maryland must service those bonds, it is mandatory spending. If the stadium does not live up to its promise, Maryland must still pay its bills. In fact, Fisher’s column quotes Prince George’s County Executive Jack Johnson admitting it’s not “going to create a lot of revenue.” Well without that revenue, taxpayers will be footing the bill.
There is a big difference between state and federal borrowing. At the state level, bonds are used to finance major projects that the state cannot afford to pay for all at once. In the case of a stadium, it makes a particularly attractive target for bonds because of all the reports and studies explaining the direct economic benefits of these facilities. For example, sales tax revenue from the stadium can be specifically allocated to service the debt. Contrast that with a highway, assuming it is not tolled. The economic benefits are far less direct and there is no direct revenue stream with which to service the debt. Although we use bonds for highway funding in Maryland, we cannot directly link the taxes generated by the highway to paying off the bond because they are too ill defined. On the plus side, no one should be able to deceive us into thinking a highway project pays for itself as they can with a stadium. Similarly, transit projects offer an attractive target because of rider fees. But generally speaking, transit projects do not pay for themselves directly through fares. Those projects that have been originally billed as such, for example the DC Metro, have disappointed.
At the federal level, bonds are issued to fill the annual budget deficit. In some cases, deficit spending may be for a worthwhile expense (like the New Deal), but since 2001 the federal deficits have been as a result of unnecessary tax cuts and an ill advised war in the Middle East. That is not beneficial deficit spending.
And neither is building a stadium. Even if a stadium could generate enough funds to service all of the debt it creates, which is not guaranteed, it could still adversely affect Maryland’s bond rating. If we are going to borrow more money, let’s do it for public priorities and not a soccer stadium.
Over a year ago, I wrote about the proposed Germantown Arena and the flaws in that proposal. Back in October I proposed eliminating the Maryland Stadium Authority. I stand by those posts and add this one to my opposition to arena/stadium projects in Maryland during the current budget morass.
