Opinion: You Are Paying for Corruption in Baltimore City

County taxpayers sending $300 million to city

By Adam Pagnucco

Baltimore’s “Healthy Holly” book scandal, which has metastasized from a conflict of interest between Mayor Catherine Pugh and a hospital system into possible contracting misconduct, may only just be starting to roll over the cliff. But as it unfolds, let’s keep in mind two things.

It’s nothing new.

And you as MoCo residents are paying for it.

To the first point, Baltimore has a looooooong history of corruption. Let’s start with former state Sen. Larry Young, who was kicked out of the Senate for using his office to obtain gifts including a Lincoln Town Car. (Young would later be the inspiration for “The Wire’s” flamboyantly corrupt Sen. Clay Davis.) Years later, developer John Paterakis Sr. pleaded guilty and paid $26,000 in fines for illegal contributions to a Baltimore City councilmember. That didn’t stop Paterakis from continuing to make many thousands of dollars in contributions to politicians after his conviction. Gary Brown Jr., an aide to Pugh, was found guilty of funneling illegal contributions to her campaign through relatives. Brown had been nominated to fill a seat in the House of Delegates but lost that opportunity because of his prosecution. A slate account funded by former Baltimore County Executive Jim Smith was fined by the state for making an illegal $100,000 loan to Pugh’s campaign. Pugh rewarded Smith with a $175,000 position at City Hall. Baltimore state Sen. Nathaniel Oaks pleaded guilty to federal corruption charges after accepting bribes from an FBI informant posing as a developer. Now the “Healthy Holly” mess is under investigation by the state prosecutor. One irony of the current scandal is that Pugh was elected as the “clean” candidate over disgraced former Mayor Sheila Dixon, who was driven out of office for using gift cards intended for city children.

As bad as some of the politicians are, none of them compare to the city’s police department. A 2014 investigation by the Baltimore Sun found that the city had paid $5.7 million in settlements since 2011 due to “lawsuits claiming that police officers brazenly beat up alleged suspects.”

In 2016, the U.S. Justice Department issued a report that “explicitly condemned many long-standing discriminatory enforcement practices by Baltimore police that allowed for illegal searches, arrests and stops of African Americans for minor offenses.” A year later, Baltimore cops were caught by their own body cameras planting bags of drugs. Then there was the case of the staggeringly corrupt Gun Trace Task Force, which kept a toy gun for planting on suspects and was broken up after several members were convicted of racketeering and robbery. And just last month, a former police commissioner was sentenced to jail for failing to file tax returns.

The biggest victims of Baltimore corruption are city residents and they know it.

In 2017, a Washington Post-University of Maryland poll asked Maryland residents about corruption in state and local government. Thirty-two percent of all state residents described it as “a big problem.” But 57% of Baltimore residents called it a big problem and 59% of them said it was a big problem inside their own city. No other locale in the state came anywhere close and in Montgomery County, just 22% said it was a big problem.

Here’s another victim of this kind of sleaze: you, the Montgomery County taxpayer. Depending on your income, you might be paying hundreds of dollars in state taxes every year that are distributed to Baltimore City’s government.

Let’s look at one document that few politicians in state government want you to see: The Balance Sheet, an accounting of state taxes paid and state aid received by each of Maryland’s 24 local jurisdictions. The Balance Sheet, which is published every year, shows two salient facts: Baltimore is completely dependent on state aid to operate and MoCo is the biggest contributor to the state.

Because of the state’s wealth formulas, counties with high incomes and/or high property values receive less state aid per capita and those with lower incomes and/or property values get more. Here’s an example of how that works. In fiscal 2016, the average per capita state aid was $1,220. MoCo received $862 per capita, ranking 20th of 24 jurisdictions. (Anne Arundel, Kent, Talbot and Worcester counties fared worse.) Baltimore City received $2,282 in per capita state aid, by far the highest in the state. In part, that’s because the state pays for the complete cost of the city’s community college, booking facility and jail, a special benefit that no other jurisdiction gets.

The table below shows exactly who is paying all that money. Over the last decade, total state tax revenues that are traceable to individual jurisdictions are shown on the left. Next is shown the amount paid by MoCo residents.

MoCo’s share of state revenues is consistently between 21% and 22%, tops in the state, despite the fact that MoCo has a sixth of the state’s population. After that is shown the state aid that goes to Baltimore. Applying MoCo’s percentage of state revenue to Baltimore’s state aid, the amount of money MoCo sends to Baltimore each year is shown at right. We are now sending the city more than $300 million a year, which is more than we spend on our own police department.

According to the U.S. Census Bureau, MoCo had 373,346 households in 2016. That means that MoCo households are giving more than $800 each on average to Baltimore every single year.

The fact that the state sends Baltimore more than $1.4 billion a year gives it enormous potential leverage over the city. The state could attach strict transparency and competitive bidding requirements to every dime of aid it gives to Baltimore. The state could establish claw-back provisions for state money misused by city officials. The state could limit side incomes for city politicians and enact strict penalties for violators. It could impose lifetime bans on lobbying and running for office on politicians convicted of crimes. (Former Baltimore state Sen. Nathaniel Oaks was convicted of theft while in the House of Delegates, was later elected to the Senate, and was nailed for corruption again.) It could allow recall elections for politicians since it’s virtually impossible to remove a mayor of Baltimore without a conviction. Gov. Larry Hogan has suggested the establishment of a financial control board to oversee the city’s school system. The police department desperately needs aggressive state oversight (it is nominally a state agency), but the General Assembly is letting Johns Hopkins University establish its own armed police force instead. Look for other large city employers to make similar requests. The state could even consider radical solutions like having the Board of Public Works, which includes the governor, the comptroller and the treasurer, approve city contracts considering the role that contracting has played in the city’s political scandals.

Above all, the state must make clear that the city will get no more aid programs as long as its top officials indulge themselves in corruption.

But let’s be realistic: little or none of that is going to happen. The city has too much political power in Annapolis, even in its current weakened condition, to permit outside intervention. And the leaders of the General Assembly will never allow a Republican governor or their hated apostate, Comptroller Peter Franchot, to be part of any meaningful oversight of the city.

The Democratic leadership’s predictable reaction will be to put a few Band-Aids on the immediate problems, give the city more money and hope that the bad publicity will go away. (Spoiler alert: it won’t.)

As for you, the MoCo taxpayer, there’s only one thing you can do: smile, be nice, don’t complain and pay your taxes. After all, someone has to help Mayor Pugh pay her attorneys, so it may as well be you!

Adam Pagnucco is a writer, researcher and consultant who is a former chief of staff at the County Council. He has worked in the labor movement and has had clients in labor, business and politics.