It’s been awhile since I looked at the energy industry, what with legislation, riots, and other general mayhem. Fortunately for me, I have several sources in that industry to return me to speed and one is writer Marita Noon, whose piece on NetRightDaily today detailed the efforts of forward-thinking states to repeal their renewable energy mandates - some by whopping margins in their legislature. In those states, the market-bending allocations to renewable energy are coming to an end, leveling the playing field and perhaps saving their taxpayers millions of dollars.
Unfortunately, Maryland isn’t one of those states rolling back its mandates; in fact, the only piece of legislation dealing with the renewable portfolio was a liberal Democrat-backed scheme to expand it some more. House Bill 377 and Senate Bill 373 both were aimed at significantly increasing the percentage of renewables up to 40% by 2025 – current law peaks renewables’ share at 20% by 2022. (Both these figures are a pipe dream.) The Senate version lost in the Finance Committee by an 8-3 vote, and the House version was withdrawn before it was voted upon.
It was good that a bad bill was thwarted, but it was unfortunate that no bill was introduced to repeal these mandates. Maryland would be in far better shape energy-wise, eventually with lower utility rates, if true reform was achieved: repeal of the renewable energy portfolio, the withdrawal of the state from the Regional Greenhouse Gas Initiative, repealing the subsidy for offshore wind, and encouraging energy production from hydraulic fracturing and offshore drilling.
Over the course of the O’Malley administration, energy companies took the brunt of new regulations and changes in the market; in particular, their cost of doing business was affected by the renewable energy portfolio and the RGGI. If you assume the goal of the utility is to provide energy as cheaply as possible to make a profit – while keeping prices low enough to maintain and grow a customer base – having the dead expenses of the “alternative compliance payment” made necessary by falling short of renewable goals and the CO2 allowances auctioned off by RGGI as a sweet redistribution scheme aren’t helping the cause. Meanwhile, more exploration and investment in energy infrastructure could bring Maryland closer to being at least even as opposed to a net energy importer.
I wouldn’t expect any repeal of these bills to pass on the scale that they’ve moved through some state legislatures, but 71-70 and 24-23 are perfectly fine margins to me. It would also likely require getting around the committee process and bringing the package directly to the floor. (The portfolio repeal, RGGI withdrawal, and repeal of the offshore wind subsidy could be one bill: call it the Maryland Energy Reform Act of 2016.)
The trick is getting the right people to advocate for the changes by showing how much can be saved by consumers. That portion seems like a job for a group like the Maryland Public Policy Institute, while the lobbying on the part of the energy providers should include a pledge of reducing rates. Shaving 2 cents a kilowatt hour off the bill may not sound like much, but it translates to about $216 a year based on average residential usage of about 900 kWh a month. I don’t know about you, but an extra $18 a month would be nice for me. Just think of the economic benefits we received last year when gasoline skidded to $2 a gallon – benefits being lost now as prices have edged back up over $2.50 a gallon.
To help in prosperity, Maryland needs cheap energy. As it stands now, we don’t have it but I think we can get it if the political will is there.
Unfortunately, I can’t make the event with my work schedule but I was asked to at least spread the word.
Christopher Summers of the Maryland Public Policy Institute invited me to a Maryland Policy Forum on A Better Way to Restore the Chesapeake Bay, to be held Tuesday night (the 28th of October) at Washington College in Chestertown. (It would be a close trip for my friends and fans up Cecil County way.) The event is billed this way:
Maryland officials expect that it will cost over $14 billion in the next decade to meet EPA pollution mitigation targets for the Chesapeake Bay by 2025. Yet Maryland has pointedly ignored a single, enormous source of the pollutants—the massive amount of water-scoured sediment and trapped nitrogen and phosphorus behind the Susquehanna River’s Conowingo Dam. Periodic discharges from the dam, such as the one following Tropical Storm Lee in 2011, spill enormous amounts of sediment and nutrients into the Bay, dwarfing the most optimistic cleanup targets that have been set for the watershed.
What should Maryland do to reduce Chesapeake Bay pollution, and is current policy too much or too little?
In looking at the bios of the three panelists and moderator, it looks like a good mix of opinions will be had. Of course, there are those who believe the MPPI will put its thumb on the scale for the conservative side but it’s a side which isn’t often listened to in this state.
Personally I believe the cleanup behind Conowingo should take precedence over the regulations which have been adopted. Ditch enforcement of these tier maps, the seven-lot subdivision limit, and septic regulations which only serve to curtail growth in rural areas of the state like the Eastern Shore until the sediment behind that dam is cleaned up and we have a year or two of testing to see the difference. Instead of picking on agriculture, figure out ways to upgrade the real problem: failing urban sanitary sewage treatment plants.
I doubt either of the two candidates for governor will be there, but I think Larry Hogan should send a surrogate to hear what the MPPI and their panelists have to say. Obviously job creation is the key issue in this election, but a different, localized approach to cleaning up Chesapeake Bay would be a good secondary issue to discuss in the waning days of the campaign.
It’s almost becoming a running joke now.
Larry Hogan can crow as he wishes about raising $450,000 in the initial months of his campaign (although a significant portion was his own money, as I’ll document later this week) and make hay about being on both TV and radio in most parts of the state, but the reputation he’s building as a guy who avoids debates and tough questions is getting harder to shake.
Let’s begin with the television ads. As I speculated when I first wrote about it, it was indeed a cable buy, but now it’s spread across most of the state:
Two days after his campaign reported raising more than $450,000 in its first filing period, gubernatorial candidate Larry Hogan significantly expanded his TV and radio advertising campaign. His first 30-second ad entitled “Dedicated” which began running in 11 Maryland counties on April 3 is now airing on cable networks in a total of 19 counties.
The presser mentions radio, and I can vouch that the Hogan campaign is on our local talk station since I heard the ad Thursday. It’s a fairly good spot, but using the live audience feed on what Larry had to say in his stump speech was a little distracting because of the applause lines used. He also mentioned last Saturday when I spoke to him before our Lincoln Day Dinner that he had done another interview that day with WGMD-FM out of Georgetown, Delaware – a station popular in the Ocean City/Ocean Pines area. This is one area Hogan has used to advantage – one-on-one interviews where he can take his time to answer questions and steer the conversation back to his main campaign topics. When the questions depart from those areas, in at least one well-known instance Hogan’s called them “crazy.”
In the release, Hogan is quoted as saying:
Through our one-on-one meetings with voters in their homes, places of work and communities and now with statewide advertising, Boyd and I are bringing our message of fiscal restraint and common sense reform to Marylanders who simply can’t afford another four years of single party rule and incompetence by Annapolis elites.
Yet that message can’t seem to stand the scrutiny of direct questioning with other candidates present. On May 9 the Maryland Public Policy Institute is hosting a GOP gubernatorial debate and just three of the four candidates are participating. I’ll give you three guesses as to who declined, first two don’t count. You would think Larry can change pre-scheduled events with a month’s advance notice when he had a late change to his official announcement due to a predicted snowstorm (which indeed occurred.) So the excuse that “we have a lot of scheduling conflicts” won’t wash if he misses the May 31 debate scheduled for here in Salisbury.
Another candidate who developed the reputation of missing events early in the campaign has cleaned up his act to a large extent, and the party he’s promoting at the upcoming state convention in Bethesda promises to be a tightly-packed gathering if the guest list is accurate. Emceed by WMAL radio’s Larry O’Connor, the sponsor list includes “Ben Carson, Jr, Jimmy Kemp, Henry Marraffa, Richard Rothschild, Armstrong Williams and many others.” Most readers know who Ben Carson, Sr. is but this event features his son. Similarly, Jimmy Kemp is the son of onetime GOP Vice-Presidential nominee Jack Kemp (1996) and, like his dad, a former pro football quarterback. Marraffa and Rothschild are local elected officials, but Armstrong Williams is best known as a syndicated columnist. So it’s an eclectic group of conservatives who will be featured at Lollar’s soiree, and perhaps Lollar will get a Carson endorsement after all.
I can’t really say I predicted this, since I more or less just added a quick dose of my opinion to a post the other night by stating the obvious: “rates will either have to increase, or insurers will cede the field. Neither is a good choice, but that’s where we are going.”
But reports yesterday stated that Aetna, a leading Maryland health insurer, is indeed pulling out as it was denied the rate increase needed to stay profitable in Maryland given the uncertainty of the state’s insurance situation. While those who hold policies through Aetna may be able to continue on, a significant portion will have to shop in the newly-created state exchange at a time when rates are much more expensive – up to 83 percent, according to a release put out by gubernatorial hopeful David Craig:
Craig announced today that Marylanders can expect a dramatic increase in health care insurance premiums under Obamacare, calling it a “massive new tax.” Maryland’s least expensive Obamacare plan will be 83% higher than the lowest-cost plan sold in the state this year. The analysis comes from a Government Accountability Office report that compares rates this year to what the Maryland Insurance Administration announced they will be under the new state exchange scheduled to launch October 1.
The state’s insurance agency locked down rates with private carriers last month and the new exchange for individuals is marketed as the “Maryland Health Connection.”
“What we have here is Maryland’s health disconnection,” said Craig. “This entire contraption will fall apart unless untold thousands of healthy people inexplicably decide to go online and buy expensive insurance instead of making a car payment. Private insurance carriers are not participating and not enough healthy, working people will either, and this is not going to work.”
Craig also commented on the Aetna situation.
It is deeply troubling that Maryland has yet again soured relations with major employers and job creators. Another company acquires one of Maryland’s last remaining Fortune 500 companies and takes their business elsewhere because regulators tell them what to charge. This irony is lost only on the one-party political machine in Annapolis.
Fellow gubernatorial candidate Ron George also weighed in:
This insurance exchange is already resulting in expensive rate increases for cash-strapped Maryland families. Maryland currently has one of the lowest discretionary income rates in the country, and this exchange will take more money away from your family vacation, school funds and holidays.
Noting that the exchange, which is supposed to increase competition, is comprised of just seven companies owned by only four separate entities, George went on:
This is a classic example of the Democratic machine in Annapolis picking winners and losers based on political relationships instead of free market realities. Additionally, the higher costs to businesses will lead to less job creation. Also, many physicians are now considering earlier retirement.
Perhaps the biggest problem with the exchanges is the broad coverage they have to provide. Marc Kilmer of the Maryland Public Policy Institute illustrates this well in a recent Baltimore Sun op-ed, pointing out that:
To be fair, the lowest-cost plans for sale today are not the same as the lowest-cost plans that will be sold in the exchange. The exchange plans will be much more comprehensive. Many of the cheapest health insurance plans available for sale in the individual market today have high deductibles and may not cover as many situations as do the other plans. But that’s not a bad thing — it gives Marylanders choices in prices and in how much risk they’re willing to carry themselves or put on the insurer. For most Marylanders, the cheaper plans are excellent choices, but for some Marylanders they’re not.
Currently, you can also buy both the cheap plans and the comprehensive plans in the individual market. But you won’t have the choice to buy high-deductible, low-cost plans in the exchange. You have to buy a plan that is designed by bureaucrats and politicians in Washington and Annapolis.
These plans basically come as a one-size-fits-all, take it or leave it proposition with a limited variety of choices – remember, there are only seven approved players in the game, and just four if you consider just the separate entities. Vanilla, chocolate, strawberry, and butter pecan might be great for most, but if you prefer cookie dough like I do you’re out of luck.
And what happens when the exchanges only have six insurers? Or three? Unless new entries can figure out a way to make a profit, they’re not going to get into the game. Perhaps they can build wind turbines on the side to gain the state’s favor?
The point is our system was flawed, but the solution is equally (if not more) flawed because of the heavy hand of government. Why not come up with some true free-market solutions – for one, allowing insurance to be sold across state lines so we can buy a policy out of a state with fewer mandates – and let the market dictate its direction? Not in Martin O’Malley’s and Anthony Brown’s Maryland.
Since my e-mail box is filling up with items I’ve been meaning to get to and I spent part of my day today cleaning out our garage, it’s in that spirit that I present to you yet another heaping helping of items I figure are worth a couple paragraphs or so.
First of all, it seems our newly elected friend up Cecil County way, County Executive Tari Moore, is just getting everyone mad at her. Cecil County GOP head Chris Zeauskas chastised the woman he called “whichever way the wind blows” Moore for appointing Winston Robinson as her finance director. Robinson was a loser in the Democratic primary for the post Moore now holds but has lengthy experience in the financial field, according to the Cecil Whig. Zeauskas also blasted Moore for not hiring either one of two people who she presumably passed up for the appointment: county treasurer Bill Feehley and budget manager Craig Whiteford. Both are Republicans.
Meanwhile, the Campaign for Liberty is raking Moore over the coals for promising to appoint a person to run economic development in Cecil County. Their point is that:
Businesses and individuals build our economy, not government officials.
The idea that we need more bureaucrats to help those in the private sector to navigate red tape is proposterous. (sic)
Why not eliminate the onerous regulations that businesses face and eliminate the “need” to hire a government employee?
In a Cecil Whig news article, Tari Moore “promised to create a business advocate position to create incentives and work with businesses to create jobs in Cecil County.”
The key here is provision of incentives. Why should government have the authority to pick winners and losers in the market place?
Why should county government be giving your hard-earned tax dollars to private companies?
Every time the government uses your tax dollars to give hand outs to private businesses, it distorts and inhibits a truly free market.
It seems to me that both of these parties make valid arguments, particularly the Campaign for Liberty. However, I suspect in the Zeauskas case that if Moore hadn’t changed her registration the Republican Central Committee would have invoked the Eleventh Commandment and remained silent about the Robinson pick. The Campaign for Liberty knows no such thing and will just as readily skewer a Republican as it would a Democrat.
In fact, the C4L goes a little farther, calling on Moore to defund all economic development programs because:
Taxpayers in Cecil County have been forced year after year to give millions of dollars to county run economic development programs.
Yet, over the past two decades Cecil County has had the highest unemployment rate in the region.
By returning the money spent on these programs back to taxpayers we can start to create some real economic growth in our county.
Rather than taking potshots at a decision Tari Moore made simply because the group is upset about a change in partisan affiliation, at least the C4L has a basis in fact that perhaps another direction is needed for economic development. The data doesn’t mean that having an ineffective economic development department is the cause of the issue (since many of the peer counties are in other states, which have their own set of advantages) but could be a factor to consider going forward.
And at the moment the liberty movement in Maryland is feeling its oats, based on the glowing report I received from Maryland Liberty PAC head Patrick McGrady about their hospitality suite at the recent convention:
Our Maryland Liberty Caucus event had more visitors than any other event, by far. Not only were we able to rally our own troops to attend, but we met many new allies and friends who want to fight side-by-side with us in Maryland.
On the other hand, McGrady was blunt in his assessment of the political scene:
Although we met many old and new friends on Friday, we also came away with a very clear conclusion: the Political Establishment in Maryland is strong and will not go away easily. These people are addicted to power and are sell-outs to the conservative cause.
These Big Government Republicans and Democrats are destroying our liberties and burdening us with over-the-top wasteful spending.
Tell me something I hadn’t figured out already, Patrick. We’ve been fighting that battle off and on since I joined the Central Committee in 2006. Unfortunately, we have way too many Republicans who go along to get along in Annapolis.
Another Pat, Delegate Pat McDonough, bemoans the “Radical Blue” nature of Maryland politics in a recent release:
The dynamic of the voting power in Maryland probably ensures there may never be another statewide Democrat office holder from Baltimore after O’Malley, Cardin, and Mikulski have moved on. The Baltimore area voters have become captive step-children to the massive voting power of the Washington, D.C. suburbs. Baltimore’s “radical blue” Mayor Stephanie Rawlings-Blake presides over an urban landscape beset by murder, muggings, economic stagnation and a dim future. She suffers no real opposition, except possibly from another “radical blue” political challenger. The diversity of electoral politics or public policy is non-existent in Charm City.
All doubt about this growing power was removed when the 7 questions on the ballot achieved a solid victory created by a deluge of votes from the D.C. suburbs. The problem is compounded by the fact that the two major press organs dominating Maryland, the Baltimore Sun and The Washington Post, both reflect the “radical blue” philosophy in their editorial and reporting practices. They are enablers, not objective journalists.
I would prefer that a neither a Baltimore-based Democrat nor a Democrat based in the Washington suburbs see statewide elected office again after the way both of those groups have ruined a once-fine state. The “landscape beset by…economic stagnation and a dim future” is the state of Maryland as it stands now. So why is Delegate McDonough conceding this ground?
Be that as it may, McDonough later makes the point that the wealthy in Maryland are “voting with their feet” and leaving the state. However, a recent decision by the IRS pointed out to me by Jim Pettit means these changes will be harder to track:
(T)he IRS Statistics of Income Division attributes the decision to cancel the program, which dates back to 1991, to coordination issues with the U.S. Census Bureau. There is no official word yet on why the program was cancelled.
Pettit also stated:
The IRS tax migration data is the best indicator we have of how state and local governments are doing in developing their tax base. If there is no effective way to monitor changes in the tax base in the context of macro-economic trends, then state and local governments are at a severe disadvantage in making key legislative, regulatory and fiscal policies that address the challenges of funding government budgets.
This data was a key cudgel used by the advocacy group Change Maryland to point out the multiple failures of Martin O’Malley’s economic program for the state of Maryland. Now we’ll be down to anecdotal evidence of people leaving Maryland and seeking states more friendly to their economic interests.
Soon the transport industry may follow, as it’s all but certain the General Assembly will once again consider a gas tax when they reconvene next month and may even try to work out a mileage tax as part of their “War on Rural Maryland.” But I’m putting that cart ahead of the horse a little farther than Americans for Prosperity is by setting up their opposition to a gas tax via petition. (Of course, it also builds up a healthier e-mail list.)
Let’s just hope Republicans stay unified in opposition to a gas tax this time around, mmmmmmkay?
Another tax which stands a good chance of being increased yet again is the cigarette tax, but Marc Kilmer of MPPI punctures a hole in the logic of the Baltimore Sun and lobbyist Vinnie DeMarco in his usual clear, level-headed way. It’s worth a read since the cigarette tax increase proposal is another of those Maryland General Assembly rites of spring.
Taxes are also on the mind of national politicians thanks to the closeness of the so-called “fiscal cliff.” But a coalition of nineteen conservative groups called on Congress to “…reject tax increases, refocus negotiations on spending cuts and entitlement reform, where they belong, and send a strong signal to Americans they can count on their elected representatives to look out for them in the upcoming budget negotiations.” But that would require members of Congress to exhibit some backbone, which is in short supply inside the Beltway.
I could go on but you get the idea. Despite the holiday season, politics doesn’t seem to take a break and vigilance is always required.
Governor Martin O’Malley, he of the trial balloons, may have yet another one up his sleeve.
His latest (of many) tax proposals would extend the state’s 6% sales tax to purchases of gasoline, on top of the current 23.5 cents per gallon surcharge the state takes. If adopted, Maryland would join a handful of other states which use this nebulous practice of profiting off high gasoline prices.
The other states which do this are California, Florida, Georgia, Illinois, Indiana, Michigan, and New York. To see what impact this proposed tax would have on our wallets, we need to use three methods of comparison. First, here are the per-gallon gasoline taxes charged by each of these states and Maryland, ranked lowest to highest, not including sales taxes or various fees added by each state: (Source)
- Florida, 4 cents per gallon
- Georgia, 7.5 cents per gallon
- New York, 8.1 cents per gallon
- Indiana, 18 cents per gallon
- Illinois, 19 cents per gallon
- Michigan, 19 cents per gallon
- Maryland, 23.5 cents per gallon
- California, 35.7 cents per gallon
And now the sales tax rates which are (or would presumably be) applied to gasoline, also listed lowest to highest:
- California, 2.25%
- Georgia, 4%
- Maryland, 6%
- Michigan, 6%
- Illinois, 6.25%
- Indiana, 7%
- New York, 8%
- Florida, 12%
Finally, the combined bite between all taxes (federal, state, and local) impacting gasoline in the states which charge sales tax, which includes where Maryland would eventually rank. To do their calculations, API uses the average cost per gallon in each state according to AAA as of 1/1/12. For Maryland, I couldn’t find the price on the specific 1/1 date but according to the latest AAA figures, the average price one month ago from today was $3.26 and that should suffice for being roughly the price on January 1st. Again, this is lowest to highest.
- Georgia, 47.8 cents per gallon
- Florida, 53.4 cents per gallon
- Illinois, 57.3 cents per gallon
- Indiana, 57.3 cents per gallon
- Michigan, 57.8 cents per gallon
61.558.9 cents per gallon*
- California, 67 cents per gallon
- New York, 67.4 cents per gallon
If this is passed, Maryland would have the fifth-highest total gasoline tax in the country, trailing New York, California, Connecticut (also 67 cents per gallon) and Hawaii (65.5 cents per gallon.) Maryland drivers would be ceding a much higher bite out of their wallets than their neighbors in West Virginia (51.8 cents per gallon), Pennsylvania (50.7 cents per gallon), Washington D.C. (41.9 cents per gallon), Delaware (41.4 cents per gallon), and Virginia (38.2 cents per gallon.) Retailers in those states who are fortunate enough to be close to the Maryland line are probably licking their chops about now.
Of course, this doesn’t factor in the addition of some of MOM’s other trial balloons like a separate 15 cent per-gallon increase in the gasoline tax or increasing the sales tax to 7 percent. And as Todd Eberly points out at The FreeStater Blog, this could all be a feint to make a direct 15 cent additional surcharge more palatable.
As it is currently proposed, the gasoline sales tax would be phased in 2% at a time so drivers wouldn’t be hit all at once. But when they’re projecting $613 million in new annual revenue at a time when the state is over $1 billion in the hole, it will be a surprise if they don’t rush the process. It may get passed this way for now, but wait for the new, improved bill to accelerate the increase next session when money is still tight.
We’re also being told that a gas tax increase is about infrastructure jobs in fixing bridges and roads. But the Maryland Public Policy Institute does a magnificent job of not only blowing that argument out of the water but also pointing out the folly of public transportation while they’re at it. Simply put, it’s another component of the War on Rural Maryland as those of us who drive greater distances because we choose to live away from urban woes will be subsidizing those who ride the buses or light rail in more-developed areas. That group doesn’t quite comprise the 1% but they’re pretty darn close, and they don’t come close to paying their own way.
Putting private transport out of reach to the average family through higher prices also fits neatly into the goals of so-called “Smart Growth” and “sustainable development”, which strives to increase the usage of mass transit. Perhaps this is a line of thought more suited to the tinfoil hat crowd, but one can’t deny it’s much easier to control the population if their movements are controlled.
In any event, the first step in rebuilding Maryland’s crumbling transportation infrastructure needs to come from locking away the Transportation Trust Fund from greedy governors who can’t shake their spending addiction. And if we take back the half of transportation spending we waste on a tiny percentage of commuters and instead gave them a more appropriate share of a nickel per dollar, there are a lot of bridges, road widening projects, and traffic control measures which could be completed for the rest of us who get tired of sitting in traffic.
On the Eastern Shore, we already will bear a significant burden from the newly increased tolls on the Bay Bridge, so we should get a break when it comes to gasoline taxes. The state should quit using the knee-jerk reaction it always seems to have about raising taxes and instead consider spending the vast amounts already collected more wisely.
* I was also taxing the existing tax, not the actual price. Subtract out the 41.9 cents we currently pay in taxes and the sales tax is actually on $2.84 of the $3.26 per gallon.
After raising the cigarette tax in 2008 and the alcohol tax last year, a public health advocate (read: lover of big government and the nanny state) wants to jack up taxes on cigars from their current 15 percent rate, according to a recent Washington Times story by David Hill. Vincent DeMarco also spearheaded the unnecessary alcohol tax increase which took effect earlier this year.
I find it interesting that the angle DeMarco uses to justify yet another sin tax is teen smoking. Apparently cigarettes are now too expensive for teens to purchase – thanks to the additional taxes – so they are embracing cigars instead. DeMarco is quoted in the Times, “Anything that is going to stop young people from smoking is a good thing.” Well, sir, I have news for you – raising taxes on cigars and other tobacco products won’t work for that intended purpose. But you’ll certainly extract more money out of those adults who choose to smoke.