Campbell’s eye on bully pulpit

Posted: 6:37 pm Mon, October 11, 2010
By Nicholas Sohr
Daily Record Business Writer

A longtime fiscal chief of sprawling government organizations, William H. Campbell said he would use the post of Maryland comptroller to rein in spending in Annapolis and cast a more critical eye on everything from slot machine purchases to office leases.

The Republican, running his first campaign for elected office, acknowledged the challenges he faces in winning a race in heavily Democratic state, and changing the course of a government dominated by his political foes from an office that lacks the clout of the governor or General Assembly.

But, he said, Annapolis needs elected officials with a different perspective if Maryland’s fiscal situation is to improve.

“There has been a culture of spending beyond our means for quite some time. It’s not a new phenomenon,” Campbell, 63, said last week in an interview with The Daily Record. “We have set up programs where we have what you will hear is a structural deficit. That’s a fancy word for we have plans that exceed our future projected income.”

Indeed, the state, still struggling with slack tax revenue in the wake of the recession, is expected to have annual budget deficits of at least $1.5 billion in the coming years.

The state’s pension system, however, faces a starker shortfall, and Campbell would be in a position to oversee changes there as the vice-chair of the board that oversees the State Retirement and Pension System.

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Maryland’s $34 billion pension fund was about $18.5 billion short of the amount it would need to cover future benefits at the end of fiscal 2009, and the health care fund was another $16 billion short. “Year after year after year we’ve had miserable performance,” Campbell said, referring to the 2.4 percent average annual return from 2000 to 2009, during which the pension fund was battered by two recessions.

Campbell said he would look closely at oversight of the fund’s investments, from the state employees who staff the pension system to the private money managers who invest the assets. The state pays the management firms about $100 million a year.

“I’m not making any allegations that there’s any kind of hanky panky at all, but one of the things you have to do is find out … who was getting the management contracts and why,” Campbell said.

He also said the state could streamline its operation by simplifying the different types of plans it offers, and should examine moving to defined contribution programs, like 401(k)s, for its retirees.

“It looks like they’ve got a huge bureaucracy micromanaging the system poorly. That’s one of the things I want to look at,” Campbell said, adding that while he was chief financial officer of Amtrak, he fully funded its pension system.

Campbell also served as CFO of the U.S. Coast Guard and was appointed assistant secretary for management and CFO of the U.S. Department of Veterans Affairs by President George W. Bush.

As the state’s top tax collector, the comptroller holds positions on two boards that have a hand in directing state spending — the Board of Public Works and the Board of Revenue Estimates, which he would chair.

Campbell said he would use his official powers and the bully pulpit that comes with the seats to clamp down on wasteful spending and limit the growth in the state budget.

The revenue estimates panel, which includes the state treasurer and budget secretary, sets spending guidelines for the governor’s budget every year. Recently, Campbell said, the estimates have been too high, and the government’s spending, which often exceeds the board’s recommendations, has kept the state limping along with a structural deficit.

“It appears oftentimes their estimates are too rosy,” he said. “We have taken what are very suspicious estimates and plugged them in like they’re gospel.”

The comptroller should have questioned Gov. Martin O’Malley’s 2011 budget, Campbell said, because it was balanced on an anticipated $389 million allocation from Congress, which was not fully funded when federal lawmakers finally approved the measure this summer.

Campbell said Maryland, which he described as a “federal enclave,” needs to adopt more conservative revenue projections and plan for a time when federal agencies are spending less at labs and military installations in the state, and with contractors within its borders.

“When they get the sniffles, we get pneumonia,” Campbell said.

He said he would advocate for cutting spending enough to eliminate a host of taxes on businesses, including the corporate income tax, the personal property tax and inventory tax.

“We only get 2 percent of our revenues from the corporate income tax and it’s a huge impediment to businesses coming here,” Campbell said.

As comptroller, Campbell said he would fight against the state adopting combined reporting, a way of assessing corporate taxes based on an apportioned share of a company’s total income across multiple states.

“If we do that, businesses will run, not walk, to the exits,” he said.

The comptroller also influences state spending on the other end of the budgeting and appropriation process through the Board of Public Works.

If former Gov. Robert L. Ehrlich Jr., also a Republican, wins his job back in November, Campbell said the duo could clamp down on wasteful spending at the board.

Often the most visible role the comptroller has in state government, the Board of Public Works has given incumbent Peter Franchot the opportunity to make well documented stands against a host of issues.

In fact, one of Campbell’s biggest criticisms for the board has been a hot topic for Franchot — the purchase and lease of slot machines for Maryland casinos.

Franchot repeatedly criticized the price the state paid for the first batch of machines for Hollywood Casino Perryville and voted against the state’s procurement of slots terminals for that casino and Ocean Downs, which is expected to be the second to open in the state.

Campbell said he would have taken the opposition a step further and audited the contracts to determine if the state is getting a fair price.

“I don’t know what a slot machine should cost, but we paid $50,000 per machine for [Perryville] and we’re doing the same at [Ocean Downs],” Campbell said. “At a minimum, we need to see if we’re overpaying, and if we are, we need to recoup that money.

The State Lottery Agency, which oversees the gaming industry, has defended the purchases as being in line with the industry average and dismissed the $50,000 figure because it includes five years of maintenance.

Campbell said he would also try halt or audit other large projects approved by the board, including the mixed-use State Center redevelopment and a comptroller initiative to develop computerized analysis tools across multiple tax databases to catch tax cheats. On both, Campbell said the state is paying too much — $34 per square foot for the State Center offices and $240 million for the tax system.

Campbell also said he would crack down on “emergency contracts” that come to the board after state agencies have already signed them.

“We shouldn’t let it go just because that’s the way we do business in Maryland,” he said.

But it will be a tough road to the comptroller’s office for Campbell, who must overcome the 2-1 Democratic registration advantage in the state, and the gulf between his financing and that of his opponent.

The Columbia resident had less than $2,000 on hand just before the primary election, the last time he was required to file a report with the state. Franchot, a first-term incumbent who previously served in the House of Delegates for 20 years, had $454,000.

“All the stars have to align just right,” Campbell said.