Franchot wants to keep ‘independent voice’

No matter who is running the state in 2011, Comptroller Peter Franchot said he would not deviate from his game plan of pushing for fiscal restraint and harshly criticizing programs he considers too costly or wasteful after spending the last four years establishing his “bona fides as an independent voice.”

The Montgomery County Democrat, running for his second term after serving two decades in the House of Delegates, seeks to return to the post that has kept him embroiled in Maryland‘s recent fiscal woes.

Through his sprawling duties as comptroller, the outspoken Franchot chairs the board that forecast diminishing tax revenues and sits on another panel that slashed the state budget by $1.6 billion when the revenues dipped even further than expected.

“Our people are suffering. I think part of the disconnect that you see in politics now is you read about the stock market toasting themselves with champagne and everything’s back to normal with bonuses and limousines. And they’re bad off,” Franchot, 62, said in an interview with The Daily Record. “I’m happy to be a voice for those taxpayers … saying ‘You know, the Maryland economy is really suffering. We can’t do everything at the state level.’”

Franchot’s most visible role has been his post on the Board of Public Works. He is the most vocal member of the board, frequently the toughest questioner and is often the dissenting vote outweighed by the governor and state treasurer.

Whether it is Gov. Martin O’Malley who wins or former Gov. Robert L. Ehrlich Jr., who has made his own pledges of fiscal responsibility, Franchot said his approach will not change.

“Every governor wants the same thing,” Franchot said. “They don’t want to be challenged by anybody.”

Franchot pointed to several actions by the board over the last year as evidence of the impact his independent streak — O’Malley and Treasurer Nancy K. Kopp are also Democrats — can have on the average $400 million in spending approved by the board every other week.

The State Lottery Agency asked the board in the spring for $800 million over the next decade to buy slot machines for Maryland casinos. After Franchot protested the price tag, the agency opted for a smaller sum — $200 million — for the first two casinos and agreed to return to the board for approval of each lot of slots terminals.

Franchot has since voted against three rounds of slots procurements worth about $100 million and has criticized the lottery for overpaying. Lottery officials have defended the purchases as being in line with the industry average and dismissed the overpayment charge because the contracts include five years of maintenance.

“I’m still losing 2-1, but I think the public is getting a lot more scrutiny and transparency as far as those contracts,” Franchot said.

And this month, Franchot took a hard line against H.D. Myles Inc., a company that sought a state contract without disclosing that it was not yet incorporated in Maryland. The company’s bid was thrown out.

“I guess I’ve got the black and blue marks on my back to prove it,” Franchot said, “but people appreciate that check and balance.”

Franchot’s role as vice chairman of the Board of Trustees of the State Retirement and Pension System has also placed him in the middle of the state’s slumping retiree and health care funds.

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.

The pension fund, battered by two recessions in the last decade, was fully funded in 2000, but only 64 percent funded in 2009.

Franchot called corridor funding — a 2002 budgetary fix that tied employee and state contributions to the health of the fund — “a mistake” and said the system needs to be reformed.

A state commission is expected to lay the groundwork for legislative fixes to the pension and health care programs next year. Comparing the undertaking to steering an aircraft carrier, Franchot urged caution in making changes to the system, which he said are needed for both the way the system is funded and how benefits are doled out.

“People know that,” Franchot said. “People know we’re going to make sacrifices.”

He noted the pension fund’s investments have diversified during his time in office. The investment returns in the last decade, however, have been less than half of the 7.75 percent forecast by the state.

“We’re not bullet proof, but we’re certainly more protected than we were,” Franchot said.

He also touted the fund as an economic engine for the state. The pension board put 85 female and minority money managers in charge of $2.5 billion and has encouraged investment in Maryland technology companies.

But, Franchot said, job creation needs to come from the private sector. The state’s top tax collector, he said Maryland needs to spend less, lower its debt load and avoid raising taxes on businesses and individuals in coming lean years.

“Business should not be looked at by Annapolis as a bottomless pit of tax revenue,” he said. “If we can get out of the way of the private sector and partner with them and support them where appropriate, then we’re going see the cycle begin to turn.”

Instead of searching for new sources of revenue, or increasing existing ones, Franchot said the state and local jurisdictions need to “scrub” their operating and capital budgets to find places to cut costs and save money.

“I think you can do it without draconian reductions in government services. I think you can do it without big tax increases,” Franchot said. “I think you can do it with innovation and technology.

The comptroller has turned his own staff of 1,100 on that tack during the last four years, using a mix of free options and pricey tools to make disparate government systems work together.

Franchot said that 1.7 million Marylanders file their state tax returns online, saving the state $1.60 per return.

The comptroller’s office puts items abandoned in safe deposit boxes for more than three years — mostly coin collections, jewelry and baseball cards — up for sale on eBay. It’s not the state’s first trip to the online auction site — Ehrlich famously put the state yacht up for sale there in 2003.

An agreement with the Internal Revenue Service to exchange and compare state and federal lists of delinquent taxpayers and government contractors yields $50,000 for Washington, and $320,000 for Maryland every week, Franchot said.

And his office is working on the Modernized Integrated Tax System, an $87 million set of computerized analysis tools that comb multiple state databases to identify tax cheats.

“Almost everybody in the state does the right thing,” Franchot said. “There’s a small percentage that aggressively cheat. This isn’t fudging. This is cheating.”

Delinquent tax payments decreased by 20 percent in fiscal 2009 due in large part to the early phases of the project, and the comptroller was able to collect $9.8 million as a result, according to a state analysis.

It’s through programs like MITS and targeted spending reductions that Franchot said the state needs to address its fiscal straits, headlined by the annual budget deficits of at least $1.5 billion projected for the coming years.

“It’s a very tumultuous, difficult time right,” Franchot said. “We need stability. We need thoughtfulness. We need data. We do not need, ‘Let’s turn the boat over and let’s see what the boat looks like on the bottom.’”