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Frosh: Hogan nominees Peters, Schrader cannot be paid

Hogan sharply disputes AG's conclusion, says his administration wants outside counsel


Health Secretary Dennis Schrader and Planning Secretary Wendi Peters.

Budget language barring two of Gov. Larry Hogan’s Cabinet secretaries from being paid is legal, according to Maryland Attorney General Brian E. Frosh.

Hogan’s own legal counsel fired back, calling Frosh’s declaration unconstitutional and requesting permission to retain outside counsel to represent the executive branch and Planning Secretary Wendi Peters and Health Secretary Dennis Schrader.

And the possibility of a rare courtroom battle between the two branches of state government grew more likely as the Office of the Comptroller asked Frosh to seek a judicial review of the “intractable conflict” between the governor and the legislature. The comptroller’s office said it would continue to pay Schrader and Peters, but a spokesperson for the state treasurer — whose office is responsible for signing the checks — wouldn’t say if she would do so.

Frosh, in a July 3 letter to Sen. William C. “Bill” Ferguson, said the Departments of Planning and Health “may not pay for a position that has been stripped of its appropriation.” The letter strongly supports a budgetary move by the General Assembly that was meant to prohibit paying Peters and Schrader.

“I can’t believe we’re at this point,” said Ferguson, a Baltimore City Democrat. “I would hope the governor would follow the letter of the law.”

Frosh wrote that the budget language was ” a valid exercise of the legislature’s power” under the state constitution “and thus prohibits the payment of salary to Ms. Peters and Mr. Schrader for any of the identified leadership positions.”

Peters’ salary is $137,749. Schrader’s salary is $174,417.

Ferguson said the standoff sets up an unprecedented situation. When asked how it might be resolved, Ferguson said: “I’m not sure.”

“This is truly unbelievable,” Ferguson said. “This isn’t how Maryland government should operate. This is an incredibly difficult state of affairs that the governor has chosen to create.”

Douglass Mayer, a Hogan spokesman, said Friday that Frosh’s letter “is one man’s legal opinion” and said the governor had his own legal advice.

Robert F. Scholz, Hogan’s chief legal counsel, argued in a July 6 letter to Frosh that the budget restrictions are unconstitutional, saying it was a violation of the separation of powers in the Maryland Constitution. Additionally, Scholz argues that the legislature has no power to restrict paying individual employees.

“Allowing this action would quickly lead to absurd results,” Scholz wrote in the letter, a copy of which was provided by Mayer. “By this same reasoning, the legislature could, through the budget bill, prevent you, as attorney general, from appointing specific people to your senior staff, or require nonpayment of such individuals under certain conditions. Such actions would be improper and would clearly interfere with the constitutional and statutory prerogative of the governor or the attorney general. That is exactly what the legislature has attempted to do with the budget.”

Mayer said the governor intends to pay both secretaries.

“Our administration believes that secretaries who work should be paid,” Mayer said.

Peters and Schrader were both appointed in 2016, prior to the start of the 2017 General Assembly session.

Both appeared before the Senate Executive Nominations Committee, which is chaired by Ferguson.

The Senate panel ultimately voted to recommend Peters not be confirmed after a contentious interview.

Hogan quickly withdrew her nomination but made no move to replace her. The legislature responded by adding budget language that would prevent the governor from paying any appointee who was subject to confirmation but did not receive a Senate vote by the end of session.

Initially, the language, which does not name any individual, only applied to Peters.

Schrader’s nomination dragged on in the Senate. Senate President Thomas V. Mike Miller Jr. and Republican leaders in the chamber said the nominee was expected to be confirmed by the time the session closed in April.

But an irritated Hogan withdrew Schrader’s nomination, complaining that the Senate was playing games with the appointment and repeatedly delaying the confirmation process at every turn.

The withdrawal of Schrader’s appointment made him subject to the same budget language meant initially for Peters.

Mayer said the restriction raises other concerns related to ongoing negotiations between Schrader and the federal government related to Maryland’s unique Medicaid waiver — a federal grant of about $1.5 billion.

Mayer said Schrader should be paid for his efforts on behalf of the state.

When asked if the budget language could potentially jeopardize those negotiations if Schrader were no longer considered an employee of the state, Mayer said he didn’t know.

“That’s the type of problem that can come up when you play these types of unconstitutional games,” Mayer said.

The standoff sets up the possibility of a rare courtroom battle between the two branches.

Deputy Comptroller Sharonne R. Bonardi, in a July 7 letter to Frosh, notes that the office will continue to pay Peters and Schrader unless the attorney general seeks a judicial review of the issue.

Earlier this week, Renee Nacrelli, an assistant attorney general assigned to the comptroller’s office, advised the agency that it was not to pay either secretary.

Bonardi, in her letter, called the standoff a “highly unusual — and more significantly, an unprecedented situation.”

“Absent of any judicial action that resolves the current legal dispute involving the payments of salary to Secretaries Peters and Schrader, (the comptroller’s office) is obligated to follow the longstanding process that governs personnel compensation and will and therefore will continue to issue warrants of salary payments to Secretaries Peters and Schrader,” Bonardi wrote.

The office led by Comptroller Peter V.R. Franchot won’t have the only say on paychecks. The state treasurer is responsible for signing the checks.

Further complicating the issue is the fact that Treasurer Nancy K. Kopp is appointed by the General Assembly. The treasurer, since Hogan took office, has found herself the target of lawmakers who have privately grumbled that she doesn’t do more to represent the General Assembly’s point of view on the three-person Board of Public Works. That panel is led by Hogan and includes Franchot, the two of whom often have teamed up on issues to the consternation of legislators and other Democratic officials.

Chief Deputy Treasurer Bernadette T. Benik said the agency has received advice from the attorney general regarding paying Peters and Schrader but declined to elaborate.

“Clearly everyone is aware of the situation and we’re working to get ready,” Benik said. “We’re working with the attorney general to determine what the treasurer’s obligations are under the constitution.”

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