Notes from the meeting of Jan. 31, 2019 – Good Governance

Meeting of January 31, 2019

Topic: “Approaches to Good Governance in Montgomery County

Speakers: Evan Glass, Council Member At-Large, Member Health & Human Services Comm., Transportation & Environment Comm.

Andrew Friedson, Council Member – Dist. 1, Member Govt. Operations & Fiscal Policy Comm. ; Planning, Housing & Economic Development Committee

Because of the limited time of Council Members Glass and Friedson, they were able to respond to just 4 questions ( see highlighted areas) that had been sent to them in advance of the meeting.

1. There was a lot of discussion about the fraud at the County’s Department of Economic Development (DED). Although the fraud by Peter Bang, DED’s Chief Operating Officer, had been discovered in April 2017, the public never heard about it until November 2018, a year and a half later. A casino operator became suspicious because Bang was using large sums of money for gambling, and the casino then alerted the IRS. When asked why it took so long for the County to hear about this case, the response from the County was that it took the IRS a long time to trace the money trail, which led to South Korea. Both Messrs Glass and Friedson found this curious. There could be more fraud in that area but no one knows yet. (The 161-page report of the County’s Inspector General is available online at  www.montgomerycountymd.gov/OIG/Resources/Files/PDF/IGActivity/FY2019/mcded_mismanagement_final_report_19_nov_2018.pdf)

The County Executive is searching for a new head of Human Resources who may pursue the issue as to the status of county employees during criminal investigations. It should be noted that Mr. Bang was transferred to the payroll of the County’s Department of Finance where he remained until he was terminated in 2018.

We were told by Council Member Friedson that he formerly worked on Comptroller Franchot’s staff and thus also staffed Board of Public Finance issues. He has extensive experience in looking at contracts in general and in no-bid contracts in particular. He was involved in questioning contracts awarded to support the state’s implementation of the Affordable Care Act. Some contracts were let without competition and lacked transparency.

Council Member Glass, as a former CNN journalist who covered issues on Capitol Hill, has extensive investigative experience. As a supporter of transparency, accountability and better governance, he supports an Inspector General for Montgomery County Public Schools, supported both by the Taxpayers League as well as by the Montgomery County Civic Federation.

The Office of Procurement, formerly within the Department of General Services, is now an independent office. It works with the Department of Finance’s accounts payable function to validate payment requests and to match them to existing contracts. The Department of Finance manages grants and tax credits of the Department of Economic Development. The Taxpayers League questioned the oversight exercised by the Department of Finance noting that while they operate critical internal controls, those controls are not independently tested by external auditors and thus these auditors do not render an opinion on internal controls.

2. Council Member Friedson stated that the lack of affordable housing affects the educational achievement gap. Council Member Glass said that more funding should be provided to narrow the achievement gap with the provision of more wrap-around services to the public schools. There is a $28 million carryover in the MCPS budget, which is not subject to the requirements of the Maintenance of Effort (MOE), There has been more collaboration between MCPS and the Montgomery County Education Association (teachers’ union) with the advent of the new union president. The new focus is on a more holistic approach. Everyone including educators, parents and social service providers needs to be involved. 33% of MCPS students are in the FARMS program (Free and Reduced Meals).

Council Member Friedson talked about impact fees on developers . The Taxpayers League noted that impact fee collections have dropped over the last year not only due to tax credits to developers but also due to declining development which appears to be a trend in the county. This has an adverse effect on schools as impact fees fuel tax revenue on which the public schools are dependent.

3. Council Member Friedson opined that the recent decision by Amazon not to choose Montgomery County as its second headquarters was not due to our taxes, as Long Island City in New York is a high tax district too. Businesses are hesitant to relocate to the county because the very high cost of housing makes it too expensive for the average employee. He said that the county’s economic development strategy should focus on our high quality of life to distinguish it from our competitors.

4. All agreed that affordable housing is critical and the need for it is growing. Council Member Glass noted that the percent of those residents who are renters has increased since 2008 from 24% to 32%. Council Member Friedson stated that the Bethesda Master Plan will add another 1,300 housing units and that the county has added over 37,000 affordable housing units in the last 5 years but more is needed. This number is at variance with Taxpayer League data that shows a net balance of 16,000 MPDUs in inventory. The difference may be attributable to the units that have been retired either by sale or conversion.

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