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The Collector

Comptroller's race pits an active incumbent against an experienced challenger

Photo: Franchot: Frank Hamilton, Campbell: courtesy the candidate, License: N/A

Franchot: Frank Hamilton, Campbell: courtesy the candidate

Campbell (left) and Franchot

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William Campbell says if he’s elected state comptroller, he’ll push to cut state spending by one-fifth. “If we don’t do this we’re gonna have a financial Armageddon,” the former chief financial officer for the Coast Guard, Amtrak, and other large, bureaucratic organizations says. To him it’s just common sense.

The comptroller collects the state taxes, sends out the refunds, oversees state spending, and sits, with the governor and the state treasurer, on the Board of Public Works, which must approve nearly every state contract of any significance. It’s a high-profile position, and former comptrollers have stayed in office for decades, sometimes confounding governors by wielding their Public Works vote like a hammer.

That’s the part Campbell relishes.

“We’ve grown our budget over 30 percent in the last four years—about 37 percent. We haven’t got 37 percent better governance,” says Campbell, who easily won his three-way primary race in September to become the Republican Party’s candidate to face Peter Franchot, the four-year incumbent and 20-year Democratic member of the House of Delegates. “I think we could reduce spending over the four-year period by 20 percent. If you did that we can make this a sustainable environment to create jobs,” Campbell says. He proposes eliminating the corporate income tax, a move he hopes would create a “more business-friendly environment” and, through supply-side alchemy, spur the creation of more tax-paying businesses.

Campbell has clearly read the state’s budget (he’s got some real problems with the way Medicaid was accounted for). He complains that it’s confusing and hard to follow (a fact), but he’s not a newbie to these things. For 20 years, according to his campaign web site, Campbell held various high-level positions: In addition to his time with the Coast Guard and Amtrak, he served as assistant secretary for management and CFO for the U.S. Department of Veterans Affairs.  The Veterans Affairs budget topped $65 billion while Campbell was there—more than twice the Maryland state budget.

But Campbell is not just a big-picture guy. Since leaving Amtrak in February 2009, Campbell’s concerns have shrunk to the micro level. “You pay a $300 [state] filing fee to register a business,” he complains. “What is a fair filing fee? Is it $100? They raised it to $300. It cost me $1,000 to set up my business before I made a single dime. The fees ought to reflect the services that are given. Unemployment insurance tax went up 350 percent. Does something seem wrong with this picture to you?”

He comes by his views on efficiency honestly, as a former engineer. “It’s not because I’m some kind of anti-tax person,” Campbell says. “Taxes pay for civilized society. I just want to make sure that the tax isn’t so burdensome . . . just want to make sure it’s not an impediment to economic activity.”

And so, his engineer’s heart on his sleeve, he suggests this “down payment” on his 20-percent spending cut. “The comptroller is running a quarter billion dollar information technology project,” Campbell says, “to try to mine data from all state databases” to determine if, say, a guy who claims $22,000 in annual income is cruising around in a brand new 54-foot Hatteras yacht. Not a terrible idea, Campbell says, but “these [projects] are very difficult to pull off well. Only about 30 percent of them come in on budget, on schedule, and have the full technical performance.”

In other words, big ambitious projects like this, done by government, usually fail. The federal government has “wasted billions” trying to do similar stuff, Campbell says.

And then there’s this problem: “The underlying assumption is that 200,000 people in Maryland cheat on their taxes sufficiently to make this worthwhile.”

Campbell doesn’t think so. “There’s an old Russian proverb: If you milk like a tyrant you’ll draw nothing but blood.”

Comptroller Peter Franchot is sticking to his talking points and ignoring his opponent. He’s not above boasting a bit, either. “I’ve revolutionized the office,” Franchot says. He comes to the Public Works meetings “on time, prepared, professional. I ask tough question after tough question, based not on politics but on sound fiscal analysis. My briefing book is about that tall,” he says, hand eight inches over the table. “I cram for my Board of Public Works meetings like I used to study for high school finals.”

Franchot has always come off as a studious sort. And he has raised a little hell when, for example, items came before the board proposing the state pay millions more than the appraised value for undevelopable Eastern Shore land. He touts himself an “independent, investigative observer” beholden to no party line. “We’re spending too much, borrowing too much,” he says. “We need to do top-to-bottom spending reform.”

That this sounds like something his opponent endorses doesn’t faze Franchot. “I have never met my opponent,” the comptroller says. “I’m sure he’s a nice man, but I’m running on my record. I have said all along that we shouldn’t have had new taxes. But people advocating further tax cuts, draconian cuts [to state spending], that’s not practical. We need reform. We also need stability.”

One of Franchot’s key reforms is MITS—the Modernized, Integrated Tax System. It’s the thing Campbell says will cost a quarter billion and probably not work.

The cost is actually $87 million, Franchot says, and it’s already working. Franchot says the program brought in $63 million in its first year and will bring in $100 million every year in the future. Franchot boasts an additional $47.4 million in delinquent taxes recovered from federal contractors as part of a “vendor offset program.” The feds send Maryland their payment records on federal contractors, Maryland sends them its state contractor list. Each tax collector looks for people on the list who are receiving government payments—as vendors, not welfare—and who have outstanding tax lien judgments against them.

These judgments are exceedingly hard to collect, Franchot claims: “Everybody lawyers up.”

With the vendor offset it’s easy—he just diverts the payments into the government account; the feds and state government work in concert to get what’s coming to them. Every week, Franchot says, Maryland sends about $50,000 to the IRS to cover payments owed the feds by Maryland state vendors. In return, the Treasury Department each week sends Maryland an average of $325,000, all of it extracted from federal vendors domiciled in Maryland, and owing Maryland state tax.

Both Franchot and Campbell also think the state pension system is in trouble. Franchot says he’s improved matters, however—by getting more women and minorities hired as money managers. “When I arrived we had 52 white men as money managers,” Franchot says. “The Terra Maria program [which develops new money managers] now has $3.2 billion managed by 85 new woman and minority fund managers.”

A consummate politician, Franchot has objected to state spending increases, debt increases, and wasteful spending even while making sure newspaper editors had an opportunity to sit down and talk to him. He’s no slouch in the fundraising department, either, having collected hundreds of thousands of dollars—lots of it bundled from developers and others with multiple corporate identities—an easy way around campaign spending limits. He makes no apology.

“I’m a progressive, but I don’t believe in unilateral disarmament,” Franchot says. “My opponent this year is not well funded. But it could have been a self-funded millionaire.” Franchot says he has about $400,000 in his campaign account.

Campbell says he has about $5,000 on hand. He practically apologizes for his lack of money.

“I could put some more money in,” Campbell says. “This is going to sound ridiculous. If you don’t believe me, I’ll understand. Money is a surrogate for your time. If I can get around to a million people in Maryland, and get them to like me, know me, and trust me, I could get elected. I thought I could raise about $80,000. I grossly overestimated.”

Campbell decides to wear his campaign’s poverty as a badge of honor. “Why would anyone spend $2 million for a $190,000-a-year job?” he asks. “You know why? ‘Cause it’s not his money. And I think he treats the taxpayers’ money the same way.”

Armageddon is nigh, Campbell says, though his definition is perhaps less than biblical. “For 2012 if they don’t cut spending, they’re probably going to have to raise taxes 6 percent,” Campbell says. He wishes more people would listen.

“I used to believe that in the land of the blind the one-eyed man is king,” Campbell says. “Since I’ve been running for office I’ve come to believe that in the land of the blind, the one-eyed man is considered a lunatic.”

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