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Annapolis ’06: A collapse at the wire

General Assembly fails to resolve electric rate debacle; governor looks into solving the problem on his own

Wednesday, April 12, 2006

Click here to enlarge this photo Christopher Anderson⁄The Gazette Members of the Senate Finance Committee hold a last-minute meeting in the Senate lounge Monday night to iron out details on the controversial energy bill, as reporters listen in. The bill was defeated by one vote in the full Senate. Click here to enlarge this photo Christopher Anderson⁄The Gazette (From left) Del. Anthony G. Brown, Sen. Brian E. Frosh and Sen. John A. Giannetti confer about a sex offenders bill in a hallway outside the House chamber on the last night of the General Assembly session Monday. Legislation that would have strengthened penalties on sexual predators died.

Legislation to postpone the full weight of this summer’s electricity rate hikes for customers of Baltimore Gas & Electric and Pepco failed by a single vote in the Senate late Monday, the final day of the annual 90-day legislative session.

With no mitigation plan in place, more than 1 million Marylanders can expect to pay significantly more for electricity beginning in June and July. BGE customers can expect a 72 percent increase on July 1, while bills for Pepco customers will rise 39 percent on June 1.

The rate hikes follow the expiration of price caps that were established when the General Assembly deregulated electricity in 1999.

Shortly before midnight Monday, as negotiations began breaking down, Ehrlich (R) promised to call the General Assembly back to Annapolis for a special session on Wednesday.

But after a night’s sleep, Ehrlich and his aides were discussing ‘‘nonlegislative” options to the electricity rate debacle that would not need lawmakers’ approval.

Paul E. Schurick, Ehrlich’s communications director, blamed lawmakers for leaving the issue unresolved.

‘‘The legislature had a job to do,” he said. ‘‘They had 90 days to do it. They didn’t do the job.”

House Speaker Michael E. Busch and Senate President Thomas V. Mike Miller Jr. sent mixed messages on Tuesday about next steps.

The issue is for the governor to decide, said Miller (D-Dist. 27) of Chesapeake Beach, while Busch expressed frustration that the Senate failed to pass the bill that had been the result of weeks of negotiations among lawmakers, Ehrlich and the power companies.

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‘‘Tell me how any of this makes sense to anybody?” asked Busch (D-Dist. 30) of Annapolis.

Three-fourths of the House was on board with the bill, he said.

Asked about a special session, Busch said, ‘‘You need a plan and right now there is no plan.”

Senate Finance Chairman Thomas McLain Middleton (D-Dist. 28) of Waldorf said he expects the governor to try and solve the issue himself so he can use the lawmakers’ failure in his re-election campaign.

The Public Service Commission must still approve the $11.4 billion merger between BGE parent Constellation Energy and Florida Power and Light, giving the state some leverage.

The bill that died Monday night would have given Constellation legislative authority to borrow $725 million, Ehrlich said. Cash from the merger would have contributed $600 million more that could have been used to offset the rate hike.

Pepco customers, meanwhile, would have been given the option to stretch out the expected 39 percent increase over two years.

The governor said officials must consider how Wall Street investors will react to Constellation’s borrowing without the legislature’s go-ahead.

Miller said Tuesday that the legislation failed because the Senate did not have enough time to debate the complex rate relief bill. Ehrlich aides claimed that Miller, who controls the Senate, could have engineered the bill’s passage if he wanted to.

At a news conference Tuesday, Ehrlich refused to blame anyone for the failure of the legislation.

Placing blame ‘‘is not productive,” he said. ‘‘It’s not leadership. It’s whining. ... Who cares whose fault it is? All people care about is what their bill will be July 1.”

The collapse of the complicated electricity issue capped a politics-filled final day of session.

Democrats in the Senate overrode Ehrlich’s veto of a bill delaying the state takeover of 11 failing Baltimore city schools. The schools bill was rife with political implications; Baltimore Mayor Martin O’Malley (D), who is running for governor, complained that Ehrlich is using the takeover for political reasons.

O’Malley sat in the Senate gallery and watched the bill pass with 30 votes, one more than necessary to override the veto.

Ehrlich said the Senate override, which followed the House’s vote on Saturday, was ‘‘appalling” and a confirmation of the ‘‘status quo” in Baltimore. O’Malley said the override reflected the lawmakers’ confidence that city schools are improving.

Also Monday, senators overturned several other vetoes, including bills that targeted Ehrlich allies and that allow certain polling sites to open a week before Election Day.

Republicans said the early voting bill was an unfair power grab by Democrats to tilt the election their way.

Senators voted 31-16 to override Ehrlich’s veto on a bill requiring Cabinet secretaries to be reconfirmed during a governor’s second term. Republicans say the bill targets Transportation Secretary Robert L. Flanagan, who has fallen out of favor with key Democratic senators.

The bill raises serious constitutional questions and erodes the governor’s authority, said Senate Minority Leader J. Lowell Stoltzfus.

‘‘Never in my 16 years have I seen this kind of attack on the executive,” said Stoltzfus (R-Dist. 38) of Westover. ‘‘If there’s any bill out there that is mean-spirited, this is it.”

Another bill bans members of the University of Maryland Board of Regents from participating in campaign activities, which Republicans said is directed at Richard E. Hug, Ehrlich’s chief fund-raiser. Senators narrowly overrode the governor’s veto 29-18.

Republicans said the override reeked of partisan politics and disjointed priorities.

‘‘That a Dick Hug bill could pass, but the Maryland General Assembly could not get together to pass a package of sexual predator protections for our kids —” Ehrlich stopped, shaking his head, at a news conference on Tuesday.

Even though there is talk of a special session, legislators are preparing for the coming elections. Ehrlich’s re-election campaign sent out a fund-raising solicitation on Tuesday morning. O’Malley’s camp dispatched an e-mail describing the governor’s term as ‘‘four years of failed leadership.”

Montgomery County Executive Douglas M. Duncan (D), who is also running for governor, used the electricity issue to criticize Ehrlich.

‘‘Until Bob Ehrlich starts talking about re-regulation, he’s not solving the problem. He’s passing the buck,” Duncan said.

The county executive supports allowing local governments to buy electricity for residents through aggregation. Montgomery County has purchased three years of electricity for 18 local government agencies at a cost of $125 million, saving $25 million.

Democrats and Republicans are expecting the divisiveness that marked the past four legislative sessions to continue throughout the election.

‘‘The campaign begins when the last piece of confetti hits the floor,” said House Majority Leader Kumar P. Barve (D-Dist. 17) of Rockville of the confetti drop that occurs at midnight on the session’s final day. ‘‘The campaign will be a continuation of the disagreements in the legislature over the past four years.”

Here are the highlights of the 90-day session:

Budget

The state passed a $29 billion budget, about a 10 percent increase. It includes $4.5 billion in education aid and $361 million on land preservation and parks.

Correctional officers, a pawn in budget games, will receive a 6 percent raise that kicks in April 15. Other adjustments will kick in later in the year. Ehrlich had proposed a raise retroactive to Jan. 1, which the state has never done before.

Ehrlich has crowed that he has turned a sea of red ink into balanced budgets. His own budget proposals forecast $3.1 billion in deficits in fiscal 2008 through 2011. The legislature has offered less sanguine projections, with the state staring at a $3.7 billion to $4.2 billion deficit. Maryland law requires the General Assembly to pass a balanced budget.

Environmentalists praised the budget’s $361 million for Program Open Space.

Stem cell research

Ehrlich already has signed legislation that will pump $15 million into stem cell research. The Technology Economic Development Corp., or TEDCO, will dispense the money for projects chosen by a scientific panel that includes bio-ethicists.

The money will be used for research that uses stem cells extracted from human embryos, using a procedure that conservatives believe is tantamount to abortion. The money also will finance research using noncontroversial adult stem cells, which are derived from human tissue.

Healthy Air Act

The governor signed the Healthy Air Act, which will reduce sulfur dioxide, nitrogen oxides and mercury emissions from coal-fired power plants. The bill resembles regulations Ehrlich announced last year, although environmentalists said the new law is stronger than the regulations because it requires deeper reductions in a shorter period of time.

The bill was the subject of a minor constitutional crisis: It arrived at the governor’s office late on the last day the General Assembly could pass a bill in time to try to overturn a veto. Because it arrived late, the governor’s staff insisted the bill missed the deadline. By signing the bill, the governor surprised even his own staff.

Pensions

Both chambers unanimously passed pension enhancements for teachers and state workers before House and Senate negotiators agreed to a $120 million plan that advocates say will help recruit and retain workers.

Under the plan, employees will contribute more money toward their retirement — from 2 percent to 5 percent over three years — in return for larger retirement checks and retroactive benefits dating to 1998.

Under the new plan, a 30-year veteran with an average annual salary of $50,000 would receive $27,000 in retirement, $6,000 more than they received under the current formula.

Wineries

The General Assembly gave final approval to legislation creating a special alcoholic beverage license for wineries.

The compromise stems from a 2005 U.S. Supreme Court decision that struck down laws protecting in-state wineries. Comptroller William Donald Schaefer (D) ruled earlier this year that the state’s 22 vintners would have to sell through a third-party distributor beginning June 1, a restriction that would have cut profits and dealt a severe blow to the wine industry.

But both sides agreed last week to allow wineries that produce less than 27,500 gallons — a benchmark that applies to 18 manufacturers in Maryland — to continue direct sales.

Higher education

The budget includes money to freeze tuition at public universities and hundreds of millions of dollars for construction projects, while lawmakers boosted funding for Maryland’s 16 two-year institutions.

State aid for public colleges and universities increases 13 percent over last year, rising to more than $1 billion. The capital budget includes about $230 million for college construction projects.

State aid to community colleges will increase under a new formula: Under current law, two-year institutions receive 25 percent of the per-pupil funding given to four-year colleges. That will jump to 30 percent over six years.

Farmers

The legislature allocated money to farmers this year to help them stay afloat and embrace environmentally sound techniques.

Millions of dollars could be directed toward winter cover crops, soil conservation programs and open space preservation.

‘‘It’s showing our farmers that we put our money where our mouth is,” Miller said.

The agricultural efforts also stem from a desire to restore the Chesapeake Bay and its tributaries. Legislation that would reduce pollutant flow into some state waterways passed the General Assembly in the session’s final hours.

Transportation

The long-running dispute between Democratic lawmakers and the Ehrlich administration over $29 million in local highway user revenue was solved during budget negotiations. A bill that would study dedicated mass transit funding was approved.

Voting machines

A bill that would have scrapped the state’s $90 million electronic voting machines in favor of a new system died in the Senate.

Other dead issues

For the fourth straight year, lawmakers were unable to pass a bill legalizing slot machines at racetracks. Bills that would have strengthened penalties on sexual predators, banned smoking in bars and restaurants statewide, allowed easier access to the so-called ‘‘morning after pill,” strengthened the state’s eminent domain law and put before voters a constitutional amendment defining marriage as solely between one man and one woman all failed.

Staff Writer Alan Brody contributed to this report.