The Maryland Department of General Services did not charge sales tax to former Gov. Martin O'Malley when he purchased "junk" furniture from the governor's mansion as he was leaving office in January — another divergence from state rules governing such transactions, state officials said Friday.
The department is required to charge sales tax on the sale of surplus government property but did not apply the 6 percent levy — the increased rate O'Malley pushed into state law in 2007 — to the Democrat's discounted purchase of 54 furnishings from the Annapolis mansion.
"Sales tax wasn't paid" by O'Malley, Therese Yewell, a department spokeswoman, said in an email. Yewell confirmed that charging sales tax on such transactions is department policy. Asked why sales tax was not charged, Yewell said the agency could not say because the employees involved in the deal no longer work for the state.
Department officials are still examining the transaction with O'Malley, as well as a smaller sale of furnishings to former Gov. Robert L. Ehrlich Jr. eight years ago. State officials are not clear if Ehrlich paid sales tax.
A spokesperson for the Maryland comptroller's office said the agency customarily seeks repayment of unpaid sales taxes from a seller, not a buyer.
A Baltimore Sun investigation revealed last month that O'Malley paid $9,638 for armoires, beds, mirrors, tables and other items that originally cost taxpayers $62,000. The furniture, from the residential section of the mansion, was sold after the department declared every item "junk." The state did not charge $578, or 6 percent, for sales tax to O'Malley, who is now a Democratic candidate for president.
O'Malley and his wife, Baltimore District Judge Catherine Curran O'Malley, who together earned $270,000 in state salaries last year, used the items to furnish their new house in Baltimore's Homeland neighborhood.
The former first lady signed the $9,638 check from the O'Malleys' joint bank account on Jan. 17, when her husband was still governor. He left office Jan. 21.
A spokeswoman for O'Malley's current presidential campaign, Haley Morris, said in an email Friday that the Department of General Services "has always had the authority over these transactions, so thisappears to be an internal matter for DGS to answer. Governor O'Malley followed DGS protocol."
The department manual governing the sale of surplus state property says the "preferential sale or gratuitous disposition of property to a state official or employee is prohibited in accordance with Board of Public Works policy." The prohibition against preferential sales — transactions made without publicly soliciting other bids — applies to all surplus state property, even items declared junk, Yewell said.
State ethics rules and the standards of conduct for executive branch employees forbid state officials from making transactions that involve information unavailable to the public.
"The assertion [by the O'Malleys] is: 'We were told what to do,'" said Jennifer Bevan-Dangel, executive director of Common Cause Maryland, a government watchdog group. "But clearly some person decided to skip over the protocol and procedures. Without an ethics investigation, we don't know who that person was or when it happened. Someone decided the governor could get this furniture for a steal — without taxes and at rock bottom value. Why and how that decision was made is unclear."
The General Services Department's legal counsel, Assistant Attorney General Turhan E. Robinson, asked the State Ethics Commission last month to review the transaction.
David Nitkin, spokesman for Attorney General Brian E. Frosh, a Democrat, issued a statement Thursday saying that "the State Ethics Commission has advised the Office of the Attorney General that it has no jurisdiction over this matter, and that no investigation was commenced or is underway."
The statement means the commission determined it was not the proper venue for Robinson's questions, and did not examine details of the transaction.
Bevan-Dangel criticized the move. The commission "dismissed it out of hand on procedural grounds," she said, not on the substance of the facts.
Nitkin's statement also said, "Under established procedures, the Department of General Services, which oversees the disposal of surplus state property, approved the sale of furniture to former Gov. O'Malley."
The department is still reviewing procedures involved in the sale to O'Malley, as instructed by Gov. Larry Hogan.
The Republican governor said at a news conference this week that O'Malley has been "misleading" the public about the removal of mansion furniture. Hogan said that during a mansion tour in early January, O'Malley said all of the furniture in Government House's residential side belonged to the Democrat, even though the 54 items had not been declared surplus.
O'Malley's former chief of staff, John Griffin, has said that O'Malley asked to buy the furniture only after the state declared it surplus and junk.
That declaration took place on the day the O'Malleys moved out of the mansion.