James T. Brady, appointed Maryland's secretary of the Department of Business and Economic Development three years ago, resigned recently after a series of disagreements with Gov. Parris N. Glendening. Former managing partner with the Baltimore office of Arthur Andersen, Brady was widely respected as the voice of business in the governor's Cabinet.
Staff writer Jay Hancock interviewed Brady last week about his differences with Glendening and his assessment of Maryland's business climate.
Maryland's economy is doing well these days. Who gets the credit?
Economic development is generated in the private sector. Too often government and politicians think that they are the ones who make things happen. We are in a very interesting period right now with the economic growth that has taken place and the budget surpluses that have been generated. Amazingly, I think there are some people in government who think they are responsible for that.
Including the governor?
The governor seems to say that on more than one occasion.
The budget surplus that we're dealing with in the state of Maryland now comes from the private sector. It comes from the extraordinary economic activity that is taking place across the country, and Maryland is finally participating in all of that. Some of the things that we have done in the last three years have been helpful in making this happen, but the greatest driver is the fact that we have an incredibly strong national economy right now.
How attractive is Maryland for business?
My strong belief is that one of the mistakes we are very capable of making now is to assume that because the economy is going well that we've solved all our problems. The fact of the matter is that the quality of a business climate needs to be measured in the down times, not in the up times. And if you look at Maryland's history, we have suffered disproportionately in the down times in the past.
How well prepared are we for the next slump?
We're better prepared than we've been. But we're not as well prepared as we ought to be. We've done some good things, but there's still not the sense of urgency that we need to have to get this stuff done and prepare ourselves. Maryland likes to operate in minor, incremental change, and I think we need to do something more dramatic than that.
The tax cut and some of the things we've done in the work force area, I think, will be helpful to us. We didn't make as much progress in taxes as I would have liked, but it certainly is progress.
The General Assembly and Glendening cut personal income taxes by 10 percent. What would you like?
I think the analysis that was done in '95 was the right analysis, which was, to really provide the kind of jump start we needed, 15 percent tax cut over three years was the way to go.
How important is the work force issue -- the supply of competent employees?
That has become something that is just huge. This is an issue that is troubling companies large and small at this point. And in a certain sense, potentially it puts Maryland in an incredibly positive position. We have a state that is quite affluent. We have a high level of highly educated people. We have institutions in this state that really have the potential to be leaders in this whole area. We have the infrastructure in place. If we can uptick it a little bit and become more passionate about insisting on excellence from all those institutions.
Some people believe the state needs slot machines and casinos to fund educational institutions and generate the excellence.
I am quite amazed at what's happened with the [Baltimore] mayor [Kurt L. Schmoke] and with [gubernatorial candidate and Harford County Executive] Eileen M. Rehrmann on this issue of gambling. I'm amazed on several levels, but the one that is most difficult for me is that they have taken the position basically that if we are going to educate our children properly in the state of Maryland, we have to have gambling. As a Marylander, to be honest, I am insulted by that. In order to educate our children we have to have slot machines?
Forget what you think about slot machines. That's a different issue. The issue that we ought to be making is that there is no choice but to educate our children the best way we can.
Education aside, you think slots are a bad idea?
I do. When you talk about gambling, you talk about different levels. Casinos, to me, are a dreadful answer. I can't think of one positive thing about having casinos in Maryland. Not one. And don't give me the jobs thing. These are terrible jobs.
When you get to slot machines, one can make an intellectual argument: How can you have trouble with slot machines at Pimlico when there's paramutuel betting going on at Pimlico? I have never been convinced, anywhere you go, that gambling has had the salutary impact on a community that some people would suggest it has.
So you agree with the governor on gambling. Let me bring him into the conversation. There is a perception in the business community that his commitment to Maryland's economic infrastructure has waned over the last three years. Is that true?
I think it is true. At the outset of the administration, I can remember any number of times that the governor described himself, and I quote, as "unabashedly pro-business." Those are pretty strong words.
What seems to have happened, and I don't suggest that I can read the governor's mind, is that his priorities have certainly gone through some change. Education has always been at the top of his list, and I applaud that. But I would argue that in those early days, economic development was probably No. 2 on the list. I don't think it's No. 2 anymore. I think there are a whole lot of interests that have superseded it in importance. The environmental community certainly has the governor's ear in a big way.
Is that why he opposed the Intercounty Connector, an outer beltway that would have linked Montgomery and Prince George's counties?
There's no question in my mind that the Intercounty Connector decision was driven by the governor's connection to the environmental community. And that says an awful lot. The ICC has been a major business issue for a very long time. It's been prominent in our strategic plan. Governors have decisions to make, and there are some interests that are going to be happy and some that are not. An unabashedly pro-business governor would not have made the Intercounty Connector decision.
There were political reasons to be unabashedly pro-business in the 1994 election. Maryland's economy wasn't doing well. Economic development was talked about during the campaign. It was a big Sauerbrey issue. How sincere was the governor in his representations as being pro-business?
I don't have any way to measure sincerity. I just know what the facts are. I think he has reorganized his priorities in a way that he has every right to do. In my personal case, I have some rights as well. And I decided that the reorganization of priorities was not consistent with what I thought my mission was.
What other Glendening decisions disappointed you?
I am a firm believer that the BGE-Pepco [Baltimore Gas and Electric and Potomac Electric Power Co.] merger was the right thing for Maryland. It would have provided us with a very strong utility that could have been competitive in what is going to be a ferociously competitive world in the very near future. I understand that this was something that was not purely the governor's decision [to prevent the merger]. You had the Public Service Commission involved. But the power of leadership, the influence that a governor has, in Maryland particularly, is profound. And that issue could have been made a much more important one by the governor.
I fear that in the near term both BGE and Pepco might well be acquired by major, out-of-state utilities. And I think that has a huge impact on the influence that they have in the state.
What about legislation allowing BGE to create a holding company, which failed this year?
A very simple bill. This was not complicated. Maryland is the only one of 50 states that does not allow a utility to form a holding company. There is nothing sinister about it. It would allow the nonregulated part of their business to access the capital markets in a way that is much easier than is the case now.
I think the governor could have been much stronger in pushing that with the leadership [in the General Assembly]. He had a great opportunity to push it with the leadership because he had been, shall we say, extremely generous in distributing the $350 million surplus that the private sector generated.
Let's talk about the governor's decision to grant union bargaining rights to state employees. Is that something you supported?
No, I didn't. That case was submitted to the General Assembly and overwhelmingly defeated. It was not a close call. I think the governor broke faith with the business community when he decided to override the General Assembly and do something that was strongly opposed by the business community. And I don't believe he has recovered from that to this day.
The General Assembly recently passed an agricultural runoff-control bill following the Pfiesteria illnesses on the Chesapeake Bay last year. Is that an issue that has been dealt with responsibly?
No. The existence of Pfiesteria is something we need to address in this state, especially a state like Maryland that has such a commitment to its natural resources. However, I have trouble with the fact that, in my opinion, the politics outpaced the science in all of this. I have talked to scientists, and I have yet to have any of them tell me that what we're doing has the proper scientific support.
I also found it very troubling that we had to find a bad guy right away in all of this. And the bad guys very quickly were the agricultural industry and the poultry industry, two industries that are important in Maryland and two industries that I would argue have worked very hard to address the issues that relate to runoff and those kinds of things.
You were also said to be disappointed with the tobacco-liability legislation passed by the Assembly this year.
It has nothing to do with any sympathy for the tobacco companies. I think tobacco companies have behaved horribly in the last several decades. My problem is the legislation itself. The legislation changes the rules in midstream as to how evidence is going to be viewed and what kind of evidence is OK. As a case is going on, for a state to change the rules in midstream, I think, is piling on.
The second thing is, I am not a fan of class-action litigation.
What did you do as secretary that you're proudest of?
It's a clear choice for me. The proudest thing was taking a department that had been viewed in the past as being a very difficult bureaucracy to deal with, one that was not as sensitive to business interests as it needed to be, and streamlining that department and making it one that the business community by and large now feels is a friend and advocate. And I would hope that that is the legacy I leave behind.
What was your biggest disappointment?
We have not made as much progress on the regulatory front as I would have liked. That still is the greatest barometer of business friendliness.
Regulation can mean building permits to taxes. What do you mean by regulation?
When I think of the regulatory environment, I think of two things. We need to have regulations in place that are balanced, that give businesses an even chance to move forward. The second thing is how those regulations are enforced. If I think of all the regulatory problems that I've had to deal with in the department, I'd say 75 percent of them relate to how regulations are enforced rather than what the regulation is.
And we still have room to grow in all of that. Businessmen can deal with yes. And they can deal with no. But they have no mechanism to deal with uncertainty, and I think government's feet need to be held to the fire. For a particular kind of permit, a decision needs to be made in a week, two weeks, a month, whatever it might be. Too often these things drag out interminably.
I've been told by many people that Maryland business regulation is more user-friendly now.
If the question is, are we better off than we were three years ago, the answer is yes. If the question is, are we significantly better off, the answer is no.
Pub Date: 5/17/98