Dems of­fer Ho­gan a deal

Vote is promised if he tes­ti­fies on $20 mil­lion loan to Northrop

Baltimore Sun - - FRONT PAGE - By Erin Cox

Democrats lead­ing the Gen­eral Assem­bly said Tues­day that they would vote on the $20 mil­lion loan for aero­space gi­ant Northrop Grum­man that the Ho­gan ad­min­is­tra­tion has pushed, as soon as Repub­li­can Gov. Larry Ho­gan tes­ti­fies per­son­ally that he wants it.

The gov­er­nor im­me­di­ately de­clined the un­usual in­vi­ta­tion, pro­long­ing the un­cer­tainty about whether the state will de­liver on a prom­ise to one of its big­gest em­ploy­ers.

Se­nate Pres­i­dent Thomas V. Mike Miller and House Speaker Michael E. Busch laid out the re­quest Tues­day in a let­ter to Ho­gan, invit­ing him to ap­pear be­fore the Leg­isla­tive Pol­icy Com­mit­tee and agree­ing in ex­change to sched­ule long-de­layed votes on the loan for Northrop.

“We, too, have a re­spon­si­bil­ity to the peo­ple of Mary­land to en­sure that the tax­pay­ers are get­ting a good deal,” the Democrats wrote. Al­though the leg­is­la­ture voted for the deal, the two lead­ers said law­mak­ers still do not have many cru­cial de­tails and have “long been con­cerned with the me­chan­ics” of busi­ness in­cen­tives of­fered by the state.

A Ho­gan spokesman said, “The gov­er­nor has no in­ter­est in at­tend­ing a meet­ing to dis­cuss an is­sue that was unan­i­mously

ap­proved by both the Se­nate and the House six months ago.

“The Se­nate pres­i­dent and the speaker voted for and sup­ported this ef­fort. It is un­clear why they are waf­fling now,” spokesman Doug Mayer said. “The ball is in their court.”

The loan, part of a $57.5 mil­lion, five-year pack­age for Northrop Grum­man, has be­come en­meshed in a bud­get fight be­tween Ho­gan and the leg­is­la­ture.

The com­pany would not have to re­pay the $20 mil­lion loan as long as it kept at least 10,000 jobs and in­vested $100 mil­lion in the state. The Ho­gan ad­min­is­tra­tion has said the loan and a $37.5 mil­lion tax credit are nec­es­sary to keep the com­pany com­pet­i­tive with other de­fense con­trac­tors.

The terms of the loan re­quire the ap­proval of a com­mit­tee headed by Busch and Miller. The first meet­ing was can­celed this sum­mer with­out pub­lic ex­pla­na­tion.

Busch and Miller later of­fered sev­eral rea­sons: If Mary­land’s fi­nances are as bad as Ho­gan has de­scribed them, they weren’t sure the state could af­ford the deal; there weren’t enough votes to ap­prove the deal af­ter Ho­gan de­clined to spend about $100 mil­lion that law­mak­ers des­ig­nated for their top pri­or­i­ties; and a few com­mit­tee mem­bers would miss the meet­ing be­cause they were at the Repub­li­can Na­tional Con­ven­tion.

Un­til Tues­day, Miller and Busch said they had no plans to resched­ule a meet­ing to con­sider ap­prov­ing the loan, which would be granted through the Sunny Day Fund.

In their let­ter, they of­fered new ob­jec­tions to hold­ing a vote on the loan: The Ho­gan ad­min­is­tra­tion kept the leg­is­la­ture in the dark as it ne­go­ti­ated a deal with Northrop, and the gov­er­nor never per­son­ally ex­plained why it was a good idea.

“We un­der­stand that you made a com­mit­ment back in Au­gust of 2015 but you did not in­form the Gen­eral Assem­bly [of ] the $57.5 mil­lion Sunny Day or tax credit prom­ises un­til Jan­uary,” Miller and Busch wrote. “De­spite the com­mu­ni­ca­tion and time­li­ness is­sues, we both voted to sup­port your tax credit pro­posal and worked to en­sure that your re­quest for the $20 mil­lion stayed in the state bud­get. This is not, as your spokesper­son sug­gested, the ‘ma­jor­ity lead­er­ship waf­fling on a prom­ise.’ ”

A Northrop spokesman is­sued a state­ment that called the com­pany Mary­land’s largest man­u­fac­turer and said it was proud of its work here.

“We ap­pre­ci­ate the sup­port of Mary­land’s lead­ers and look for­ward to con­tin­u­ing work­ing to­gether,” said Randy Belote, Northrop’s vice pres­i­dent of strate­gic com­mu­ni­ca­tions.

The two-part deal was de­vel­oped by the state Com­merce De­part­ment and ap­proved this spring. A hand­ful of law­mak­ers in both par­ties called it “cor­po­rate wel­fare,” but a ma­jor­ity backed the plan.

The leg­is­la­tion cre­ated a $37.5 mil­lion aero­space tax credit for which only Northrop qual­i­fies, and the bud­get gave the com­pany ac­cess to as much as $20 mil­lion in for­giv­able loans.

The deal evolved out of a se­ries of meet­ings be­tween Northrop ex­ec­u­tives and Ho­gan ad­min­is­tra­tion of­fi­cials in July and Au­gust 2015, ac­cord­ing to emails ob­tained by The Bal­ti­more Sun un­der a Pub­lic In­for­ma­tion Act re­quest.

Within a month of those meet­ings, the state pitched the plan to help the com­pany keep and ex­pand its elec­tronic sys­tems di­vi­sion in Linthicum, where it em­ployed roughly 6,800 peo­ple.

In de­scrib­ing the pro­posal, state Com­merce Sec­re­tary Michael Gill wrote in a Septem­ber 2015 email that “the State of Mary­land has no prece­dent for some­thing like this.”

In Novem­ber, Northrop an­nounced a re­or­ga­ni­za­tion that would con­sol­i­date the elec­tronic sys­tems di­vi­sion into the new, larger mis­sion sys­tems di­vi­sion start­ing Jan. 1, 2016.

Northrop official Scott Porter wrote in tes­ti­mony to the leg­is­la­ture that the de­ci­sion was “made in part on a com­mit­ment by the State of Mary­land to help sus­tain Northrop Grum­man’s Mary­land foot­print and im­prove the com­pany’s over­all com­pet­i­tive­ness.”

Sev­eral lob­by­ists wrote emails to Ho­gan’s se­nior staff ask­ing that the gov­er­nor make a pub­lic, per­sonal ap­peal on Northrop’s be­half as leg­is­la­tors weighed whether to ap­prove the pack­age for the com­pany. Ho­gan did not per­son­ally weigh in.



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