Dems offer Hogan a deal
Vote is promised if he testifies on $20 million loan to Northrop
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.