House Speaker Nancy Pelosi (D-Calif.) released a new, $3 trillion COVID-19 relief bill that completely misses the mark on prioritizing spending. This misguided legislation includes everything from extending unemployment benefits to $25 billion for a bailout of the U.S. Postal Service. The bill also contains almost $1 trillion to bail out states and localities. Sounds reasonable, right? Not exactly. Take, for example, Maryland, which is estimated to have a $2.8 billion shortfall because of the economic shutdown. Pelosi’s bill gives the state and Maryland localities $9.5 billion. Those numbers just don’t add up. Fortunately, the bill is dead on arrival in the Senate. If Speaker Pelosi is serious about helping people, she should go back to the drawing board and come up with legislation that is laser-focused on struggling households and small businesses.
Profiles in Courage…Gov. Hogan’s a Hero
Last week, the Taxpayers Protection Alliance (TPA) highlighted Colorado Gov. Jared Polis (D) as a Profile in Courage for cautiously reopening his state against strong political headwinds. From the other side of the political aisle (and country) Maryland Gov. Larry Hogan (R) has had to deal with plenty of political opposition in his deeply blue state, including a state legislature intent on pushing wasteful spending and tax increases at the worst possible time. And for that, Gov. Hogan is truly a Profile in Courage.
From the start, Larry Hogan was an improbable governor. In the 2014 Maryland gubernatorial election, most pollsters and political analysts expected then-Gov. Martin O’Malley’s (D) Lieutenant-Governor (and hand-picked successor) Anthony Brown to emerge triumphant. Instead, businessman and tax reform advocate Larry Hogan unexpectedly earned 51 percent of the vote and was sworn in as the 62nd Governor of Maryland on January 21, 2015. While difficult for many analysts to believe, Hogan’s triumph was all-but-inevitable given former Gov. O’Malley’s policies of runaway taxation and spending. Gov. Hogan (and other free-market and limited-government activists) were able to highlight egregious policies such as the “rain tax,” which punished property owners and businesses for paving “impervious” driveways and constructing buildings on their own land. Gov. Hogan was able to axe some of these egregious policies once elected, but state lawmakers continue to test the chief executive’s resolve.
Just days before Maryland instituted stay-at-home orders and shut down businesses, the Maryland General Assembly passed more than 650 bills that would’ve plunged Maryland residents deeply into debt. For example, a commission led by educator William “Brit” Kirwan (former chancellor of the University System of Maryland) recommended spending up to $4 billion extra per year on bolstering Maryland’s education system. This would require Maryland households to pay an extra $6,000 per year in taxes to subsidize already well-funded but failing school districts. The Baltimore public school system, for instance, is already among the top 5 best-funded per pupil systems nationwide at $16,000 per pupil but can’t even keep the air conditioning on for students.
And now, Gov. Hogan is on a mission to carefully reopen his state and get Maryland businesses up-and-running again. Today (May 15), Maryland will begin its “Safer at Home” phase and retail businesses will be allowed to reopen to 50 percent capacity. In addition, services such as hair salons and barber shops will resume business by appointment only. It isn’t a complete return to normalcy as restaurants will remain takeout only. But in pursuing a careful reopening, Gov. Hogan is sending a powerful message that Maryland is ready to adapt to quickly changing circumstances. Maryland’s chief executive has a stellar track record in looking out for Marylanders by vetoing reckless taxes and spending to get the state back on track amid the Coronavirus crisis. Marylanders evidently like his governing approach; his 70 percent approval rating is the envy of all Republican officials in blue states. Regardless of their political leanings, state residents know that Gov. Hogan will continue to look after their best interests. And for tirelessly advocating on behalf of the citizens of Maryland, Gov. Hogan is truly a Profile in Courage.
GON With the Wind… The Failed Promise of Government Owned Networks Across the Country
TPA’s latest report detailing the viability of taxpayer-funded broadband networks took a long time. We submitted numerous FOIAs and jumped through massive amounts of red tape. But, we succeeded in uncovering the truth about these networks; they aren’t worth the taxpayer money that’s being spent on them. Our new report, “GON with the Wind: The Failed Promise of Government Owned Networks Across the Country,” demonstrates that taxpayer-funded networks are failing and don’t deliver on promised revenues and digital access for residents.
We found that government-owned networks (GON)s only reach about a third of potential broadband consumers living in the municipalities that have built these networks. But all residents of those municipalities must foot the bill for these boondoggles, resulting in sky-high expenses for taxpayers. These taxpayer-funded broadband projects break the bank without providing reliable internet. Video and voice services provided by these government networks have been faring particularly poorly over the years because of private sector innovation and the increased use of fast and reliable cellular networks. The report notes that, from 2014 through 2018, weighted-average video penetrations (i.e. the percentage of area residents benefiting from GON video offerings) fell from 31.8 percent to 26.5 percent. Voice services, “dropped from an average usage of 23.6 percent in 2009 to 20.6 percent in 2018 as more and more customers dropped their home line and use cell phones exclusively.” And, more than 60 percent of households in areas with GONs don’t want or need government internet offerings.
Our analysis also highlights the experiences of individual GONs, some of which were sold to private providers in an attempt to recoup lost revenues. This fate befell a taxpayer-funded internet network built by Salisbury, North Carolina in 2010, which was only used by 16.7 percent of residents. The city had to borrow $40 million to construct the project but was only able to recoup about $8 million from broadband operations. Starry-eyed consultants and city planners failed to account for innovative private providers such as AT&T and Time Warner, which were able to offer better services to Salisbury consumers at competitive rates. As a result of abysmal financial planning and unforeseen private competition, Salisbury faced low subscriber rates and had to raid its reserves to prop up operations. In 2018, frustrated citizens voted to lease the municipal broadband project to a private company over a 20-year period. But with the leasee (a company called Hotwire) only paying the city 30 percent of its revenue from its internet and 10 percent of revenue from video and phone services, it’s hard to see how Salisbury will dig itself out of the financial hole it created. According to a 2017 study by University of Pennsylvania scholars Christopher Yoo and Timothy Pfenninger, the Salisbury GON has only generated $340 in revenue per household despite costing $2,224 per household.
At this difficult time, taxpayers don’t need a faulty, poorly targeted service that sidelines private internet providers. Keeping America connected means rejecting these GON projects, and instead empowering private networks to continue to deliver for consumers.
Blogs:
Monday: COVID-19 Highlights the Potential of Free-Market Innovation
Tuesday: Coalition of 18 Free-Market Groups Urges Congressional Leadership to Keep Unnecessary Spending out of “Phase 4” COVID-19 Package
Tuesday: Watchdog Slams Speaker Pelosi’s Latest “Relief” Proposal
Wednesday: TPA Releases Report on Taxpayer Funding of Government Owned Broadband Networks
Friday: Profile in Courage: Maryland Governor Larry Hogan (R)
Media:
May 11, 2020: I appeared on WBOB Radio (600 AM and 101 FM; Jacksonville, Fla.) to talk about the potential for new Coronavirus relief legislation.
May 11, 2020: WBFF (Fox, Baltimore) interviewed me about Maryland Gov. Larry Hogan’s vetoes.
May 11, 2020: TPA Policy Director Ross Marchand appeared on “The Diane Ploss Show” (WSMN 1590 AM; Nashua, NH) to talk about the latest Coronavirus relief bill.
May 12, 2020: Townhall ran TPA’s op-ed, “CARES 2: The Sequel that Nobody Asked For.”
May 12, 2020: Yahoo News quoted TPA in their story, “Should businesses be shielded from coronavirus lawsuits?”
May 13, 2020: I appeared on the “Dan Proft Show” (nationally syndicated) to talk about the latest Coronavirus relief bill.
May 13, 2020: TPA Senior Fellow Jeff Stier appeared on 1240 AM WHBU radio (Indianapolis, Ind.) to talk about harm reduction.
May 13, 2020: I appeared on 99.1 FM KKFT (Carson City, Nev.) to talk about the latest Coronavirus relief bill.
May 13, 2020: The Center Square ran TPA’s op-ed, “TPA report finds taxpayer-funded broadband networks not worth the money.”
May 14, 2020: WBFF (Fox, Baltimore) interviewed me about the latest Coronavirus relief bill.
May 14, 2020: I appeared on “America’s Voice News” (nationally syndicated) to talk about the latest Coronavirus relief bill.
May 14, 2020: The National Interest ran TPA’s op-ed, “Time to Put the Broken and Bloated F-35 Program to Rest?”
May 14, 2020: The Wall Street Journal quoted TPA in their story, “Congress Debates Push to End Surprise Medical Billing.”
May 14, 2020: I appeared on American Family Radio Network/One News Now (nationally syndicated) to talk about the latest Coronavirus relief bill.
May 14, 2020: I appeared on “America’s Voice” (nationally syndicated) to talk about the latest Coronavirus relief bill.
May 14, 2020: Ross appeared on “The David Webb Show” (nationally syndicated) to talk about a potential U.S. Postal Service bailout.
May 15, 2020: TPA Senior Fellow Jeff Stier appeared on “The 11th Hour with Doug Henderson” (98.5 FM WRTA; Altoona, Penn.) to talk about harm reduction.
May 15, 2020: Ross appeared on Fox Business to talk about U.S. Postal Service pricing policies.
Have a great weekend, stay safe, and as always, thanks for your continued support.
Best,
David Williams
President
Taxpayers Protection Alliance
1401 K Street, NW
Suite 502
Washington, D.C. xxxxxx
www.protectingtaxpayers.org
