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Watching Out for Other People’s Money and Being Tight with a Dollar

Peter Franchot tells us just what it is that a Comptroller does

“I’m the top cop, trying to protect our citizens against financial identity theft,” says ­Maryland Comptroller Peter Franchot, at right.

By April 18, you’ll be communicating with Maryland’s Comptroller, likely writing him a check — or hoping he’ll write you one because you’ve already given him too much of your money. Our comptroller is our tax man. He — so far comptroller has always been a man — gets to count money and lead a big, smart and supportive staff in chasing bad guys.
    Meet Peter Franchot — the former legislator from Montgomery County who ended the political career of the legendary William Donald Schaefer, Baltimore mayor, Maryland governor and state comptroller — now aspiring to a fourth term in the job.

Bay Weekly    Let’s start with a question everybody in Maryland wants to know. Why are you the Comptroller rather than the Controller?

Peter Franchot    Comptroller is the French version of the word. In the Revolutionary War, we were joined at the hip with the French. General Lafayette parked on our shore here in 1790, in Annapolis by the yacht club, and we’ve preserved that influence. My last name is French, by the way.
    Throughout the states, we have 14 controllers and nine comptrollers.
    Call me what you want, but I’m the same fiscal watchdog.

Bay Weekly    Taxes are on all our minds, even with our due date delayed until after Easter Monday to April 18 this year …

Peter Franchot    Well over 800,000 people have filed. People want their refund. A lot of people we owe refunds to, and they’re early filers. So we’re at the peak of the season right now. About 23 percent have been processed so far. Eventually we’ll process 3.2 million returns.
    Mid-January to mid-April is our crunch time. We hire extra people to answer the phone because we believe every taxpayer deserves respect, responsiveness and results — we call them the three Rs. Call times in the last tax year, some people were told to wait 30 minutes or longer, and I consider that unacceptable. Now I’m told that all phone calls are being answered in 40 seconds. It’s what Maryland taxpayers deserve, but it’s not easy. If you call the IRS, it can take days before you get your answer.
    We have 25 new people based in Salisbury answering the phones for the whole state. In Salisbury because it’s an area that needs economic attention.

Bay Weekly    How much money do you expect to collect from Marylanders this year?

Peter Franchot    $14 to $16 billion. Maryland has a large budget, $40 billion. A lot of the other money comes in from the federal government in payments I don’t collect, such as for Medicaid and transportation.

Bay Weekly    How will that money be used by the state?

Peter Franchot    That’s not my job, I collect and enforce the law. The legislature and governor decide how to spend the money.

Bay Weekly    But you have veto power at the Board of Public Works …

Peter Franchot    I do get to vote on how Maryland spends its money because the comptroller sits with the governor and treasurer on the Board of Public Works.
    We’re the only state in the country that has an independent Board of Public Works. In other states, it’s controlled by the governor.
    Two of the three of us — the governor and myself — are independently elected. The treasurer is elected by the legislature. So you’ve got three people for independent bases. You need two votes to pass contracts, ranging from relatively small to approaching one billon dollars, on projects involving expenditure of our whole $34 billion a year that is the whole budget, which includes tax money we collect.
    When you’ve got to have two votes, there’s no certainty to anything. That’s good for taxpayers because it promotes transparency and accountability.

Bay Weekly    You’re also chair of the Board of Revenue Estimates, which may mean you have bad news to deliver. Last year, for example, you reported that Maryland was counting on hundreds of millions of dollars that weren’t there.
    How do you make discoveries like that?

Peter Franchot    In my agency, we work collaboratively with government financial experts, and the legislature’s and the treasurer’s tax experts to predict future tax revenues. The governor and legislature use those predictions in making annual state budgets.
    Last year, we had to write down the fiscal year that we’re in and the one that ended last June 30 by $1 billion.
    Why? A small number of very wealthy Marylanders generate quite a bit of tax revenue through capital gain. Those families that usually invest were frozen in their concern about what the stock market and the overall economy would do. They’re still somewhat on the sidelines because of the uncertainty coming out of Washington.

Bay Weekly    Are we out of the woods?
Peter Franchot    It’s been corrected. I think we’re going to take a much more conservative approach, in a smaller state budget. We’ve also removed $750 million in potential spending for this upcoming year and shaved our state’s ability to spend and borrow.
    We could be affected again, but probably not to the magnitude of last year. We made adjustments downward because of the new discovery that capital gains revenues could almost disappear.
    It’s good for the state to have a forced moderation of spending.

Bay Weekly    How has the Washington effect trickled down to Maryland?

Peter Franchot    It’s almost chaos as far as the federal government is concerned. With everyday a new tweet about something else, the new president has chosen to inject instability and a sense of recklessness, causing the private sector to be less interested in borrowing and investing in risky operations. They don’t get a sense of stability or predictability of policy.
    I’m very opposed to the chaos in Washington. It makes it difficult for a state economy to perform up to its capacity and we need it to provide jobs and wage growth for citizens, and we can’t do it from the government side. We have to do it from the private sector side.

Bay Weekly    What will be your role if federal support and funding for Bay restoration is cut?

Peter Franchot    I’m happy to speak out. I have a very strong philosophy about the need for fiscal moderation, but I’m also an environmentalist and believe in Program Open Space and conservation as far as the Chesapeake Bay. If for political reasons the federal government begins to tinker with funding I’m happy to weigh in.
    But I don’t have a real role. I have no big bag of money for Bay rescue. I’m hoping things will stabilize and we will see less tweeting and more governing.

Bay Weekly    How would the Taxpayer Protection Act under consideration in Maryland’s General Assembly protect us against identity theft?

Peter Franchot    It’s a game of cops and robbers right now. The robbers trying to break in are guys down in a war room maybe in Florida filing thousands of tax returns using information they buy that’s been stolen from companies like Target or Auto Zone and the federal government.
    I’m the top cop, trying to protect our citizens against financial identity theft and the use of that financial information to file fraudulent tax returns.
    We’ve largely succeeded in heading off fraudulent tax payments. We identify questionable returns, and when we confirm fraudulence, we don’t send a refund.
    Since 2007, we’ve detected and blocked nearly 76,000 fraudulent tax returns worth more than $174.2 million. We’ve stopped processing returns from 78 tax preparation offices at 98 locations.
    The missing piece of the puzzle is finding the people sending those returns and bringing them to justice. The Taxpayer Protection Act would help by giving us the same police power we already have for petroleum, alcohol and tobacco protection. Our sworn law enforcement officers need to have subpoena powers to demand documents from preparers we suspect.
    We need them to prepare a case we can take to the attorney general or states attorney for prosecution.
    Once we bring thieves to justice and sentence, we have a deterrent. Now it’s the Wild West.
    So we need the legislators to do their job and pass this bill.

Bay Weekly    Louis Goldstein was comptroller for life. But you cut short William Donald Schaefer’s stint as comptroller. With competition likely in both the primary and general election in 2018, what are you doing to keep your job?

Peter Franchot    I’m in my third term. Out of 33 comptrollers we’ve had since 1851, at the end of this term I’ll have served longer than anyone but Louis Goldstein and one other.
    I have broad support, and I’m pretty confident, knock on wood, I’ll be successful in the 2018 primary. Plus I have almost $1.3 million in my campaign war chest. I’m not going to be caught unprepared.
    I love my job, and I’m able to articulate my vision for government, which is at a minimum answer the damn phone with a live, friendly, knowledgeable person who can help with whatever the taxpayer on the other end is asking. I love giving leadership in customers service to a staff of 1,100 responsive people, watching out for other people’s money and being tight with a dollar.
    My view is not ideological, but it fits with the office, so I’m able to flourish in these partisan times.

Bay Weekly    You seem to get along better with Gov. Hogan than you did with Gov. O’Malley. Have you ruled out challenging Gov. Hogan in Maryland’s 2018 gubernatorial election?

Peter Franchot    To be mentioned is a great honor. But if I won, then I’d have to be governor, and it’s not as good a job as what I’ve got now. There’s a lot of stress and partisanship, everything is highly visible. So I’m very happy being comptroller.

Bay Weekly    Finally, what advice can you give us taxpayers as we buckle down to everybody’s least favorite task of the year?

Peter Franchot    Be very careful about your Social Security number. Do not give it over the phone, ever, to anybody. That is the open sesame thieves use to cause all kinds of havoc in your life. Over 10,000 people in Maryland are now victims.