Supreme Court Delivers a Major Victory for Freedom of Speech—

Court Invalidates Prohibition Against

Corporate Expenditures for Political Purposes

Citizens United v. Federal Election Commission, 558 U.S. ___ (2010)

by C. Paul Smith

On January 21, 2010, the Supreme Court ruled (5-4) in Citizens United v. Federal Election Commission, 558 U.S. ___ (2010) that the federal law prohibiting corporations from making independent expenditures for “electioneering communications” is unconstitutional.  This ruling invalidated an important provision in the Bipartisan Campaign Reform Act of 2002 (BRAC).  President Barack Obama announced his disagreement with this decision a few days later in his State of the Union Address, when he incorrectly chastised the Supreme Court for wrongly overturning a century of settled law on this important issue.

I don’t ever recall seeing the President openly attacking the Supreme Court in a State of the Union Address.  The impropriety of this was apparently lost on President Obama—who committed three distinct errors:  (1) The State of the Union Address, an event at which all three branches of the government convene, is not the proper forum for the President (one Branch) to chastise another Branch (the Judiciary); (2) The President’s statement that the Supreme Court had “reversed a century of law” was incorrect and misleading; and (3) President Obama failed to appreciate that this Supreme Court ruling and opinion was a good and important decision to strengthen the freedoms of speech and press in America.

The Citizens United decision can be summarized as follows:  It struck down the BCRA provision (2 U.S.C. Sec. 441b) that prohibits corporations from making political communications within 30 days of a primary and within 60 days of a general election.  There are two principal reasons why the Court struck down this provision:  First, there is no valid constitutional reason to discriminate

against corporate speech versus the speech of any other entity.  Second, Section 441b exempted public media corporations from the prohibition—and there is no logical or legal basis for treating public media corporations differently.  There exists no justifiable reason for this disparate treatment of corporations in their exercise of political speech.  There is no constitutional basis for penalizing certain corporate speech based upon who the speaker is.

Once the Court determined that the corporate prohibition was wrong, they next had to address the 1990 case of Austin v. Michigan Chamber of Commerce, 494 U.S. 652, where the Supreme Court held for the first time that the political speech of corporations may be banned.  As Justice Kennedy explained, the principal of stare decisis prevents the Supreme Court from overturning prior decisions “unless the most convincing of reasons demonstrates that adherence to it puts us on a course that is sure error.”  The Court found such to exist (J. Kennedy, Slip Opinion, p. 47); the Court found that “Austin abandoned First Amendment principles” (J. Kennedy, Slip Opinion, p. 48) and therefore the Court overturned Austin.  The Court stated that Austin was actually the aberration—that Austin “itself contravened this Court’s earlier precedents in Buckley [1976] and Bellotti [1978].  Ibid. The Court pointed out that when the Supreme Court first considered the constitutionality of the BCRA in McConnell v. Federal Election Commission, 540 U.S. 93 (2003), that no one argued in that case that the Austin case was wrong and should be reversed.  So the McConnell ruling did not address the fundamental issue that now requires the Court to invalidate this important part of the BCRA.1

Thus, the Citizens United decision overturned a 20-year-old case, that was manifestly incorrect; there was no 100-year-old precedent that was overturned in Citizens United.

The Dissenting Justices argued that stare decisis should uphold the corporate prohibitions of the BCRA, and prevents the Court from revisiting the Austin case.  The Majority disagreed.

The Dissenting Justices also argued that the corporate prohibition helps to prevent corruption of elections by preventing corporations from buying elections with infusions of their monies.  But the Majority found that the prohibition against indirect corporate speech was without constitutional merit; that the alleged corrupting influence cannot be shown; and that the disparate treatment of media corporations from other corporations is a blatant violation of First Amendment principles.

On another provision of the BCRA, the Court upheld the BCRA requirement (Sections 201 and 311) that the identity of the speaker of electioneering speech must be disclosed and reported.  Justice Thomas was the lone dissenter to this ruling.  The Court acknowledged that this imposed a minimal restriction on speech, but that the requirement enabled voters to be fully informed of who is speaking, and thus better enabled to give proper weight to the messages.  (J. Kennedy, Slip Opinion, pp. 52-55.)

Supreme Court “Global Warming” Ruling—

A Monument to Bad Science and Judicial Activism

Massachusetts v. Environmental Protection Agency,  549 U.S. ___ (2007)

by C. Paul Smith

It has been three years since the Supreme Court handed down its decision in Massachusetts v. Environmental Protection Agency, 549 U.S. ___ (2007).  But the significance of this case requires that it be exposed and discussed.  The Supreme Court ruled 5-4 in this case that the EPA “abdicated its responsibility under the Clean Air Act to regulate the emissions of four greenhouse gases, including carbon dioxide.”  In this case the Supreme Court sided with speculation over scientific evidence, as it endorsed the man-made global warming fanatics, whose purposes attack America’s economic strength based upon unsupported speculation.

This is a ruling of profound significance for America.  The Supreme Court (by a slim majority [5-4] leaped forward to conclude that man-made C02 emissions (a) cause global warming, (b) are increasing too rapidly, and (c) that America will suffer catastrophic damages if the EPA does not do something to stop these increases.   The problems with the Massachusetts v. EPA opinion are fundamental and far-reaching.  This opinion stands with Lawrence v. Texas and Boumediene v. Bush as examples of a slim majority of five Justices who abandoned established constitutional principles and echoed politically popular themes to reach a pre-determined result.   The legal processes and analysis of the majority represents a departure from intellectual honesty and disciplined analysis, and stands as a blatant example of judicial activism.

1. 1. The Standing Problem. The

Supreme Court never should have heard this case because Massachusetts did not have standing to bring this case.  It lacked standing because it never articulated any “particularized injury.”  Rather Massachusetts only asserted that global warming was “harmful to humanity at large” (Robert, C.J., dissenting, p. 7).  The injuries that Massachusetts alleged were all non-specific and speculative (Ibid. 8).  In addition, some of the asserted injuries were specifically admitted to be caused by other factors.  For example, it was admitted that a “significan[t]” cause of the projected loss of Massachusetts’ shore line was due to the land’s sinking (Ibid. p. 8).  Previously the Court has held that “[a]llegations of possible future injury do not satisfy the requirements of Art. III” [the injury requirement] (Ibid. p. 9).  But the majority disregarded this, and treated speculation to be specific, proven facts.  As the Chief Justice stated:

The Court ignores the complexities of global warming, and does so by now disregarding the “particularized” injury it relied on in step one, and using the dire nature of global warming itself as a bootstrap for finding causation and redressability. Ibid.p.10.

Although the EPA set forth the complex reasons[1] that prevented it from ruling that green house gases caused global warming, the Court either disregarded or rejected those reasons, and went on to require the EPA to rule that green house gases cause global warming.  The Supreme Court ruled that CO2 is a pollutant that causes global warming; the Supreme Court said that the EPA was wrong for not concluding this.  The Chief Justice concluded that it is “pure conjecture to suppose that EPA regulation of new automobile emissions will likely prevent the loss of Massachusetts coastal land”  (Ibid. p.13).

2.  The statute interpretation problem. Not only did the majority botch the standing issue in its haste to solve the global warming debate, but the majority also botched its fundament task of strictly interpreting a statute.  The majority made two distinct misinterpretations in order to reach its desired result.

First, under Section 202(a)(1) of the Clean Air Act (CAA), there is no authority granted to challenge an action of the EPA until the EPA Administrator makes a “judgment”  (Scalia, J., dissenting, p. 1).  The majority simply ignored this requirement, and held that the EPA should have adjudged that CO2 causes global warming.  There is no justification for imposing this mandate.  The majority holding is blatant judicial activism to achieve a predetermined result.

Second, the majority concluded that CO2 was a pollutant by ignoring the first part of the statutory definition that had to be met in order to regulate CO2.  An “air pollutant” is defined as “any air pollution agent or combination of such agents, including any physical, chemical, . . . substance or matter which is emitted into or otherwise enters the ambient air.”  42 U.S.C. Sec.7602(g).  The majority focused on the latter part of this definition, and reasoned that since CO2 is emitted into the air, therefore it is a pollutant.  But the problem with this is it totally ignores the first part of the definition which states that only “air pollution agent[s]” which are emitted into the air constitute “air pollutants.”  As Justice Scalia pointed out, “[t]he Court simply pretends this half of the definition does not exist” (Ibid. p. 9).  Either the Court ignored the first half, or it used circular reasoning to conclude that CO2 is an air pollutant.  Either way, the reasoning of the majority is flawed.

Conclusion. In conclusion, what do we get—we get a Supreme Court ruling that is scientifically flawed, which was arrived at by ignoring logic and legal precedent, in order to reach a result that would please the global warming fanatics.

99% of Americans will never know about the legal errors that led to this ruling.  Eventually the scientific community will come to acknowledge that the Massachusetts v. EPA case was politically based and scientifically flawed.  But for now, the case represents a theory that is falsely held to be a fact, which has risen to the top by popular demand, regardless of true science.

“Predicting future climate change necessarily involves a complex web of economic and physical factors including:  our ability to predict future global anthropogenic emissions of [greenhouse gases] and aerosols; the fate of these emissions once they enter the atmosphere (e.g., what percentage are absorbed by vegetation or are taken up by the oceans); the impact of those emissions that remain in the atmosphere on the radiative properties of the atmosphere; changes in

critically important climate feedbacks (e.g., changes in cloud cover and ocean circulation); changes in temperature characteristics (e.g., average temperatures, shifts in daytime and evening temperatures); changes in other climatic parameters (e.g., shifts in precipitation, storms); and ultimately the impact of such changes on human health and welfare (e.g., increases or decreases in agricultural productivity, human health impacts).”  App. To Pet. For Cert. A-83 through A-84.

President Obama has applied his rhetorical skills to support the health care reform law, and in so doing he criticizes the free enterprise system.  He chastises businesses for making money.  He blames greedy American capitalists for the recession.  He refuses to acknowledge that bad laws and excessive regulation are primary causes of the credit collapse.  Neither does he acknowledge that the trillions of dollars of new national debt will exacerbate the economic crisis more than help it.  Perhaps the theme of President Obama’s administration is best typified by his adeptness in speaking out of both sides of his mouth.  The very day when he announced his proposed budget—which would increase the national debt ceiling to $14 Trillion—he also called for the government to live within its means, beginning late next year.  Even a fifth grader can see through this.

But the new law is 2,000 pages long—that’s a lot of pages—that’s five, 400-page books.  Who can possibly speak authoritatively on the 2,000-page health care reform law?   Even if someone read it once, he or she would have difficulty mastering what was contained in all those pages.   There can be no doubt that most of the Senators and Congressmen do not comprehend the law that they just passed; even if they were to trim it down to 1,000 pages, or to even 500 pages.  Does this legislative process bother anyone besides me?

When I represent someone in a trial, I try to limit what my client says, because whatever the client says can come back to haunt him or her.  The more words there are, the more likely it is that there will be contradictions, confusion and ambiguity.  Legislation is no different:  The more lengthy the law, the more likely it is to have problems.  Conversely, a short and concise law is less prone to have problems.

With this backdrop, I fully expect the new health care reform law to have multiple problems.

Based upon my observation, here are some of the troubling aspects of the health reform law (HB3200) that have been brought to my attention1:

1. The law will provide insurance to all non-U.S. residents, whether or not they are here legally.  (See Page 50 – section 152)
2. The government will have access to our bank accounts, with authority to make electronic fund transfers from those accounts.  (See Pages 58-59.)
3. The federal government will hire150,000 new employees to administer the new health care law.  (I understand most of these will be with the IRS, who will be using the tax enforcement laws to collect from the taxpayers the funds required to provide universal health care.)
4. The government will set doctor fees, and doctors will be paid the same, regardless of any specialty.  (See pages 241 and 253.)
5. Cancer hospitals will ration care according to the patient’s age.  (See page 272 – section 1145.)
6. The law does not apply to members of Congress, who can have different coverage.

I have heard of so many problems with this law, and the law is so long, that it is almost impossible to discuss it properly.  I heard Senator Harry Reid today proudly claim that the law not only provides health care, but that it will also help the economy and reduce the national debt.  Everything I have learned about the law contradicts this, and I’m not prepared to suspend my common sense and drink the Obama/Reid/Pelosi cool aid.

I take seriously the need to understand both history and economics.  And my study of them causes me to have grave concerns about the health care reform law.   It has too many bad parts; it repudiates and attacks the free enterprise system; it attacks capitalism; it embraces socialism.

And now that President Obama has signed the law, he needs desperately to move on to other issues—hoping that the nation will forget about the health care reform law fiasco.  Desperate for diversion, on March 26^th, President Obama announced that he has reached a nuclear arms reduction agreement with Russia.  There is no urgency for this—except for the diversion it might supply.

But we cannot forget the health care reform law CATASTROPHY.  Because of the grievousness of the flaws in the health care reform law, it must be challenged, exposed, contested, defeated and repealed.  It under-mines the last vestiges of a free enterprise system in America.  It is currently the crowning jewel of the socialists, who in the last 14 months have taken over the automo-bile, banking, insurance and health care industries in America.  This is one law that must not be allowed to stand.

Constitutional Challenges to Obamacare

Within hours after President Obama signed the health care reform law, fourteen states filed law suits seeking to stop the law.2 Wholly apart from the socialism aspect of the new, health care reform law, the law may be unconstitutional for three reasons:  First, the procedure that Congress employed to pass the law (“deeming” the bill passed), may violate Article I, Section 7 of the Constitution.  Second, the substance of the law may exceed the powers of Congress, as set forth in the “Commerce” Clause  (Article I, Section of the Constitution.  Because the health care reform law takes over the insurance industry—which has historically been a matter of private contracts and state domain—the law may be an improper regulation of state commerce.  Congress may only regulate “interstate” commerce.  The new law proposes to transform state-regulated health care and insurance into federally-regulated health care and insurance.  Third, because this law impairs private contracts and takes private property without due process (a violation of the Fifth Amendment of the Constitution), the law may be fatally flawed.3

The Supreme Court has previously upheld both Social Security, Medicaid and Medicare, but those laws were not nearly so far-reaching in attempting to interfere with private industry and private contracts.  It is true that the Supremacy Clause (Article VI) makes the Constitution controlling in areas where both the federal government and the States have concurrent jurisdiction.  But the Commerce Clause and the Tenth Amendment limit the scope of federal legislation, and the current Supreme Court has previously shown its recognition and support of this restrictive interpretation of Congressional power.  Accordingly, in my judgment, at this point there is a good chance that the Supreme Court could invalidate some or all of the new health care reform law.

Stay tuned for the development of these cases that are being filed, some of which will eventually make their way to the Supreme Court.

2 States suing the federal government to stop the health care reform law include:  Alabama, Colorado, Idaho, Florida, Louisiana, Michigan, Nebraska, Pennsylvania,  South Carolina, South Dakota, Texas, Utah, Virginia and Washington.

3 Virginia has an additional basis for challenging the new health care reform law; Virginia has a state law that prohibits federal, unfunded mandates.

Congress and President Obama Make It Official:   We Are Now a Socialist Nation!
–with passage of massive health care reform law—
by C. Paul Smith

At noon today (March 23, 2010), President Barack Obama proudly signed into law the massive health reform bill, which is opposed by all Republican Congressmen and a few Democrat Congressmen.

Since President Obama wants all the credit for cramming this law through, it is only right that this brand of health care be dubbed, “Obamacare.”  And, just to be clear—to make sure you understand what this new law will do—here is a brief summary.

It will provide health care for all Americans, giving coverage to the 38 million uninsured and all others who are able to sneak inside our borders.  Health insurance premiums will go down, and those who don’t have health insurance  and who can afford it will be required to purchase health insurance or pay a federal tax to get the government-provided health care.  It will save the nation a trillion dollars in twenty years.  Everyone will get the best health care.  No one will be denied health care because of pre-existing conditions.   Insurance companies will be prevented from making obscene profits.

Wow!  How could anyone oppose this?

The problem is that this “too good to be true” proposal is just that—it is too good to be true.  Do you really believe that this Obamacare will cure all these ills?   It is amazing that half of the nation cannot see the economic flaws in Obamacare.  But because, in fact, about half the people cannot see clearly, let me take a few minutes to point out what should be obvious to all of us.  Obamacare is nothing less than pure socialism—an economic system that is not economically sustainable; therefore it will fail.  Here is why this health care reform law, if allowed to go forward, will fail.

Can a nation deliver quality health care to 38 million more people than are presently being served, and save $50 Billion a year in doing so?  Does anyone really believe this?  But that is exactly what Obama/Pelosi/Reid are promising.

What will happen to the insurance industry if you require them to insure all pre-existing conditions?  Have you really thought this through?   It will kill the insurance Indus-try, which is based upon contracts and proba-bilities and cost projections.    What’s left will not be insurance—it will be socialism.

How can health insurance premiums go down if insurance companies are required to cover pre-existing conditions?  The answer is they can’t; they can only go up—unless the law requires it.   And if the law requires it, then either the insurance companies will go out of business or taxes will be raised to pay for the increased coverage.   In fact, both will happen.  And just to make sure we kill the insurance companies, the Obamacare law prevents them from making excess profits; you know, corporate greed must be punished in order to re-distribute the wealth to those in need.   Socialists do not understand that profit incentive and competition is what has made America great; and they certainly don’t see that by eliminating profit from business they kill the incentive for excellence, achievement and hard work.   Obamacare will replace an incentive-driven economy with one of entitlements and sloth.  Socialism will work only until the receivers take everything away from those who have.   Then socialism dies, too.  And that is exactly what will happen.   The insurance industry will be killed, and/or transformed into socialism, which will lead to economic ruin.

If everyone is being guaranteed health care—at least 38 million more—and if we are going to save $50 Billion a year in the pro-cess, will we continue to attract the brightest and best people to be doctors and nurses.  No, there will be a marked decline in the number of the best people who elect to be doctors.   Many of the best will choose another field to apply their superior skills and intellect.   But don’t worry, there will be more than enough lesser qualified people to take up the slack and become our doctors of the future.   The result will be a decline in the quality of health care that is offered in America.

The problems wrought by Obamacare are even worse than what I have just described.  It takes a little bit of analysis and education to understand, but not much.   The passage of Obamacare stands as a condemnation of our entire national education system, because the liberal teachers who run our education system have finally succeeded in passage of this self-destructive law.   The liberals are celebrating this political success, even though it is sowing the seeds of economic destruction.  The liberals are oblivious to the serious blow Obamacare has dealt to the economic foundation of America.  Today America has embraced Marx and Lenin and has rejected Adam Smith.

Educating America is the only way to cure the economic poison that America has swallowed today.   But this will be a difficult task; we have a nation that is pre-occupied with getting their entitlements from the rich in order to level the playing field.  Hopefully this poison can be eradicated before it irreversibly cripples America.

Constitutional Challenges to Obamacare

Within hours after President Obama signed the health care reform law, fourteen states filed law suits seeking to stop the law.1 Wholly apart from the socialism aspect of the new, health care reform law, the law may be unconstitutional for three reasons:  First, the procedure that Congress employed to pass the law (“deeming” the bill passed), may violate Article I, Section 7 of the Constitution.  Second, the substance of the law may exceed the powers of Congress, as set forth in the “Commerce” Clause  (Article I, Section of the Constitution.  Because the health care reform law takes over the insurance industry—which has historically been a matter of private contracts and state domain—the law may be an improper regulation of state commerce.  Congress may only regulate “interstate” commerce.  The new law proposes to transform state-regulated health care and insurance into federally-regulated health care and insurance.  Third, because this law impairs private contracts and takes private property without due process (a violation of the Fifth Amendment of the Constitution), the law may be fatally flawed.2

The Supreme Court has previously upheld both Social Security, Medicaid and Medicare, but those laws were not nearly so far-reaching in attempting to interfere with private industry and private contracts.  It is true that the Supremacy Clause (Article VI) makes the Constitution controlling in areas where both the federal government and the States have concurrent jurisdiction.  But the Commerce Clause and the Tenth Amendment limit the scope of federal legislation, and the current Supreme Court has previously shown its recognition and support of this restrictive interpretation of Congressional power.  Accordingly, in my judgment, at this point there is a good chance that the Supreme Court could invalidate some or all of the new health care reform law.

Stay tuned for the development of these cases that are being filed, some of which will eventually make their way to the Supreme Court.

2 Virginia has an additional basis for challenging the new health care reform law; Virginia has a state law that prohibits federal, unfunded mandates.

INSIST ON FACTS

Katherine Heerbrandt stated in her October 30th column that Alan Imhoff’s and my support of the buyout was a “blunder that will burden city coffers for years to come.” Her condemnation of Alan and me is unmistakable, but she gives neither facts nor reasons to support her opinions.

The Aldermen attending and voting in 2008 were unanimous in support of the buyout because they believed the recommendation of the City Budget Director that it would bring substantial savings. The City’s retirement benefits counsel (from Whiteford, Taylor & Preston) was present during our deliberations and did not dispute Mr. Angel’s projections. No one presented arguments that identified any flaws in the facts and rationale offered by Mr. Angel. Two Democrats and one Republican voted unanimously for the Buyout. If we were to do it again, it is true that I would vote for a one-year salary payment, rather than the overly generous, two-year payment. However, just because I would have done it differently, does not mean that the buyout is a “blunder that will burden city coffers.”

Ms. Heerbrandt does not mention the primary benefit from the buyout—that is the difference between what the salaries would have been, and the new, lower salaries. Now that 67 employees have accepted the buyout, and 60 employees have taken their places at reduced salaries, the City is in a better position to project what the actual financial benefits of the buyout might be. The salary savings to the City is now ascertainable–$1.6 million for FY2009, $1.36 million in FY2010 and $1.22 million in FY 2011. The new Budget Director’s current projections (including the adjustments identified by the MKSH audit) are that the City is on track to have net savings of $4.5 million in 30 years.

It is true, as Ms. Heerbrandt says, that “most voters don’t have the patience for the gritty details of pension liabilities, actuarial evaluations and bond ratings.” But Ms. Heerbrandt clearly is among those without the patience to get such details. If she had obtained these details, she would know that the City improved its bond rating after passing the buyout.

Ms. Heerbrandt’s impatience in seeking out details apparently gets worse after she finds a few details that support her pre-disposed views. She has no patience whatsoever for details that might qualify or undermine her views. For example, she points out that the City’s contribution to the buyout pensions is $456,472/year (for the 30-year plan) and $704,891/year (for the 25-year plan). But Ms. Heerbrandt ignores the other side of the leger, which is the savings to the City on the salary reductions—e.g., $1.36 million for 2010. Because Ms. Heerbrandt’s analysis totally ignores the buyout benefits, her conclusions and incomplete analysis are of no value.

The buyout may save the City $4.5 million over 30 years, or it could bring some losses, or something in between—but the City still has the opportunity to obtain the maximum savings. It is not accurate to say that the buyout will cost the City $10 million or any other amount. The buyout is on track to save the City money.

The next time someone asserts that the buyout was a terrible financial mistake, that person should be challenged to state the dollar figure that he/she projects for such a mistake, and then explain how that figure was determined. Failing to do this, such opinions are of little value.

Alderman C. Paul Smith

The BUYOUT is on schedule to save the City money!

(See below (and in the blog) Paul’s Response to Katherine Heebrandt’s Column of 10/30/09.)

A common accusation of current city candidates and of some people from the media is that the City’s Early Retirement Incentive Program (ERIP or the “Buyout”) was a financial disaster for the City. I dispute this. No candidate has analyzed the Buyout issues and reached a conclusion as to how much the Buyout will cost the City. Except for mayoral candidate Jason Judd, I have not heard any candidate express an oninion as to an amount of money the Buyout would save or cost the City. Mr. Judd opinined that it would cost the City $10 million. For the reasons expressed below (and in the attached evalauation writings), Mr. Judd’s opinion is erroneous, and is not based upon either facts or reason. Mr. Judd has not explained the basis for his opinion, and therefore his reasoning cannot be examined–his conclusions are unsupported by facts or reason.

Analyzing the Buyout is complex, so I understand why neither Jason Judd nor any other candidate who is critical of the Buyout has undertaken to do his/her own analysis of the Buyout. But I have studied the analysis done by Jon Angel, by the MKSH auditors, and the current City projections–and they show that the Buyout could save the City over $5 million in 30 years. I have seen no support for Mr. Judd’s opinion that the Buyout “will” or “may” cost the City $10 million.

The Buyout is easy to criticize because the generosity of the 2-year-salary payments was more generous than City residents can stand. For that reason, I would have voted differently if I were to revisit the issue. But in 2008 the projections were that it would save the city $8 million over 30 years, and the current projections continue to show that it could save the city over $5 million in 30 years. So, if we are going to make a responsible analysis of the costs and benefits of the Buyout, we need to analyze the many factors that are involved. It is of no help to merely give a gut reaction and then to ridicule the importance of making a thorough financial analysis. After a thorough review of this matter for a year-and-a-half, I have concluded that it may save the City $5+ million over 30 years, or that it could bring some losses, or something in between—but the City still has the opportunity to obtain the maximum savings. It is not accurate to say that the Buyout WILL cost the City $10 million. The Buyout is on schedule to save the City money, despite the fact that 26 employees who took the buyout were rehired by the City. Consider the following facts and analysis, which support the conclusion that the Buyout is on schedule to SAVE the City monty.

Former City Budget Director Jon Angel concluded that the Buyout would save the City approximately $8 million over 30 years. The MKSH audit report found two flaws in Jon Angel’s analysis of the savings that the Buyout would bring to the City. Based upon their corrections, MKSH reported that the Buyout was not likely to save the City anything. However, MKSH specifically declined to consider that Mr. Angel’s savings were based upon his projection that the City would leave unfilled FOUR city positions. This factor is worth at least $7.5 million in savings over 30 years (assuming the average salary/benefit cost to be $60,000 per employee). The City currently has 7 unfilled positions. Therefore it is currently on a faster track to generate savings than what Mr. Angel projected. Until we know how long the city will go forward with a smaller work force, we cannot determine what the total savings will be, orwhether there will be a net loss. However, the City still has the opportunity to achieve savings of more than $10 million over 30 years. If the City is able to pay-off the retirement payment loans in 25 years, instead of 30 years, then this will increase the savings even more. The tight economy is giving the City to keep its work force at a reduced number. Thus, the timing of the Buyout was actually very good because it led us to reduce our work force without having to layoff workers. Nevertheless, I believe that over time the City would have had the opportunity to make some reductions in work force every time someone left the City employ for reasons other than for retirement. It is difficult to estimate what this would be and when it would occur, but it should be considered as an offset to the figure of the 7 current unfilled positions.

Another factor to consider is that the cost to the City for the 26 rehirees is less than what the cost would be for new hires BECAUSE the City does not have to provide duplicate health insurance benefits for the rehirees. The annual savings from this would be $156,000 (@ $6,000/yr x 24 rehirees). Thus, while the return of those who took the buyout was not wanted by the Board of Aldermen, nevertheless, their return does generate some savings to the City.

For the first 4 years, the Buyout will save the City a lot of money every year. It saved the City $1.6 million in FY2009. For the middle years (5-17, I think), the Buyout is projected to generate annual losses. Then, for the remaining years, the Buyout will again bring annual savings. For the short run, the Buyout has been a big help to the City–it will save the city $2 million in the first three years ($1.6+ million in 09, $0.235million in ’10, and $0.06 in ’11). The current financial problems have nothing to do with the Buyout; it would have been worse without the buyout. But making projections for whether the Buyout will ultimately save or cost the City money 30 years from now is an extremely complex exercise. And contrary to what Mr. Judd asserts, the City is currently on track to save millions of dollars. The primary savings comes because actual salaries paid is substantially less than the salaries that would be paid. Over 30 years, the City projects that the net savings are projected to be over $5 million. Thus, the Buyout is not projected to cost the City money, but rather the Buyout gives the City the opportunity to save, if it continues with the reduced work force.

Nevertheless, if I were to do it again, I would have voted for a 1-year salary payment. The 2-year payment was too generous for the citizens–that is the principal problem, not that it will cost the City too much. I think it is clear that 67 people would not have taken the buyout if it was only for one year’s salary. But perhaps that still would have been beneficial.

The next time someone asserts that the Buyout was a terrible financial mistake for the City, that person should be challenged to state how much he/she has determined that it will cost the City and to explain the basis for this conclusion. Except for mayoral candidate, Jason Judd, to my knowledge, no one has dared to offer any such figure. Unless someone can give his opinion about the amount of savings or loss–and with analysis to support it–their opinions are baseless rhetoric. With regard to Mr. Judd’s projections, at the October 27th debate he stated that the Buyout would cost the City $10 -11 million in 20 years. His website states that the Buyout “may end up costing us $10 million.” His use of “may” is much more accurate. As I stated above, the City’s current projections are that it may save us over $5 in 30 years. Mr. Judd’s use of the 20-year analysis period is either a mistake or misleading. Because the City is financing the Buyout over 30 years, that is the time period that must be considered–not 20 years. And even if the loan is paid off over a shorter period of time, the 30-year evaluation period should be used, because of the intial loan period and because of the actuarial projections (e.g., how long retirement payments will be paid to retirees [until they die]).

In the year and half since the BUYOUT was approved by the Boad of Aldermen, I have published the following writings on the Buyout, which the reader can access by linking to them. Some of my analysis has changed during the last year-and-a-half, but for the most part it still applies today.

The YouTube video below is one of several radio ads from Paul. If you are having trouble viewing the video, click here Commitment to Keeping Your Taxes Low.

The YouTube video below is one of several radio ads from Paul. If you are having trouble viewing the video, click here Limited Government and Economic Growth.

The YouTube video below is one of several radio ads from Paul. If you are having trouble viewing the video, click here Relieve Traffic Congestion through Road Improvements.

PROGRESS ON ROADS
DURING THE HOLTZINGER ADMINISTRATION

The Holtzinger Administration has made tremendous progress on many road projects in and around the City. The accomplishments include agreements and plans that will save the City $20-25 million. I have been a part of this, and this writing will summarize these impressive accomplishments, which will benefit the City for years to come. (See the list on the back page.)

As the City’s representative to Washington Council of Government’s Transportation Planning Board (TPB), for 3 ½ years I have worked closely with legislators from the entire Washington, D. C. region in planning and securing funding for regional transportation matters. This participation is essential in order for the City to get our share of funds that come from the federal government to the State. For four years I have chaired the City’s Streets & Sanitation Committee, and I participate in the regular meetings of the Frederick Area Committee on Transportation (FACT), the City’s Airport Commission, and the County’s Transit Services Advisory Council (TSAC) (which addresses local and regional bus and train issues). The FACT and TPB meetings are especially important because it is there that I regularly interface with the people who influence the funding and decision-making for regional transportation projects.

In a few weeks, we will celebrate the opening of the new East Street interchange on I-70. This will culminate over ten years of work, beginning with the work to convince the State how important it was to fund and build this new entrance into the city. This $90+ million project is funded by the State (and indirectly by the federal government). This will alleviate the terrible congestion on South Market Street that for years has extended all the way to Route 85 and has plagued citizens. East Street will now provide a new way to get into the downtown, in addition to South Market Street.

The City is already moving forward to lobby for the State (and federal government) to plan, fund and build other projects that are needed. The City is currently working with the County to move forward with the Monocacy Boulevard interchange on US 15 and to improve the Meadow Road interchange on I-70. The City continues to lobby the State to build a North/South Parallel Road east of the City, which would alleviate traffic congestion in the city. The City shows this road on its Comprehensive Plan. It is my sincere hope that in the future the County will also take an active role in advocating for this regional (federal) project that can ease the congestion that occurs on US 15, as this road daily becomes a bottleneck that clogs traffic south to Washington and east to Baltimore.

Important transportation work remains to be done for the City. But here (on the back) is a list of some of the major accomplishments in the area of roads and transportation that I have been a part of during the past four years.

Continued work on roads and transportation issues is extremely important for the City so that the City can benefit from the growth that is coming rather than being stifled and damaged by growth. Planning and work on transportation issues is some of the most important work for the city to do. I believe I am the candidate with the best vision and understanding of these issues, and the candidate best able to help the City to make progress in this area.

ROAD/TRANSPORTATION IMPROVEMENTS

October 2009

–The City just broke ground on the center section of Monocacy Boulevard. This will create for the first time an eastern route around the city. The road was re-aligned by the Holtzinger administration to take advantage of previously acquired property—a change that will save the City $5 million. The road will also include a prefabricated bridge that the City purchased, and which will save another $1 million on this project.

–Improving the section of Gas House Pike just east of the Monocacy River.

–Continued working with the County to fund the planning for the Monocacy Boulevard interchange on US 15 so that the State will make this road improvement a priority break-out project on the I-270/US 15 Multi-Modal Corridor Project. The annexation of the Thatcher Property created a substantial and valuable incentive to that property owner to contribute to the building of this interchange. The completion of this project will enable the State to close the Hayward Road intersection.

–Acquiring the Sanner farm (north of the city), to enable the City to build the critical, missing link in the Christopher Crossing/Monocacy Boulevard loop around the city.

–Approving a special taxing district agreement for property on the west side of town that will require the developer of Waverly View to make $10 million in improvements to Shookstown Road, Christopher Crossing and Waverly View Drive.

–Annexing the Crumland and Thatcher properties, will obtain 50-60 acres of land to build the US 15 interchange at Biggs Ford Road. In addition these annexations will provide valuable incentives for these land owners to make additional contributions to the building of this interchange, so that this interchange can be built. (This would be the northern terminus of the North/South Parallel Road.)

–Through the Crumland annexation, obligating that land owner to build a one-mile extension of Willowbrook Road, which will save the City $5-8 million;

–The City is urging the State to make priority break-out projects for the 3 bridge-widening improvements planned for the Patrick Street, Rosemont Avenue and Seventh Street bridges on US 15. These improvements should be scheduled before others on the I-270/US15 Multi-Modal Corridor Project because their cost is relatively minor and their impact on alleviating traffic congestion is very great.

–Acquisition of the Hargett Farm enabled us to start planning for a new alignment of the Butterfly Lane-Route 180 intersection, one of the worst intersections in the city.

–Completion of the extended left turn lane from Opossumtown Pike (north) to TJ Drive.

–Working with the SHA to plan for extensive, additional changes in the Opossumtown Pike-TJ Drive intersection—so that this, the worst intersection in the city, will be vastly improved when (in the next 3-4 years) the State rebuilds the Motter Avenue Bridge over US 15.

–The City will shortly celebrate the opening of the new East Street interchange on I-70 and the completion of East Street Extention (to connect East Street to I-70).

–The City is planning to add a turn lane at the intersection of East Street and East Patrick Street so that when the new, East Street interchange at I-70 opens, the traffic will flow smoothly, without congestion.

–The City is also prepared to build a perimeter road inside of, but around the Municipal Airport that will be accessible to emergency vehicles and provide a quick way around the east side of the city. This road will be funded 95% by the State.

By authority of the Candidate, C. Paul Smith, Donna N. Robison, Treasurer.