In Rebuke to Hogan, Maryland Statehouse Passes Ethics Bill
April 13, 2021
By: Eric Cortellessa
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The Maryland Senate has unanimously voted for more enhanced disclosure requirements for elected officials, following a Washington Monthly exposé of Governor Larry Hogan who, unbeknownst to legislators or the public, advanced road and highway infrastructure projects near properties owned by his real-estate firm—a move that can increase the value of those properties.
According to insiders privy to legislative maneuvers in Annapolis, the state capital, Senate leaders were expecting the legislation, dubbed the Integrity in High Office Act, to provoke intense debate on the chamber floor over the weekend. But, remarkably, the bill advanced 47-0 with no debate. State Senator Cheryl Kagan, a Democrat, described it as “common sense, increases transparency, and increases disclosure” during its second reading. No senator voiced an objection.
The measure, which the Maryland House of Delegates unanimously passed three weeks ago, now heads to the governors’ desk. Hogan, who derided the January 2020 Monthly story as a “blog thing,” has not yet said whether he will sign the bill into law, although that seems likely given that there are more than enough votes to override the governor’s veto. A veto, moreover, would only draw attention to Hogan’s ethical lapses at a time when he’s nearing the end of his career in state politics.
He has not discouraged speculation that he might seek the Republican presidential nomination in 2024. Elected in 2014, Hogan is term-limited as governor and he’s worked assiduously to build a national profile as a moderate eager to challenge the Trumpian wing of the party. Last year, the 64-year-old said that he had written in “Ronald Reagan” in lieu of Trump or Biden.
Hogan’s legacy on ethics could well be an issue in any future electoral bid; it also runs against the Hogan family brand. His late father, also named Lawrence, was hailed as an ethics champion when, as a congressman on the House Judiciary Committee, he became the first Republican in 1974 to announce his vote for articles of impeachment against Richard Nixon.
In Hogan’s first term as governor, he upended years of state transportation policy by cancelling a planned $2.9 billion rail line through Baltimore and directed the freed-up funds to road projects. Several of those projects were adjacent to properties owned by his company, which he did not divest from. They included a new $58 million interchange and $23.5 million in road and sidewalk improvement. Hogan did not disclose his ownership stake in those properties before the legislature approved the infrastructure projects in 2015 and 2017, respectively, even though Maryland law requires officials to recuse themselves from decisions that could financially benefit them or their family.
The Integrity in High Office Act would tighten the state’s disclosure laws by requiring the governor, lieutenant governor, attorney general, treasurer and any agency head to notify state ethics officials and members of the General Assembly whenever they face a decision in which they or a relative have a monetary interest. What’s more, it would require all elected officials to reveal more information about businesses in which they have at least a 10 percent ownership stake—such as what, if any, properties they own.
That is something Hogan has not done. In his annual financial disclosure reports, Hogan has only listed the limited liability companies (LLCs) in which he has ownership, but not the properties those companies own. As a result, he was able to steer state dollars toward road and highway infrastructure projects in Maryland without anyone knowing they would increase the value of his holdings.
Maryland State Senator Bill Ferguson, a Democrat, told the Monthly in September 2020 that he had “none of this information” when working on the transportation budget in those years. (He became Senate president a month later.) “Had I known this information, I think there would have been much more targeted and purposeful questions about the necessity of projects that appear to have a financial benefit to the governor.”
Hogan has argued that he’s kept separation from his company, HOGAN, a real estate brokerage firm with assets across the state, by putting his holdings into a trust agreement that was approved by the State Ethics Commission. But the proximity of those managing the trust to Hogan is startling. Hogan left his brother in charge of the company and three business associates—two of which are current executives at HOGAN—in charge of the trust.
The arrangement has been lucrative for Hogan: According to tax returns from his first three years as governor, which he released when he was running for reelection in 2018, Hogan made $2.4 million in total. His annual government salary is roughly $180,000. According to John Willis, an historian of Maryland politics, Hogan is the first and only one of the state’s 62 governors to have made millions of dollars while in office.
The trust arrangement, ethics experts note, does not prevent conflicts of interest because it allows Hogan to be fully apprised of the company’s activities. “He owns it, he will benefit from it, he is not shielded from knowledge of what his holdings are,” said Kathleen Clark, a government ethics professor at Washington University in St. Louis’s School of Law, last year.
Public Citizen, a government watchdog organization based in Washington, D.C. filed a complaint with the Maryland State Ethics Commission in February 2020, shortly after the Monthly story was published, alleging that Hogan violated Maryland law by advancing transportation projects that could enrich himself and his family. The Ethics Commission has not yet issued any response to the complaint.
The Integrity in High Office Act would not have any retroactive application, so it would not reveal any more information pertaining to Hogan’s holdings before the new law would take effect. Still, the bill’s author and chief sponsor, Delegate Vaughn Stewart, a Democrat, says that the statute would prevent future governors from replicating Hogan’s behavior. “In recent years, the public’s trust in state government has been tested by several ethics scandals, including allegations against Governor Hogan,” Stewart said after its House passage. “Sunlight is the best disinfectant. The Integrity in High Office Act will strengthen our disclosure laws and help ensure Maryland’s elected officials serve the public interest, rather than their own.”