Economic board critics aren't just splitting hairs


August 22, 1999|By Norris West

MY BARBER could not understand what all the fuss was about when I tried to explain problems with the Anne Arundel Economic Development Corp.

A small businessman, he suggested that it was no big deal for volunteers serving on a panel entrusted with a sizable budget to award themselves contracts as long as they can do the work and don't charge exorbitant fees.

I saw it differently.

"What if you served on a board created by the government?" I asked. "Would you see anything wrong with steering all the hair-cutting business your way?"

"Well, if I can do the work, why not?" he maintained.

"But what if a competing barber served on the board and took all the hair-cutting business connected to his volunteer work?" I inquired.

He wasn't so hot on that idea. On second thought, he said, the work should be distributed fairly so that all barbers can compete for the work. Yes, he admitted, it would be unfair for a barber, or anyone else, to use a public appointment to generate income for a private business.

This is something current and former members of the county's economic development board seem to have a hard time understanding, or acknowledging.

They believed that as members of a private entity, detached from government oversight, the normal rules on bidding, disclosure and fairness should not apply.

The board awarded its directors $20,000 in contracts last year -- $60,000 over four years -- to do work with the county, shutting out other vendors.

Under the direction of then-County Executive Robert R. Neall, Anne Arundel created the economic development corporation six years ago to give the former government agency more flexibility to pursue business. Some other area jurisdictions have privatized their agencies to free them of some government red tape.

Red tape is not always bad

But red tape is not always a bad thing. Regulations are onerous and annoying, but they keep government officials honest. And when privatized organizations stray too far from accountability, trouble can ensue.

Sun reporters Matthew Mosk and Laura Sullivan found some of the worst that can happen when regulation is absent. Directors acted as if they were spending their own money, although their multimillion-dollar budget came from public tax revenue.

"There's nothing unusual about board members charging for their services," former board treasurer Andrew R. Lombardo said about supplying his accounting services.

You would want members to be chosen for the board because they are committed to boosting economic development in the county. But Mr. Lombardo says members were recruited because they provide services the board needed.

Either way, it's a bad deal.

It is troubling that the board did not disclose these business arrangements to the Internal Revenue Service, as required. In doing so, it is jeopardizing its status as a tax-exempt organization.

This is not the way that William A. Badger Jr. would want to start his tenure as president of the economic development corporation.

Mr. Badger has a strong background in his field, having worked for the Maryland Department of Business and Economic Development. He could prove valuable to the county if he is able to parlay his connections into corporate relocations. The county needs to strengthen those efforts so that it can become a magnet for technology firms as well as the plethora of retail operations that are here or coming.

But Mr. Badger, who was appointed after Richard J. Morgan abruptly resigned, must change the organization's culture to one that blends public responsibility with private energy.

Some solutions

First, the selection process for board members must be straightened out. Instead of recruiting directors because they can provide services to the board, they should be recruited because they can refrain from doing business with the board.

Then the board needs to adopt bylaws that specifically deal with that problem, and Mr. Badger must make sure every member is aware of this bit of red tape.

A bothersome aside to all of this is the contention from defenders of the board who argue that intense scrutiny of the directors will discourage good people from volunteering for public service. Indeed, not everyone should volunteer. But conscientious, vigorous and knowledgeable citizens who put the public's interest first should and will continue to serve on government boards and commissions.

The goal of privatization was to make government act more like a business. But when volunteer members of government-created agencies deal with public money, they cannot have a totally free hand -- regardless of whether they are barbers or lawyers.

Norris P. West is The Sun's editorial writer in Anne Arundel County. His e-mail address is

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