Economist’s work for private clients and Baltimore County raises conflict of interest questions

Some Baltimore County Council members are questioning whether to continue working with a local economic consulting firm after a resident raised concerns that the company’s chief executive has a conflict of interest.

The council is scheduled to vote Monday on a four-year, $25,600 contract with Baltimore-based Sage Policy Group to work with two council committees that focus on the economy and county spending. Sage’s chairman and CEO is well-known local economic consultant Anirban Basu.

Basu’s firm would provide quarterly economic reports for the Spending Affordability Committee, a panel that recommends county spending guidelines, according to notes prepared by the county auditor’s office. The reports would include estimates and forecasts of local and national personal income, employment and population data, and describe trends in the county real estate market.

Sage also would provide briefings to the Baltimore County Economic Advisory Committee — which Basu chairs — a group made up of business representatives who advise the Spending Affordability Committee.

The firm has provided economic forecasting services for the council since 2010, and currently holds a similar contract approved by the council in 2015. Basu said he’s not required to disclose his clients to the county council.

Council members’ questions came after Towson resident Peta Richkus spoke at a recent meeting, taking issue with public statements Basu made as the county debated County Executive Johnny Olszewski Jr.’s plan to raise taxes.

Basu appeared in Facebook videos this spring questioning the proposals to raise local income and hotel taxes and impose new fees on development and cell phones. The videos were posted by Center Maryland, which is affiliated with KO Public Affairs, a political communications firm. KO Public Affairs didn’t respond to requests for comment.

Richkus, a former state port commissioner and former secretary of the Maryland Department of General Services, told the council that Basu’s “heavily promoted public opposition was a violation of his fiduciary responsibility to the county.”

“When Mr. Basu acts as a public advocate against the county’s best efforts to achieve fiscal sustainability, he undermines the appearance of objectivity that is necessary for credibility and he raises the question of conflict of interest,” said Richkus, who supported the tax increases.

Richkus also said Basu has “many clients whose interests may not always align with the county’s.”

Basu told The Baltimore Sun he was filmed for Center Maryland the day he testified at a county budget hearing. A county resident, he said he was expressing his views as a private citizen in an “impromptu” video.

“I was not paid for making that video,” he said. “I am allowed … as a private citizen to express my views.”

“I think the issue here is that people have very different opinions about what actions produce fiscal sustainability,” Basu added. “They think that if I’m advocating against tax increases, I must have a conflict of interest.”

Basu’s firm has prepared economic reports for a range of clients, including the Maryland Horse Breeders Association and Tradepoint Atlantic, the company redeveloping the former Sparrows Point steel mill. He hosts “The Morning Economic Report” on WYPR-FM and serves as chief economist for trade groups, like Associated Builders and Contractors.

In May, Sage published a report commissioned by the Maryland Building Industry Association about the county’s proposed development impact fees. The report, titled “The Unintended Consequences of Impact Fees in Baltimore County,” concluded that the fees would away drive young, professional homebuyers and hurt the local construction industry and other businesses.

The council passed legislation to create the new fees, though it weakened original proposals.

Councilwoman Cathy Bevins, a Middle River Democrat, said she had concerns that Sage worked for the industry group, which lobbied against the impact fees, while under contract with the council.

Councilman David Marks, who strongly supported the impact fees to raise money for school construction and public infrastructure, said he believes Basu has “done good work,” but that he is “troubled by some of what I see.”

“I certainly did not appreciate someone who is compensated by Baltimore County then being involved in social media broadcasts that questioned our legislation,” said Marks, a Perry Hall Republican. “It raises questions of conflict of interest. In politics, perception is reality.”

Others said they saw no problem with the deal.

“When we are making decisions … I am OK with a broad range of opinions so that we can get to what I consider to be the best decision,” said Councilman Julian Jones, a Woodstock Democrat. “I do not think it’s a conflict of interest for an economist to work for someone else and give us his opinion.”

Basu said the contract poses no conflict of interest. He described the contract as small and the reports as “rooted in objectivity.”

“There’s no advocacy with that forecasting contract,” he said. “It is simply an analysis of where we have been and where we’re likely headed economically.”

Council Chairman Tom Quirk said he disagreed with Richkus’ assertion that Basu violated his responsibility to the county by speaking out against about tax increases, but added that he understands concerns about the contract and thinks Basu “should be careful about representing people who may have a direct conflict with the county.”

“I don’t view him as a policy adviser,” said Quirk, an Oella Democrat. “He’s a very visible, very vocal person and has his own political views.”

The Sage contract scheduled to be voted on Monday “was awarded on a noncompetitive basis due to Mr. Basu’s knowledge of Baltimore County, experience performing County-level economic analysis and personal income forecasting services, and history of serving as [the county’s Economic Advisory Committee] chairman,” according to the county auditor’s notes.

“I just find it hard to believe that there’s only one person” who can do the work, Bevins said.

Councilman Izzy Patoka, a Pikesville Democrat, also questioned why the contract was not bid out. He said he could think of at least three local organizations that do economic analysis — The Hilltop Institute at the University of Maryland, Baltimore County; the Regional Economic Studies Institute at Towson University, and The Jacob France Institute at the University of Baltimore.

Separately, Sage holds two $200,000 contracts with the county school system: One for a high school capacity and enrollment study, and another to perform economic and demographic studies — including projections of future enrollment and analysis of residential development.

Under the late County Executive Kevin Kamenetz’ administration, the county hired Sage to write a report about the economic impact of Towson Row, a development that received a controversial $43 million public assistance package in 2017. Basu testified in favor of the package.