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E-mails: Mistakenly released negative jobs report a public relations 'fiasco' for Md. governor's office

By Aaron C. Davis, John Wagner and Ann E. Marimow
Monday, September 27, 2010; 9:12 PM

A senior member of Maryland Gov. Martin O'Malley's administration ordered a gloomy economic report removed from a state Web site last month that ran counter to a more positive spin O'Malley's office had approved about slowing job growth in the state, e-mails show.

The internal report characterized Maryland's economy as having "stalled." It was mistakenly posted by a staffer on Aug. 20 and removed hours later as alarm bells rang in two state agencies and in the governor's office, the documents show.

The negative report "was diametrically opposed to the discussed and eventually-approved messaging" that goes through a process of being signed off by the department and the governor's office, one staffer wrote in an e-mail explaining the "situation" to a director in his department. "The theme of the discussion was quite clear that we would emphasize private sector job growth as progressing . . . at no time did we remotely discuss messaging that the economic recovery had stalled."

Maryland Secretary of Labor, Licensing, & Regulation Alexander M. Sanchez said he ordered the report removed. "It was a mistake, a small mistake and we moved to correct it as quickly as we could," he said

The e-mails were released on Monday by former Gov. Robert L. Ehrlich Jr. (R), who is hoping to unseat O'Malley (D) in November. They had been obtained under a public records request. The Washington Post obtained and authenticated copies of the e-mails.

It was unclear on Monday what impact the revelations might have on the governor's race, but they come as O'Malley and Ehrlich have begun airing television ads targeting each other's credibility.

"It appears a staff member told the truth, was caught telling the truth, and then they just made up the rest of the story," Ehrlich said at a news conference in Glen Burnie.

The rather obscure state agency headed by Sanchez, known in Annapolis by its acronym of DLLR, has been a target of Ehrlich throughout the campaign, with the former governor claiming it has become overzealous in its regulation of business since he left office.

"State agencies are a direct function of the governor," Ehrlich said. "This episode is symbolic of an attitude at that agency."

Questions about the documents dampened O'Malley's effort on Monday to highlight his work to help Maryland's small businesses during a visit to the White House.

O'Malley watched from the front row of the ornate East Room as President Obama signed legislation designed to expand access to loan guarantees, a program O'Malley lobbied other governors to support and that was based in part on a program he pushed to create earlier this year in Maryland. O'Malley's office had said the governor was expected to stand onstage with president. He did not, but was acknowledged by Obama.

One internal DLLR e-mail said the order to remove the report came "from the top."

Asked in the driveway outside the West Wing whether he had ordered the removal of the report, O'Malley said, "No, I wasn't aware of it. I'm not sure I'd even seen the report." O'Malley suggested that the report was part of the routine internal dialogue within DLLR, which publishes monthly job statistics.

"There are a lot of analysts and internal people at DLLR who pore over the monthly job reports and ask one another what they mean and offer their perspectives and opinions, and this appears to be one of those perspectives and one of those opinions," he said.

O'Malley said any suggestion that he had the report pulled is an example of Ehrlich's campaign "always fouling and always crying foul."

DLLR spokesman Bernie Kohn said the report was removed not because of its negative economic forecast, but because it had never been intended for public dissemination.

"These discussion points are simply a means to launch a discussion about how the numbers should be presented; that's a discussion that takes place several days before the press release is put out," Kohn said. "We were not playing with the numbers. The numbers never changed."

The e-mails show that Kohn warned O'Malley's office "not to make much hay out" of Maryland's slight uptick in job creation in July in case final adjustments could actually show employment in the state had dropped.

On the same day the report was posted online, O'Malley released a statement touting the state's fifth consecutive month of job growth and characterized Maryland's employment gains as "triple the national job growth rate."

A subseqent loss of nearly 6,000 jobs in Maryland in August has cut that to twice the national rate.

Senate Minority Leader Allan H. Kittleman (R-Howard) criticized O'Malley for a speech he gave to Maryland county leaders on Aug. 21, the day after the jobs report was pulled from the state Web site.

In the speech at a conference in Ocean City, O'Malley said the state had added about 40,000 jobs between January and July, the best such stretch since 1999, he said.

"Doesn't that feel good to say?" O'Malley playfully asked the crowd.

In fact, O'Malley knew then that the economy was "stalling," Kittleman said. "I'm mad as a Maryland citizen that my government is hiding things from me to promote a political candidate."

House Minority Leader Anthony J. O'Donnell (R-Calvert) said the General Assembly should investigate.

"I don't think it's anything that warrants a special investigation," countered House Speaker Michael E. Busch (D-Anne Arundel). "It seems to me, under any circumstances, the numbers were the same. It's a matter of interpretation."

The e-mails show fragments in a usually behind-the-scenes, 10-day narrative of state staffers and analysts preparing for the release and creation of talking points on July jobs figures.

In the e-mails, Kohn acts as a go-between, shuttling information from state analysts to officials higher up in the administration.

The report that produced Monday's furor first appeared as a draft to him in an e-mail on Aug. 17 from Mary Jo Yeisley, a supervisor in DLLR's Office of Workforce Information and Performance. Yeisley began her report with a line that later appeared verbatim when the report was posted online.

"Amid reports of uncertainties in financial markets, declining consumer confidence and spending and lackluster hiring at the national level, Maryland's economic recovery faltered in July." She went on to say that while that was encouraging compared with national numbers, Maryland employment "was little changed, rising by just 500 over-the-month."

In a follow-up e-mail to Kohn, she said there "really wasn't a whole lot to say. I hate to project, but I'm kind of afraid of what we'll see next month."

On Aug. 20, when the report went online, a flurry of panicked e-mails ensued: "Is it down?" writes DLLR's Sanchez in a message to Kohn. "Call me as soon as we know who posted this outrageous info on the site."

As Kohn continued to draw fire, in one e-mail he explains that Sanchez, state business Secretary Christian Johansson "as well as the Governor's senior staff, were very upset to see this posted . . . and at Secretary Sanchez's direction I instructed [the agency's Web master] to take it down."

wagnerj@washpost.com davisa@washpost.com wagnerj@washpost.com marimowa@washpost.com

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