- The Enterprise
- The Recorder
Maryland delegates haven’t been willing to shift more of the cost of teacher pensions onto local jurisdictions in past years, but as the debate over the fiscal 2013 budget intensifies, the proposal is gaining traction in the House, officials say.
“I think there is now an emerging consensus in the House that it’s a cost we need to share,” said Del. John Bohanan (D-Dist. 29B) of California, who objected to a pension shift proposal two years ago because he believed the issue needed more study.
Gov. Martin O’Malley (D) included the shift in his proposed fiscal 2013 spending plan, which sought to reduce a $1.1 billion structural deficit, pushing $239 million of teacher retirement costs onto the counties. Currently, the counties pay only teachers’ Social Security costs, which accounts for about one-third of the total cost of $946 million, according to state budget documents.
The governor’s plan, which would have local jurisdictions paying 50 percent of the total cost, has drawn fire from county governments, particularly in Montgomery and Prince George’s, which could be saddled with a burden of an additional $47 million and $34 million, respectively.
The House is likely to advocate softening the blow by phasing is the shift over two to four years, Bohanan said.
An incremental shift also is being discussed in the Senate, which is expected to vote on the budget next week. In 2011, the Senate passed a budget that began shifting pension costs, but the provision was stripped from the budget by the House.
As it stands now, the state provides a huge amount of funding to local governments, about as much as is used to fund state government agencies, Bohanan said.
House Minority Leader Del. Anthony O’Donnell (R-Dist. 29C) of Lusby, who opposes the shift, said it wasn’t yet clear whether there was enough support in the House for the measure to pass.
“Unfortunately, the governor’s budget is predicated on shifting this down to the locals,” O’Donnell said. “That makes it more difficult to stop.”
House Republicans next week plan to offer their own budget proposal, which will not include the pension shift, O’Donnell said.
A pension shift is likely to drive counties to raise taxes and just pushes that responsibility from the state to the local jurisdictions, said Del. Jeannie Haddaway-Riccio (R-Dist. 37B) of Newcomb.
This year, there is much more pressure to pass the cost on to local jurisdictions, said Donald Norris, chairman of the Department of Public Policy at the University of Maryland, Baltimore County.
“The question is, ‘What’s the alternative?’” Norris said, adding that there didn’t seem to be another plan to close the budget gap except for the “doomsday budget,” discussed this week, which won’t pass.
That plan, prepared by the state’s Department of Legislative Services, details the extensive cuts that would be needed if the state did not adopt new revenue sources or fund transfers.
This year was the right time for the state to approve a shift, but the final plan is likely to be a compromise, such as a gradual change, Norris said.
County leaders, including Howard County Executive Ken Ulman (D), have blamed the state for the rising pension costs, arguing that benefit increases have stemmed from state actions. State officials, including Senate President Thomas V. Mike Miller Jr., have argued that local jurisdictions should share the cost because they set teachers’ salaries.
House Speaker Michael E. Busch (D-Dist. 30) of Annapolis said lawmakers are faced with three tough choices: shifting pension costs, making severe cuts or increasing revenues, and that the pension share was the best option.
Busch said he believed most lawmakers agreed that the shift should be made.
“The reality is that if you can pass on some of your liability to the counties and you believe it’s justified, this is the year to do it,” Busch said. One reason the House was reluctant to move on a pension shift in 2010 was because the pension system needed reform, which legislators did last year, Bohanan said.
Changes adopted in 2011 now require state employees to contribute a larger portion of their salaries to their pensions and work for a longer period before qualifying for benefits.