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Md. Senate passes budget, trouble looms in House

Maryland's budget is halfway to the finish line - or maybe not.

The state Senate on Wednesday passed a $31.9-billion plan that would shrink overall spending for the fiscal year beginning in July, once reductions in federal stimulus funding are factored in.

In most ways, it follows closely to the budget Gov. Martin O'Malley (D) proposed for next year, but trims roughly $120 million from O'Malley's outline for $13.2 billion in general fund spending.

The Senate halved the governor's proposed funding for a Chesapeake Bay cleanup fund and grants for stem cell research, but left intact money for other priorities, such as $20 million for employer tax credits designed to spur job growth.

The budget, however, includes a controversial change in future year accounting that could lead to tie-ups in the House of Delegates.

The Senate plan would in 2012 begin shifting a fraction of the state's $843 million cost of teacher retirement costs to counties, and share those costs 50-50 by 2014. State budget officials have warned that if left to the state, the retirement costs could soon eat up a larger portion of the budget than that used to subsidize the entire University System of Maryland.

Budget leaders in the House, however, have been cool to such proposals, and will likely feel pressure from local governments and teachers unions to put off that shift in an election year.

Senate President Thomas V. Mike Miller, Jr. (D-Calvert) noted that with that and other changes, the projected shortfall of $2.5 billion for fiscal year 2012 under O'Malley's plan would be cut to $1.2 billion under the Senate plan.

"We took steps in this budget to tackle unfunded liabilities and to start the long-overdue process of reforming our retirement system to protect benefits for retirees," Miller said in a statement. "We have been recognized as one of the worst states in the nation in funding retiree pension and health costs. It would be a dereliction of duty if we did not begin to move forward on meaningful pension reform this year."

The Senate budget also changed a funding formula for so-called disparity grants that would mean $18 million more for Prince George's County in the coming fiscal year.

The language would delay calculation of the state's disparity grant -- a program designed to give additional funding to counties with lower per capita income -- until Nov. 1. In recent years, calculations of county income were done earlier, before many wealthier residents had filed their tax returns -- a practice Prince George's officials said shortchanged the county by making it look richer than it really is.

The Senate voted 39-8 on Wednesday to pass the budget measure and 42-5 on the budget reconciliation bill, which included amendments covering both the pension reform and changes to the disparity grant calculations.

The House faces a deadline of April 5 to pass the spending plan. The General Assembly is scheduled to adjourn on April 12.

-- Aaron C. Davis and Jonathan Mummolo

By Aaron C. Davis and Jonathan Mummolo  |  March 24, 2010; 3:20 PM ET
Categories:  Aaron C. Davis , Maryland State Budget  
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