O'Malley budget advisers: Counties should pay 40 percent of teacher pension costs
Gov. Martin O'Malley's budget advisers have recommended shifting 40 percent of Maryland's teacher retirement costs to county governments -- a move that could save the state $342 million a year but exacerbate local fiscal woes.
O'Malley (D) said in an interview Monday that he would like to forgo the recommendation but said it is still among the options being considered as he struggles to bridge a shortfall of more than $1.2 billion in next year's state budget.
"I don't believe the counties are in any better position than we are to pick up the costs," O'Malley said at an event in Gaithersburg. "But I haven't figured out yet how we close a $1.2 billion gap. We're still wrestling with that mathematical challenge."
O'Malley's budget proposal for the 2012 fiscal year is due to the General Assembly next month.
A document prepared by his budget advisers that was obtained by The Washington Post presents two options for shifting 40 percent of the teacher retirement costs to counties.
The first option is to have all counties pick up 40 percent of their costs, which the state currently pays. The second option is for wealthy counties to pay more -- a plan that is drawing strenuous opposition from Montgomery County in particular.
Under the first scenario, Montgomery would pick up $69 million in teacher retirement costs now paid by the state. Under the "wealth-adjusted" formula, that figure rises to about $96 million.
"There's no way Montgomery County can absorb that," said Montgomery County Executive Isiah Leggett (D), who was attending the same event in Gaithersburg, which was designed for O'Malley to get input from business leaders as he prepares for a second term.
Leggett said Montgomery is already facing a budget shortfall of about $300 million next year, and adding nearly another $100 million to that would be "devastating for the county."
"This is a scary proposal and something we will fight to resist," he said.
Some counties, including Prince George's, would fare better under the "wealth-adjusted" scenario. Prince George's cost would be $39 million, as opposed to $50 million under the "equal shares" scenario.
The Maryland Senate passed a similar cost-shifting plan last session but it was resisted by the House of Delegates. There is growing pressure heading into the 90-day legislation session to do something to address the state's costs, however. A state commission has been studying the issue as well.
Aides suggested that O'Malley could propose a shift that amounts to something less than 40 percent and still achieve some savings for the state. No decisions have been made, they said.
O'Malley has been repeatedly hinting in recent days that his budget proposal will include many unpopular cost-saving initiatives. He has pledged to close the gap of more than $1.2 billion without any tax increases.
| December 20, 2010; 12:40 PM ET
Categories: Governor, John Wagner, Montgomery County, Prince George's County
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