Citing the new financial burden caused by last week's Maryland General Assembly action on teacher pension obligations, Harford County Executive David Craig withdrew legislation that would have paid a one-time, $625 bonus to all county government and school employees next month.

Craig sent a letter to County Council President Billy Boniface late Tuesday afternoon withdrawing three supplemental appropriation bills that contain about $5.5 million to fund the bonus payments.

The council members acknowledged Craig's action during their meeting Tuesday night, as they debated debate funding priorities and the accuracy of state budget projections. In the end, however, the bonus plan died an unceremonious death.

In the letter to Boniface, Craig said the bonus money would be needed to meet the county's new obligation to fund teacher pension costs that were previously paid by the state. The shift of responsibility for those payments to the counties was among the legislation passed last week in the special session.

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"This is not an action which I take lightly, but given the difficult position in which the Governor and the General Assembly have placed us, this is the most prudent course of action to take," Craig wrote. "By paying for teacher pensions using our fund balance, we are able to avoid furloughs, layoffs, cuts in services, or an increase in the property or income tax rates."

"As I stated in October when I initially proposed a one-time bonus, all employees – whether county employees, school system employees, or employees of other county agencies – have been forced to make significant sacrifices and to do more with less in these difficult economic times," the letter continued. "Therefore, I felt strongly that a portion of our unanticipated fund balance from Fiscal Year 2011 should go to all employees equally. I am glad that we were able to work together with our public employee unions and with the Board of Education to get the first round of bonuses into employees' hands."

Not a shock

Craig's spokesman Bob Thomas said the action was not a total shock, as the administration knew the state could make such a move when the bonuses were issued.

"This was a possibility that we knew was hanging out there and we wanted to make the commitment to our employees, and we wanted to follow through with that," Thomas said. "The fiscal situation right now just doesn't permit us to do that."

He said the administration plans to have a meeting to address the long-term implications of the pension shift.

The state's action will ultimately mean an additional $10.6 million impact for Harford by Fiscal Year 2016, he added.

"We were very, very disappointed that the state waited until the 11th hour, 59th minute, to take an action, and their action basically was nothing more than a vote along party lines," Thomas said, adding that the county administration had diligently submitted its budget by the end of March.

Other counties will face even worse penalties, Thomas said, such as Montgomery County, which now has to find $50 million.

"It left a number of counties in a very, very difficult position," he said about the legislature's action. "This is a significant blow and we will be working with the council to address it."

Earlier bonus paid

The county made a similar $625 bonus payment to government and school employees previously. The money for both payments was coming from a $32 million budget surplus the county had at the end of the 2011 fiscal year last June.

The Craig bonus plan has not been without controversy. Initially, the county council balked at approving the entire allocation of more than $11 million last fall, pushing instead for splitting the money up as a contingency against unforeseen financial obligations. The teacher pension issue, still unresolved at that point, was prominently cited.

Then, leaders of the union representing some 3,200 Harford teachers balked at accepting the bonus, claiming to do so would compromise their position in an ongoing dispute with the county over contract negotiations. The union later backed down and accepted the deal.

Craig's letter Tuesday said he would not penalize school employees over the legislature's actions on the teacher pensions.

"Despite suggestions from some that we only withdraw the bonuses for school system employees to pay for teacher pensions and allow the bill regarding bonuses for employees of county government to remain, I stand by my position that all employees should be treated equally," he wrote. "Therefore I am withdrawing all three bills."