Two candidates for governor — one Democrat and one Republican — pledged tax breaks for thousands of retirees who collect pension benefits as they sought the endorsement of the Maryland teachers union.
Speaking Friday to the fall meeting of the Maryland State Education Association, Democrat Douglas F. Gansler said if he's elected governor in 2014, he would exempt those he called "heroes" — teachers, military veterans and first responders — from taxation on their pensions. His campaign later said Gansler was proposing to exempt only part of their pension income.
Neither candidate could provide an estimate of the cost of his proposal in lost state revenue. Neither pointed to new revenue or spending cuts to offset the cost.
"Whatever the number is, that does not matter to me. We will do it anyway," said Craig. The Republican said he would phase in the exemption over four years and cap it at $60,000. He said he believed the General Assembly would find it difficult to say no to such a proposal.
Gansler spokesman Bob Wheelock said the campaign has no cost estimate for the Democrat's proposal but added that the candidate expects some of the money would be recovered from taxpayers who decide to stay in Maryland and spend money here — an assertion echoed by Craig.
Wheelock said Gansler would determine the amount of income to exempt based on what neighboring states are doing. "It's not open-ended at this point. It's under review," Wheelock said.
The promises came as four of the six announced candidates for governor made their pitches to the Maryland teachers union, which is expected to decide Saturday whom to endorse in the race. The union's endorsement council later voted to recommend supporting Lt. Gov. Anthony G. Brown. Members will decide Saturday.
Craig joined three Democrats — Gansler, the state attorney general; Brown; and Montgomery County Del. Heather R. Mizeur — in seeking the union's endorsement. Two other announced GOP candidates, Del. Ron George of Anne Arundel County and Charles County business executive Charles Lollar, were not invited after they failed to fill out questionnaires, the organization said.
Mizeur said she has not taken a position on retirement taxation. Brown, in an interview after his presentation, said Gansler was proposing something "easy to promise, not as easy to deliver."
Brown's running mate, Howard County Executive Ken Ulman was more blunt. "It's very easy to go around telling people you're going to spend more and cut taxes at the same time," Ulman said, noting that Gansler has also proposed a reduction in corporate taxes with a cost Brown's campaign estimates at $1.6 billion over five years.
Warren Deschenaux, the General Assembly's chief budget analyst, said he could not estimate the cost in state revenues of eliminating taxes on pensions but said it would be in the hundreds of millions of dollars annually.
Deschenaux, who heads the legislature's nonpartisan policy analysis staff, said lawmakers generally have been reluctant to give tax exemptions to certain groups.
"Once you start that, where do you draw the line? Which group that wants a benefit is on the wrong side of that line?" Deschenaux said.
According to the state pension system, there are about 66,000 retired teachers receiving Maryland benefits and about 4,000 former law enforcement officers. About 50,000 people receive military pensions in the state. The number of non-police first responders was not immediately available.
Maryland exempts Social Security payments from taxation and exempts up to $5,000 a year in military retirement pay.
The four candidates used their 10 minutes each on the stage to lay out their differing priorities on education.
Gansler denounced the current practice of administering a standardized test that reflects a discarded school curriculum, calling it a "$50 million waste of money." Mizeur criticized "the sloppy transition to a new federal testing regime."
Brown received a warm reception in spite of some of the union's objections to actions of the O'Malley-Brown administration, including a shift of some teacher pension costs to the counties — a move other candidates denounced.
The lieutenant governor emphasized matters in which the union and the administration have been allies, including a measure making it easier to collect representation fees from nonmembers.