If Gov. Martin O'Malley's plan to shift some teacher pension costs to the counties is approved by the legislature, no jurisdiction will take so large a hit in the first year as Baltimore County. Poorer jurisdictions are due to get an influx of direct state aid under the governor's proposal, and richer ones benefit more from Mr. O'Malley's idea to limit income tax exemptions and deductions for the top fifth of earners. The result is that Baltimore County would see a hit of nearly $3 million in the fiscal year that begins in July, with the effects magnified in the years after that.
But curiously, the Baltimore County executive, Kevin Kamenetz, is protesting the least of peers. While the leaders of the other "Big Seven" jurisdictions (Baltimore City and Anne Arundel, Harford, Howard, Montgomery and Prince George's counties) have been vocally objecting to any shift of teacher pension costs to local government, Mr. Kamenetz has been quietly trying to find a way to make it work. That represents not masochism on his part but a keen sense of the political reality and a wise strategic posture that his colleagues would do well to emulate.
If there's any surprise in the governor's effort to shift teacher pensions to local governments, it's that it has taken him so long to do it. The state has long struggled with a gap between how much it has committed to spend and how much it takes in. Teacher pensions are a growing part of that problem; with no reforms, they would cost the state $957 million in the next fiscal year, nearly the entire amount of the budget deficit. Many members of the General Assembly, led by Senate President Thomas V. Mike Miller, have long advocated shifting some of the cost of teacher pensions to local jurisdictions, and they have a winning policy argument for doing so. School boards and local governments set teacher salaries, but they don't have to consider the cost of pensions. The result is that, by and large, counties with the strongest local tax bases pay their teachers more and benefit disproportionately from state spending on teacher pensions. That's exactly the opposite of how other state education spending is allocated.
What Mr. Kamenetz has recognized is that local governments are inevitably going to take a hit in the state's effort to balance its books. Aid to the counties and Baltimore City makes up too much of the state budget to expect otherwise. And the deal Mr. O'Malley has offered is much more generous to local governments than anything Senator Miller is likely to come up with; it splits the cost of pensions and Social Security 50-50 between the state and counties, and it includes several provisions to mitigate the impact. Rather than shouting his opposition, Mr. Kamenetz is making sure he is in the strongest position to keep the deal from going sour and to get whatever tools are needed to help the county and the schools cope.
He is seeking legislation that would allow the county to combine efforts with the school system in areas like information technology, workers compensation, procurement and data management. Mr. Kamenetz believes that the county and schools can eliminate redundancy and save money without affecting what goes on in the classroom. The other county executives should take a pause from their protests and seek an amendment to that bill so that it applies to the entire state, not just Baltimore County. Mr. Kamenetz is also seeking to make sure that the bill for the pensions goes to the school system rather that the county government. Given that teacher salaries are negotiated by the school board, not the county government, that makes sense.
But the biggest fight Mr. Kamenetz faces, and the one on which he could use some back-up from the other executives, is over the governor's scheme for providing the counties with more revenue to compensate for the new costs they would face. Mr. O'Malley proposed an elegant solution in his plan to reduce exemptions and deductions for the top 20 percent of earners. Doing so would help fix the state's budget problems, but because of the way the piggyback income tax works, it would also provide about $111 million to the counties in the first year. The idea has run into stiff resistance, though, and there is a strong possibility that it will be scrapped or significantly modified in the legislature, and that could leave local governments in the lurch. By facing reality on the pension issue, Mr. Kamenetz at least has a seat at the table to urge lawmakers not to let that happen. He would be in a much stronger position if the other local executives joined him.