Local governments may escape having to pay a share of burgeoning teacher pension costs next fiscal year, but not for long, according to all but one member of a panel of state legislators who spoke to the Howard County League of Women Voters.
If true, that shift in costs could eventually mean higher property taxes for county homeowners, since local governments are just as short of cash as the state is. Some, like Del. Guy Guzzone, are still hoping the economy, and thus revenues, will improve enough in the next few years to prevent the cost shift. For now, though, Guzzone's belief that the cost shift won't occur remains a decidedly minority view.
"Five years ago teacher pensions cost about $480 million [a year]. This year it's $975 million," Senate Majority Leader and Budget and Tax Committee Chairman Edward J. Kasemeyer told more than 150 people at the league's annual luncheon forum at Bethany United Methodist Church in Ellicott City on Jan. 8.
The conclusion, according to all three Howard state senators and several delegates, excluding Guzzone, is that the state simply can't shoulder this growing burden alone in the future, especially at the same time legislators are determined to end Maryland's chronic structural deficit that annually produces more spending than revenues.
To do that, "you're going to see some impact on K-12 education, and on Medicaid," Kasemeyer told the group. The plan, he said, is to cut enough spending to eliminate at least one-third of the imbalance each year until it is gone.
"I do believe we're going to resolve this deficit before this [four-year] term is out," Kasemeyer said. "I believe there's a resolve in the Senate to get there," he added.
Gov. Martin O'Malley this month cheered local government officials, including Howard's executive, Ken Ulman, the newly installed chairman of the Maryland Association of Counties, by announcing that he won't propose that pension cost shift to begin in fiscal 2012. O'Malley said he wants the state to find ways to trim pension and retiree health benefit costs generally for all state employees first.
But Kasemeyer, state Sens. James N. Robey and Allan H. Kittleman, and Dels. Gail H. Bates and Frank S. Turner all said they believe the shift will happen eventually. Kittleman did not participate in the forum due to a death in his extended family, but was interviewed Monday.
Kasemeyer said the pension system for state employees "isn't … that generous," with the average state worker getting about $13,000 a year and the average teacher getting $17,000. In fact, between pay freezes and unpaid furloughs, "state employees have gotten a lousy deal over the last five years," Kasemeyer said. But the overall financial burden on the state treasury is just too great, he said.
"It appears, frankly, we can't continue that system because we can't afford it," said Kasemeyer, a Democrat, "The state just can't do it in the long term."
After the forum, Turner, a Democrat who sits on the tax-writing House Ways and Means Committee, and Robey, who is also a Democrat and, like Kasemeyer, serves on the Budget and Tax panel, agreed the shift is likely to happen. "We keep our commitments" to current state workers, Turner said. "Maybe we make it that future employees' pensions are picked up by the county."
Kittleman, a Republican and the Senate minority leader, later agreed the shift is probably inevitable, though he, like Bates and the Democrats, said he doesn't favor it. Bates said she opposes it because it doesn't represent a real spending cut.
"I don't believe that's the way to go," she said. "You're not cutting spending when you make somebody else pay for it." Bates recalled her time as a top aide for former Howard County Executive Charles I. Ecker, a Republican who took office just as the severe recession of 1991 began, and then had to deal with the state's shifting Social Security costs for teachers onto the counties in the middle of the budget year. Ecker was forced to raise Howard's property taxes 14 cents for $100 of assessed value to balance the county's budget during that recession.
But Guzzone, a Democrat who serves on the House Appropriations Committee, which considers the state budget, said he wasn't convinced the shift has to happen. "As the economy improves, it may level out. I'm just not sure we're there."
Guzzone also agreed with Bates in that "whoever pays for it doesn't matter. It will be paid for." His worry, he said, is that if local governments are saddled with a portion of the cost, it will impinge on local services that directly affect residents. "Those are closer to the people," he said.
Though Howard Democrats are mostly flush with leftover campaign cash, Republicans aren't, which led both Del. Warren E. Miller and Kittleman to hold pre-General Assembly breakfast events.
Boyd Rutherford, who lives in Howard and is chief administrative officer for the Republican National Committee under embattled chairman Michael S. Steele, told Miller's roughly 70 guests Jan. 7 at Turf Valley that Internet fundraising is changing the way traditional organizations like the RNC operates.
The committee fell about $20 million short of its goal to raise $107 million for last year's elections, but there's a reason for that, he said.
"You send your money via the Web directly to candidates in other states" instead of giving to the RNC, he said. "It's easier to find a candidate that you may want to give money to that's not a local candidate," said Rutherford, who was also Maryland's General Services Secretary under former Gov. Robert L. Ehrlich Jr.
Kittleman, who serves on the Senate Finance Committee, attracted a crowd of more than 100 people to Shannon's Saloon, an Ellicott City restaurant, on Monday morning. He vowed to pursue his idea of replacing courthouse marriages with civil unions instead of Maryland enacting same-sex marriage, as some General Assembly members have said they favor. Kittleman said he's taken criticism from both the right and the left for his idea, announced earlier this month.
"My goal is not to stop anything," Kittleman said about the move toward same-sex marriages. "My desire is not to hurt people's rights." His idea, he said, is to remove government from people's private decisions on marriage by having everyone get all the legal rights and responsibilities through a state-sanctioned civil union. Couples could then have a religious ceremony if they wished.
"I don't think government should be involved in heterosexual marriage or same-sex marriage," he said. "It's time to have that discussion."