In what could mark the first legislative defeat for Gov. Parris N. Glendening, lawmakers are lining up against his proposed $60 million raid on an auto insurance surplus fund to pay for school construction and crime-fighting initiatives.
The General Assembly's fiscal leaders say the one-time transfer would leave the state open to legal action from those insured by the Maryland Automobile Insurance Fund (MAIF). The state-run organization underwrites high-risk drivers.
Mr. Glendening has proposed taking $40 million from MAIF's surplus account for school construction, with half going to Prince George's County and the rest distributed statewide. An additional $20 million from MAIF would be divided among Prince George's County ($8 million), Montgomery County ($4 million) and Baltimore ($8 million) as "crime prevention" grants.
Those programs could be jeopardized should the General Assembly refuse to make the transfer. "There's pretty much a consensus that this is a potentially dangerous exposure for the state," said Sen. Barbara A. Hoffman, a Baltimore Democrat who chairs the Senate Budget and Taxation Committee. "We've wanted to do this when the state was in more desperate financial condition, and we were discouraged by our legal advisers and by MAIF."
In particular, Ms. Hoffman pointed to an opinion written by Deputy Attorney General Ralph S. Tyler III last year, when lawmakers sought to take $50 million from MAIF to balance the budget.
The MAIF surplus, which totals more than $100 million, was built up from premiums paid by the organization's 135,000 policyholders and from periodic assessments on all drivers through private insurers.
Any potential lawsuit filed by MAIF's policyholders could argue that the state is taking their property without just compensation, Tyler wrote. If the MAIF surplus were tapped and the fund did not have enough money to cover its debts, the state could be liable.
"The point . . . is not whether such a claim would prevail; rather, the point is to call attention to this potentially very significant, but difficult to quantify, expansion of the state's liability for MAIF," Mr. Tyler wrote in his Feb. 22, 1994, opinion.
That is the same argument that has kept legislators from dipping into the surplus in the past. House Speaker Casper R. Taylor Jr., an Allegany County Democrat, said there is a "very strong" consensus in the House of Delegates against taking money from the MAIF surplus.
"I'm reluctant to say it's dead, but my best insight is that I don't see any swell of support even from the jurisdictions it's earmarked for," said Del. Michael E. Busch, an Anne Arundel Democrat who chairs the House Economic Matters Committee, which oversees MAIF.
Mr. Glendening had suggested that taking money from the MAIF surplus was consistent with his efforts to cut auto insurance rates in Baltimore. The state ought not to be so deeply in the insurance business, the governor has said, and using surplus funds to subsidize MAIF's rates would keep the state involved.
MAIF insures about 4.3 percent of drivers statewide.
Frederick W. Puddester, Mr. Glendening's deputy chief of staff, said he was aware of the opposition in the legislature but that he thinks it is too early to judge the measure's fate.
"I don't think it's completely dead," Mr. Puddester said. "We'd still like to convince them it's a good idea."
Lawmakers have yet to hold a hearing on the administration's bill. Those hearings are scheduled for next week -- on Feb. 23 before the Economic Matters Committee and on Feb. 24 before the Budget and Taxation Committee.
The fate of the school construction and public safety grants might not be tied to the transfer. Legislators have expressed an interest in earmarking funds from the state's capital budget for school construction and police aid, but probably not the full $60 million.
"No one in this legislature doesn't want money for school construction or other worthy projects," said Mr. Busch.
Such an effort would depend on cooperation from Mr. Glendening. Lawmakers would need to cut enough money from the governor's proposed budget to finance the projects. Then, the governor would need to recycle that money and formally offer the projects in a supplemental spending plan.
Mr. Puddester said it was too early to explore the merits of that possibility. "We'll have to wait and see how the budget falls out," he said.