Gov. Larry Hogan said Thursday that $68 million lawmakers set aside for schools will now go to the pension system. (Kenneth K. Lam/Baltimore Sun)
Twice in the past few days, Republican Gov. Larry Hogan has declared that he won't spend money as the Democratic-controlled legislature prescribed in the budget, and will instead spend it for causes he favors.
Hogan said he would take $68 million that lawmakers set aside for schools and use it to shore up what he calls an underfunded pension system. Later, he said he intends to veto $2 million in renovations for a creative-arts center in Annapolis and will reopen a state police barracks instead.
But he cannot legally make such funding switches over the General Assembly's objections, according to the Maryland attorney general's office and other legislative experts.
"Under any scenario, he still requires an appropriation that has to be approved by the General Assembly," said David Juppe, a top budget analyst in the nonpartisan Department of Legislative Services. His assessment was backed up by Sandra B. Brantley, an assistant attorney general who is counsel to the General Assembly.
Hogan's budget secretary, David Brinkley, conceded in an interview Tuesday with The Baltimore Sun that the administration cannot unilaterally shift the education funds as the governor's public statements and his spokespeople implied.
"I get that, and he gets that, too," Brinkley said. But he said by refusing to spend the education aid, Hogan wanted to demonstrate his commitment to beefing up the state-funded retirement system for teachers and state workers.
Other Hogan aides had argued previously that the administration could and would make the spending changes the governor sought. Hogan himself had been unequivocal in announcing his intention to ignore some of the Assembly's budget wishes, suggesting that he was following the will of state voters who elected him.
"It is clear that many out-of-touch politicians simply have not gotten the message," he said Thursday.
By Tuesday, a Hogan spokesman was acknowledging that the legislature has the final say.
Douglass Mayer, Hogan's deputy communications director, said the governor remains committed to putting an added $75 million into the pension system and would continue to look for ways to do that.
"If Democratic legislators wish once again to cut funds from the state employee pension system, while extremely disappointing, it is their prerogative," Mayer said. "Governor Hogan will continue doing everything he can to protect state employees and their pension system."
The governor faced two barriers as he sought to make spending changes. The money earmarked for the creative-arts center was for physical improvements to the building — a capital expense, money that could not pay for the operating costs of a police barracks. And the General Assembly had earmarked the education money exclusively for school systems that need added funding for their K-12 classes. It cannot be spent for any other purpose in the coming year.
"So it literally will sit idle, unspent," said Del. Maggie L. McIntosh, the Baltimore Democrat who chairs the House Appropriations Committee.
Lawmakers did approve shifting to the pension up to $50 million in any unspent state funds starting in fiscal year 2017, but Hogan had argued that that was not enough.
He said lawmakers had "raided" the pension system by cutting in half a $150 million supplemental contribution he proposed to make to it. McIntosh countered that the budget approved by the legislature pays a substantial sum — $1.6 billion — into workers pensions and that lawmakers had taken other steps to put the system on sounder financial footing.
The Assembly had redirected about $75 million of Hogan's pension money for schools, among other expenses. McIntosh said that without the added money, cash-strapped school systems would be forced to lay off teachers. Baltimore's school system is slated to lose $11 million.
Brinkley said he believes there will be surplus funds at the end of the budget year that could still be funneled into the pension system. But he acknowledged that legislative leaders would decide whether that happens.
"They can do what they want to do on that; they proved that," he said.
Brinkley also said Tuesday that cutting the arts center money had nothing to do with funding for the state police, even though Hogan had linked the two in his announcement that he would reopen the Annapolis barracks closed by the O'Malley administration in 2008. What Hogan vetoed was an item in the state's capital budget to borrow $2 million for renovations to the Maryland Hall for the Creative Arts. Not issuing a bond to underwrite that project will not provide any additional funds in the state's operating budget to open and staff the police barracks, Brinkley agreed.
"They are two different pots of money and everyone knows that," he said. Brinkley said the governor wanted to signal his displeasure with "unchecked" spending by the legislature on capital projects.
McIntosh said she believed the arts center was cut to "take a swing at" House Speaker Michael E. Busch, with whom Hogan publicly sparred during the legislative session. Busch, a Democrat, represents Annapolis and has been a supporter of the arts center.
The arts center bond issue was to pay for providing access for the disabled, McIntosh noted, so youngsters with disabilities and their families could attend and participate in events there.
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Brinkley said he was sure the center would eventually get the funding it needs. Meanwhile, he said, administration officials have concluded that they can reopen the Annapolis police barracks with as little as $500,000 to start with — and plan to find the money to do so — though added funding for roof repairs and other upgrades might be needed later.
Donald F. Norris, director of the School of Public Policy at the University of Maryland, Baltimore County, said the friction between the governor and legislative leaders was "a lot of hoo-ha about nothing," as the money at stake is a relatively tiny portion of the overall state budget.
"I suspect a lot of this is symbolism ... political wrangling to make a point," Norris said. Stressing that he thought both sides had at least some "moral high ground" to their arguments about education funding and shoring up pensions, he suggested that they could easily have struck a compromise.
That the budget disputes of April are lingering suggests that trust is in short supply between the governor and legislative leaders. If that continues, Norris said, it could presage more serious conflicts. He recalled the running disputes that former Gov. Robert L. Ehrlich Jr., the last Republican chief executive had, with Assembly Democrats.
"It could take us back to the Ehrlich days, when they did nothing but fight," Norris said. "And one would hope that is not the case."