Md. budget would tip balance of power, giving state more say in education

The budget that Maryland’s Senate could approve this week has garnered attention for shifting pension costs and hiking income taxes to correct an imbalance left from the Great Recession.

Embedded in the plan, however, is an even more fundamental change to the way government works in Maryland.

Following a directive set out by Gov. Martin O’Malley (D) to protect school funding, the spending plan would consolidate power in the hands of the state’s chief executive and legislature.

The state would assume authority to seize county tax revenue and to hand it directly to school boards to ensurethat counties maintain what areamong the nation’s highest levels of per-pupil spending.

To prevent such an outcome, the legislature would first authorize county leaders to raise more tax revenue from businesses and to even toss out local, voter-approved tax caps.

The battle in Maryland reflects growing tensions nationally between local and state governments over scarce resources and rising education costs. But the reach of the plan devised by Maryland Democrats is unique and has drawn howls of protests.

County officials — even other Democrats — say the spending plan reflects a troubling encroachment on local government and will tilt the balance of power in Maryland more sharply toward Annapolis.

Coming on the heels of O’Malley’s efforts to punish counties that do not comply with state guidelines on development and the environment, the forceful move to mandate local levels of school funding could further expose the governor to complaints of liberal overreach.

“This is a fundamental usurpation of local government’s most basic function, which is to balance the needs of all the services that it provides,” said Montgomery County Council President Roger Berliner (D-Potomac-Bethesda). “If you go too far, you create a context in which the school system is now at war with every other part of local government.”

As the plan was made public Thursday evening — minutes before an initial vote by the Senate’s budget committee — officials from Montgomery and other counties sat in the audience stunned, they said, by a new mechanism for locking in education spending, which can often amount to more than half of a local government’s total budget.

They warned that the measure would undermine counties’ financial independence and could tie council members’ hands as they try to balance the needs of their communities in tough economic times.

Officials from Montgomery — which has had a hard time in recent years meeting state mandates on school funding — said they were concerned that the plan could torpedo the county’s credit rating. Wall Street bond raters, they said, could view the county as unable to make firm commitments on debt if the state is able to intercept its tax revenue at will.

Complicating such arguments, however, was this: Senators from Montgomery are leading the charge to pass the legislation.

“This is about protecting our investment in education,” said Sen. Richard S. Madaleno Jr. (D-Montgomery), chairman of a subcommittee on education funding. “This actually encourages the counties and school boards to work together more cooperatively; to make sure we have long-term solutions to long-term problems.”

O’Malley’s original budget proposal — which would shift half of rising teacher pension costs to counties — came with instructions that the General Assembly make it harder for counties to cut classroom spending.

The two goals merged in recent weeks in a budget proposal intended as a fix-all for education funding, which has been a point of contention between state and county leaders for nearly a decade.

Like other states, Maryland has for many years picked up an ever-greater share of the tab for education, in large part to make funding more equitable between rich and poor school systems.

Maryland, however, has gone further than most. Under a 2002 law, it has more than doubled yearly spending on elementary and secondary education, to $5.8 billion. That spending now accounts for 37 percent of the state’s total general fund budget and, according to the state, is more than all 23 counties spend on education combined.

The major sore point in the state-county split has been another state mandate, known as “maintenance of effort,” which requires local governments to provide public schools with at least as much per-pupil funding as they did the year before.

With local governments facing budget pressures, Montgomery and six other counties have recently taken advantage of a loophole to lower the amount they are obligated to contribute to schools.

Montgomery reduced its share of per-pupil funding to $9,759, from $11,249 in 2009.

Under a component of the budget plan that the Senate could vote on this week, there would be no way around such a reduction without obtaining a waiver from the state. And any long-term reduction would require the blessing of the state Board of Education, controlled by appointees of the governor.

To prevent matters coming to such a head, the budget makes clear that it expects counties to raise taxes if needed to make sure the overall level of combined state-county funding keeps per-pupil spending at least constant.

The bill would allow Maryland counties, which already have among the most liberal taxing power in the country, to go beyond existing caps on property taxes to raise money for schools.If a county did not meet or exceed the previous year’s funding for classrooms, the state could seize a share of the income tax levied by the county and redirect it to the school board.

The Senate proposal would have no direct budgetary impact in the coming fiscal year, and it would forgive Montgomery for recent curbs on school funding. Counties, however, would begin to be responsible for a share of teacher pension costs and could not count most of those costs toward its maintenance-of-effort requirement.

In all, the plan would add new state powers to funding requirements that are already among the most demanding in the region. In Virginia, for example, the state requires a basic level of funding for schools that is so low that many counties greatly exceed it.

Doug Prouty, president of the Montgomery County Education Association, the county’s teachers union, said the Senate’s approach would give schools some assurance each year that they wouldn’t be facing last-minute budget cuts.

“Clearly, we are not on the same page as the County Council,” he said. “We want this bill to be passed. We think this bill is important,” he said.

That sentiment was echoed by the Maryland State Education Association, which called the Senate plan a “bold package.”

Teachers have been among O’Malley’s biggest political backers, but O’Malley spokesman Rick Abbruzzese disputed any suggestion that the state was using a heavy hand to aid one of O’Malley’s allies. “The fact of the matter is, this is money that should be going to schools in the first place,” Abbruzzese said.

The prospect of local property-tax caps being undone to accomplish that goal, however, does not sit well in Prince George’s, where voters have overwhelmingly supported such a restriction.

“We have a voter-imposed tax cap and the legislature is going to come in and overturn it,” said Sen. Douglas J.J. Peters (D-Prince George’s), who unsuccessfully sought to strip that provision out of the bill, though he ultimately voted for the budget plan Thursday.

Judy Robinson, a staunch supporter of the county’s tax cap, said the General Assembly is trying to undermine the counties’ charter form of government. “They are deliberating bypassing local law and going against the will of the people,” said Robinson, who worked against then-County Executive Wayne K. Curry’s effort to repeal the cap 16 years ago.

Todd Eberly, an assistant professor of political science at St. Mary’s College, said such criticism could come back to haunt O’Malley.

“The governor is going to be labeled with this, well, ‘nanny state,’ is a good way to say it,” Eberly said. “I think people will look back and say that under O’Malley, more and more power flowed back to Annapolis.”

Staff writer Ovetta Wiggins contributed to this report.

Aaron Davis covers D.C. government and politics for The Post and wants to hear your story about how D.C. works — or how it doesn’t.
Michael Alison Chandler writes about schools and families in Northern Virginia.
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