Maryland budget plans diverge on cutting shortfalls

By Aaron C. Davis
Sunday, April 4, 2010

Maryland's House of Delegates on Friday approved a nearly $32 billion spending plan that rejects key provisions of the budget passed last month by the Senate to make local governments pay a greater share of teacher retirement, road construction and other costs.

The move sets up a confrontation to reconcile the two spending plans in committee before April 12, when the General Assembly adjourns.

Most of the battle between the two chambers will center on local governments' responsibility in coming years to help keep the state's $13.2 billion general fund solvent and whether Maryland has an adequate plan to address long-term budget problems.

With few exceptions, the House and Senate agreed to close next year's $1.9 billion shortfall by following the proposal of Gov. Martin O'Malley (D) to continue cuts made last year and use roughly $1 billion in borrowing and other one-time fixes for the remaining gap.

O'Malley's budget proposal in January left shortfalls of roughly $2 billion each year through 2015, according to the state's nonpartisan legislative analyst. To begin to bring long-term spending and revenue in line, the Senate took a harder line than the House on beginning to push some costs onto counties.

The plan approved last month by the Senate would in 2012 require local boards of education, community colleges and libraries to begin setting aside 1 percent of teachers' and librarians' payroll costs for retirement. That percentage would increase until 2014, when counties would be responsible for paying about half of the expected $1 billion in annual costs.

The House voted against that plan, saying it should consider a more comprehensive overhaul in the future. The House also chose to return hundreds of millions of dollars in highway construction funds to counties in coming years, and on Friday it adopted a provision to ease the pressure on county budgets this year by letting them take cash advances on projected local income-tax revenue.

The House version would lower the state's projected shortfall to $1.9 billion in 2015, from $2.2 billion under O'Malley's plan, but falls well short of the Senate version, which would drop the shortfall that year to $1.1 billion.

The House and Senate must also reconcile whether to withhold money from the University of Maryland's environmental law clinic, pending a report on a student group's lawsuit filed against a small chicken farmer tied to Perdue Farms.

The Senate wants to delay funding; the House does not.

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