O'Malley says he won't propose shifting teacher pension costs to counties

By John Wagner
Washington Post Staff Writer
Thursday, January 6, 2011; 10:04 PM

CAMBRIDGE, MD. - Maryland Gov. Martin O'Malley (D) assured a gathering of county leaders here Thursday that he will not propose making local jurisdictions shoulder a portion of teacher pension costs in the coming year.

The issue of which level of government picks up educator retirement expenses is certain to be among the most thorny when the General Assembly reconvenes in Annapolis next week for its annual 90-day session.

With the state facing a budget shortfall of about $1.3 billion next year, many lawmakers are pushing to change the long-standing arrangement in Maryland under which the state covers the entire cost of local educators' pensions.

"While other elected leaders may well offer other approaches, the balanced budget proposal I submit to the General Assembly later this month will not propose pension costs this year onto the counties," O'Malley said, drawing a standing ovation at a dinner that was part of the winter conference of the Maryland Association of Counties.

In his remarks, O'Malley cautioned that his budget proposal will contain many painful cuts and that other reforms to the pension systems for state workers and teachers will be needed to make them sustainable for the long term.

"The only thing I can guarantee you about this budget is that no one will be happy," O'Malley said.

The governor's budget advisers had recommended he consider shifting 40 percent of teacher pension costs to the counties - a move with the potential to save the state more than $340 million a year. But such a move would also exacerbate budget problems on the local level.

Under options presented by O'Malley's advisers, such a shift would cost Montgomery County as much as $96 million a year and Prince George's County $50 million a year.

The state Senate advanced a similar proposal last year, but leaders of the House of Delegates balked at the idea. A state commission has since endorsed a move in that direction, increasing momentum for a shift in costs heading into the legislative session.

Leaders of both the House and Senate are scheduled to address the gathering of county officials Friday morning.

County leaders expressed relief upon hearing O'Malley's pledge not to shift teacher pension costs.

"He appreciates the tough times we've been under," said Howard County Executive Ken Ulman (D), the new president of the county organization. "Having a governor who comes out of local government is very important."

Ulman acknowledged that O'Malley's support was only part of the battle ahead in the legislative session.

"There's going to have to continue to be some education and dialogue with the General Assembly," Ulman said. "Shifting is not solving the challenge."

O'Malley mentioned several "principles" he would advance in reforming the pension system.

Those, he said, include maintaining a public system, asking for greater contributions from state workers and teachers, and establishing certain "milestones" to determine the need for additional changes.

"If is my belief that we cannot have an honest conversation about sharing costs, or even the need to share costs, until we reach agreement on how we can fix the pension system," O'Malley said.

The issue of shifting pension costs is one that does not break cleanly among partisan lines. The leading advocate in the legislature has been Senate President Thomas V. Mike Miller Jr. (D-Calvert).

On Thursday night, House Minority Leader Anthony J. O'Donnell (R-Calvert) praised O'Malley's position.

"It's a rare occasion when I happen to be in agreement with the governor," O'Donnell said, suggesting a shift in the coming year would force local governments to raise taxes.

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