The effort to reduce Maryland's burgeoning pension costs by cutting benefits of state employes, stalled because of labor union pressure, reemerged today after intense lobbying and a personal appeal by Senate President Melvin A. Steinberg.
The bill, which would force some 75,000 state workers and local school teachers into a lower benefit pension system set up four years ago, was approved by a 5-to-3 vote of the Senate Finance Committee.
Just a day earlier the committee lineup on the measure appeared to be 4-4, which would have meant its defeat. But Senate President Steinberg, the chief sponsor, was able to convince a member of the opposition party, Sen. Howard A. Denis (R-Montgomery), to support him.
"He said, essentially, that it was his A-number-1 priority," Denis said. "He said it would materially hamper his ability to function as a leader."
Denis said he was unsure how he will vote on the bill when it gets to the floor of the Senate, probably on Thursday.
Lobbyists for the state employes and local school teachers said they would try to kill the measure in the full Senate or in the House, where the pension-cutting fervor has been extremely muted.
"This is only the first round," said Joseph Adler, lobbyist for the Maryland Classified Employees Association. "We'll take it to court" if the legislature approves the measure and Gov. Harry Hughes agrees to sign it.
The vote likely ensures a replay of a 1978 battle when the legislature, hearing similar warnings of potential bankruptcy caused by an unlimited cost-of-living provision in the pension plan, first tried to change the system.
Labor unions took advantage of election year skittishness to kill any changes that year. But in 1979, the assembly approved a new system that capped the cost-of-living adjustment at 3 percent and provided benefits for new state workers that were substantially less than in the old system. The legislature put in writing that it would not try to eliminate the existing pension system of long-time state employes.
Steinberg and other supporters of the new bill said those assurances of four years ago were well intentioned, but that times are different now. Pension costs have gone up much more dramatically than predicted in 1979, taking up about 10 percent of the state's general funds. Over the next 40 years the state is expected to owe retirees about $5 billion.
Hughes had to put an additional $133 million in his fiscal 1984 budget to cover pension costs, although more than half of that amount is expected to be one-year nonrecurring costs.
Despite these figures, Hughes, the House leadership led by Speaker Benjamin L. Cardin, and the state retirement board have all been hesitant to endorse revamping the pension system, mostly because state-hired pension analysts say they need more time to study the system before suggesting ways to save money.
It is this hesitancy that stalled the effort until today, when Steinberg met with the leadership of the Senate and won agreement that the issue should be dealt with.
"The feeling was that it's important, let's go with it," said Sen. Thomas V. Mike Miller (D-Prince George's). "The pressure then will be on the House."
Union officials said that with Steinberg backing the measure they expect it to win approval in the Senate, but that in the traditionally more prolabor House, it would be a different story.
Key delegates say Cardin has made it clear he does not expect a pension bill to make it through the House.
The measure proposed by Steinberg would effectively end the old retirement system as of July 1 and calculate benefits earned after then under the new, cheaper program. Benefits accrued before then would still be calculated under the old formula.
Future benefits would be reduced an average of 15 percent but would be entirely paid by the state. Employes would save 5 percent of salary they now contribute under the old pension plan, and workers with at least 25 years of service could retire within six months of enactment of the new plan without penalty.