ANNAPOLIS IS seized by bickering between Democratic lawmakers and Gov. Larry Hogan (R) over relatively minor tweaks to the state’s $16 billion budget. Mr. Hogan wants small and mainly symbolic tax cuts; the Democrats prefer to direct the cash to state workers and public school teachers.
The squabbling involves roughly $200 million, a sum that amounts to little more than 1 percent of general fund spending. Meanwhile, both the governor and the legislature’s grandees seem to have struck a tacit agreement to remain closed-mouthed about a much bigger problem: a $20 billion shortfall in the pension fund for retired state workers.
It is a willful act of denial, and a blatant act of bad governance, to wrangle over a 2 percent pay raise for current public employees while ignoring a $20 billion problem on the not-very-distant horizon.
What makes it even more unforgiveable is that Mr. Hogan, in particular, promised an end to budgetary gimmickry when he took office earlier this year. Yet it was scarcely a matter of weeks before he accepted, with barely a peep, a raid by lawmakers of the state’s annual contribution to the pension fund — a raid that the legislature’s own chief analyst said would impose an “eye-popping” debt on Maryland taxpayers.
The General Assembly shares equal blame. Just four years ago, at the behest of then-Gov. Martin O’Malley (D), legislators agreed to patch the pension shortfall with an annual cash infusion of $300 million. Last year, lulled by a rising stock market that made the pension gap look more manageable, they took back half that annual allotment. Now they’ve reached into the cookie jar again, slashing annual contributions to the fund to just $75 million and diverting the cash to reverse proposed cuts by Mr. Hogan.
The trouble is, the pension hole remains; it cannot be wished away by what amounts to a conspiracy of silence. Wall Street analysts have warned Maryland officials about it, repeatedly. By some measures, including one used by the bond-rating agency Moody’s, Maryland’s pension burden is the seventh-highest among the 50 states. And while six years of rising stock prices has fattened the pension fund’s bottom line, a market correction — not exactly a far-fetched scenario — would quickly revive talk of a crisis.
The stakes in the current quarrel in Annapolis are small potatoes — tax cuts, favored by Mr. Hogan, that would save some first responders and retired military personnel enough to buy a few modest restaurant meals; raises for state employees, favored by Democratic lawmakers, that would provide only a little more.
Weigh that against the stealthy raid on the pension fund now underway, which would saddle Maryland taxpayers with an additional $2.5 billion in long-term costs to fix the problem. How is that responsible governance?