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Senate Approves Gradual Teacher Pension Shift, Counties Still Wary

The Senate recommends a four-year plan to gradually shift teacher pension costs to counties.

By MIKE BOCK
Capital News Service

ANNAPOLIS- Breaking with Gov. Martin O'Malley's proposal for an immediate $239 million teacher pension shift from the state to counties, the Senate recommended a gradual, four-year plan in a budget vote Thursday.       

The debate over the pension shift now moves to the House, where members such as Delegate Heather R. Mizeur, D-Montgomery, and Delegate Aisha N. Braveboy, D-Prince George's, said a decision is not likely to be made right away. Mizeur said the Education and Economic Development subcommittee, of which she is the vice chair, will discuss the Senate plan on Friday.

Currently, the state pays all of the pension funds for public school teachers. In January, O'Malley proposed a 50-50 cost split between the state and local governments for teacher pensions starting next year.

The Senate's budget plan not only phases in the shift over four years, but provides a number of ways for counties to mitigate the impact.

But delegates and county representatives still aren't quite on board.

"I don't support the shift, it's not something I think we have to do," Braveboy said Thursday. 

"However, if that is the direction that the state is moving in ... we have to ensure that it won't impair local governments from performing other essential functions," said Braveboy, who is vice-chair of the Legislative Black Caucus.

County leaders agree, but may be softening their positions.

"It's progress in the right direction, at least," said Thomas Himler, deputy chief administrative officer of Budget, Finance and Administration for Prince George's County. Himler expressed concern over the projected rising costs of teacher pensions, and said he didn't think the current plan would give counties enough ways to offset the burden for the long term.

"We're all waiting to see what the House will do with it," he said.

Anne Arundel County Executive John R. Leopold is still opposed to county governments absorbing teacher pension costs, but said in a phone interview that, "It appears that the state is intent on shifting the costs."

County leaders like Leopold have expressed concerns that the pension shift will place too much of a financial burden on already-straining governments.

Local governments will need to work closely with delegates before the budget passes, said Michael Sanderson, executive director of the Maryland Association of Counties.

"Because there are so many details left to be worked out, counties are wise to want to remain part of the budget discussion," he said. 

The Senate's pension plan would allow counties to pay for the shift using a combination of new taxes, reallocated funds and an elimination of certain payments owed by counties to the state.

The Indemnity Mortgage Recovery Tax will allow counties to tax land developers who take out a mortgage when they buy property, and should allow local governments to raise almost $40 million in the next fiscal year.

In addition, the state will also eliminate the payment plan for the Local Income Tax Reserve, a loan that counties received to help pay for various unexpected tax refunds two years ago.

Some local jurisdictions, such as Baltimore, Prince George's County and Wicomico County, will also be able to offset pension costs with state funding from the Maryland Disparity Grant, which is determined by the amount of money a county can generate through income tax revenue.

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