-Gazette.net / Daniel Leaderman, Staff Writer
County officials say a revised proposal to gradually shift part of the cost of teacher pensions from the state to counties is better than the original plan to do it all at once, but has lots of room for improvement.
“It’s definitely a better approach than what was initially proposed,” said Thomas Himler, Prince George’s County’s deputy chief administrative officer for budget, finance and administration. He added there still were some outstanding concerns about proposed offsets to the costs.
The Senate Budget and Taxation Committee voted Thursday to approve a plan to phase in the shift across four years. Gov. Martin O’Malley’s proposed fiscal 2013 budget, released in January, sought to cut a $1.1 billion structural deficit in half, in part by shifting about $240 million of the $946 million total cost of teacher pensions to counties.
The plan was denounced by many county leaders, who said their jurisdictions would not be able to absorb the additional cost.
Currently, the state pays the entire cost of the pensions, while the counties foot the Social Security costs.
Under the committee’s plan, the cost to county school boards would be $68.3 million in fiscal 2013 and $254.8 million by fiscal 2016. The costs would be offset in part by state aid, including the closing of a loophole in the state’s recordation tax, expected to generate $39 million in revenue.
Such a measure might generate revenue in the short term, but ultimately wasn’t sustainable, Himler said.
Himler’s concerns were echoed by Craig Whiteford, Cecil County’s budget manager, who said although the committee plan was an improvement on the governor’s budget, those affected by the modified recordation tax likely would find a way around it.
Himler said he was pleased with some of the other proposed offsets from the state, such as disparity grants, where additional state funds are given to jurisdictions with low income tax yields, and police aid.
Montgomery County leaders are concerned county governments effectively would be responsible for the entire “normal cost” of pensions. The normal costs are the retirement costs of active employees, not including unfunded liabilities, according to budget documents.
In a joint letter to the Montgomery’s General Assembly delegation, County Council President Roger Berliner (D-Dist. 1) of Potomac and County Executive Isiah Leggett (D) said that cost should be shared evenly between the local governments and the school boards as a “modest incentive” for school boards to control pension costs. The county governments should pay their half directly to the state, according to the letter.
But on the whole, the committee’s plan is more palatable than the governor’s, said Francis Jack Russell (D), president of the St. Mary’s Board of County Commissioners.
“Do we like it? No. But we’re going to deal with it,” Russell said.
