$147 million to be slashed in special session State wants to stop tax payments for local governments

October 15, 1992|By Marina Sarris | Marina Sarris,Staff Writer Staff writer William F. Zorzi Jr. contributed to this article.

State legislative leaders and Gov. William Donald Schaefer agreed yesterday to convene a special legislative session next month to slash $147 million in aid to local governments.

The cuts -- equivalent to the amount the state pays in Social Security taxes for teachers, librarians and community college professors -- were certain to provide yet another round of budget conflict.

They were denounced immediately by Jane R. Stern, president of the 37,000-member Maryland State Teachers Association. "This is a terrible idea and represents a further backing off by the state on payment of education costs," Ms. Stern said.

But House Speaker R. Clayton Mitchell Jr. maintained, "This is not an education cut. It's a cut in fringe benefits we've been picking up for years for the locals."

Under the plan, the state would stop paying the employers' portion of Social Security taxes for the educators and librarians who are hired -- and whose salaries are determined -- by the 23 counties and Baltimore City, and permanently shift the responsibility to local governments.

Since the budget year is already under way, the local governments would lose an amount of money equivalent to the payments and can make up for the loss any way they see fit. But starting July 1, they would have to take over the Social Security payments.

Mr. Mitchell, House leaders and key senators met privately with Mr. Schaefer in Annapolis yesterday and reached consensus on the cuts, which would be the last in a series of reductions needed to eliminate a $450 million budget deficit this fall.

Several county government leaders have already said they cannot afford to lose more than $94 million during this round of budget cuts.

"We're being asked to bail out the state because it does not have a financial plan of its own," charged Prince George's County Executive Parris N. Glendening. "I would say this is a very major direct attack on education. Anyone who supports education cannot go along with this plan."

Prince George's would lose $21.2 million. The biggest loser would be Montgomery County, which has $26.6 million at stake.

In the Baltimore region, the biggest cut would come from Baltimore County, at $19.1 million, followed by the city, $18.8 million; Anne Arundel County, $14.4 million; Howard County, $6.9 million; Harford County, $5.9 million, and Carroll County, $4.1 million.

Unlike other methods that the state uses to calculate its aid to local governments, the Social Security formula favors the wealthier jurisdictions that pay higher salaries, such as Montgomery County. Not surprisingly, Montgomery lawmakers are expected to oppose the plan.

The $147 million cut comes on top of two others the state has made to local budgets since July 1. The first two totaled $57 million, bringing the grand total to about $204 million in cuts.

Taken all together, the city of Baltimore and Montgomery and Prince George's counties stand to lose more than $30 million each this year if the legislature approves the latest plan.

Baltimore Mayor Kurt L. Schmoke said he hoped the state would take into consideration that the city received the biggest hit -- $8.5 million -- in the last round of cuts in September.

"I hope the state will give us credit for that" and reduce the city's share, Mr. Schmoke said.

If not, the proposal could mean pay reductions for city employees and layoffs, he said.

Mr. Mitchell said it won't be easy to round up the votes for the cuts, but he believes it can be done.

Many legislators, along with Mr. Schaefer, have complained for years about the state's practice of making the payments for local governments. State government has no control over local decisions to increase teacher hiring and salaries, they said, but ends up paying the higher Social Security costs anyway.

Senate President Thomas V. Mike Miller Jr. noted that his home county of Prince George's gave teachers a pay raise while the state government was laying off its workers and freezing salaries.

"The responsibility for Social Security payments, which are driven by policies and decisions of the counties, should be paid by the counties," Mr. Miller said.

The special legislative session to vote on the plan is expected to begin shortly after the November election.

One county executive, Robert R. Neall of Anne Arundel, said he supports the idea -- which he happened to propose weeks ago himself -- and believes Arundel can absorb its share without disruption to services.

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