Troubled General Assembly Agenda

November 17, 1992

When state lawmakers convene tomorrow in special session, they should promptly enact two troublesome measures: a deficit-reduction plan that halts an open-ended subsidy to local governments to cover Social Security costs of school and library workers, and a bill delaying the impact of a court ruling that could slam the door on consumer lending in the crucial holiday shopping season.

With the state facing another huge budget gap, local aid has to be reduced. Legislative leaders and the governor have reached an unusual consensus on eliminating the Social Security subsidy. It is an inequitable program that rewards wealthier subdivisions more than poor counties. And most alarming, the state has no way of controlling these costs: the price tag to the state rises as local school boards hire more teachers and raise salaries.

It makes far more sense to have local governments pay Social Security costs for teachers. If they want to raise the pay of teachers, local officials should be responsible for the higher Social Security expenses, too.

With the state drowning in red ink, this cutback in local aid is imperative. It will save $147 million immediately, $174 million next year and $185 million the following year. Reluctantly, the Maryland Association of Counties has signed on, believing this is the least objectionable proposal for local governments. Only Montgomery County and some legislators from Prince George's County remain opposed. They take the biggest hits. But every county as well as Baltimore City will lose millions. No one emerges a winner.

A last-minute alternative from Montgomery and Prince George's legislators aims to soften the blow. But a majority of lawmakers has already lined up behind the original plan. Threats of political retribution from Montgomery lawmakers against Baltimore City aren't likely to change the outcome, either. Besides, the city neither generated the notion of the subsidy cut-off nor pushed for its adoption. It is reluctantly going along with the cuts, which will cost the impoverished municipality $16 million.

Once lawmakers vote to end the Social Security subsidy, they have to handle an urgent business matter, too: a recent court ruling threatens to ruin Maryland's retail economy in the key Thanksgiving-Christmas season. Banks, savings & loans, credit unions and merchants may stop lending to consumers because of this judicial decision.

This is a complex issue whose implementation the abbreviated General Assembly session should put on hold until next fall, thus giving itself time to come up with a practical solution. Otherwise, hopes for the first bright holiday retail season in three years could turn bleak. The implications for merchants, and for state sales-tax collections, are deeply troubling.

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