Urgent action in Annapolis

November 18, 1992

When Gov. William Donald Schaefer called for a special General Assembly session, there was only one pressing issue on the table: a deficit-reduction plan to end a $147 million local subsidy that pays Social Security costs for teachers and librarians. But as legislators start their emergency meeting today, a second pressing issue has been added -- dealing with a court ruling that could deflate a mini-boom in the state's retail economy.

Lawmakers from Montgomery and Prince George's counties are resisting the cutback in local aid for parochial reasons: They stand to lose the most money. That is an understandable concern. But no subdivision gains anything in this proposal. All local governments must take fiscal hits to help get the state's budget books back in balance.

Eliminating the Social Security payments is a logical step. The local subsidy is inequitable because richer counties get the most money. And the state cannot control costs: As more teachers are hired and salaries are raised, the state's bill rises. In just eight years, the cost will be $250 million.

Local governments should be responsible for Social Security payments, since they approve higher teacher pay and larger instructional staff. They can control these costs; the state cannot. The Maryland Association of Counties supports this realignment of government functions, reluctantly, to avoid harsher cuts in other local programs.

Montgomery lawmakers are leading the opposition. They have plotted delaying actions. They are threatening to retaliate against Baltimore City next year -- though the city has had little to do with the Social Security plan. They came up with a compromise proposal recently, but it was too late for legislative leaders to consider before the special session. The die has been cast.

Lawmakers should not go home without also dealing with a second matter. A Court of Appeals ruling has thrown into doubt millions of dollars worth of consumer loans. As a result, banks and retail merchants could shut off credit to customers till this legal uncertainty is resolved.

That would prove devastating. Retail sales in Maryland have been picking up since late August -- the first sustained uptick in three years. Merchants are now entering the most important shopping time of the year. A cutoff of consumer loans could stagger the state's economy.

Legislators cannot allow that to happen. The impact of the court ruling should be delayed until next fall, giving the Assembly time to devise a sensible solution. The governor supports such a move. A successful holiday shopping season is in everyone's best interest -- especially a deficit-ridden state government.

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