Lawmakers seek end to Angelos case

$120 million would be available if dispute over fees is settled

March 05, 2002|By David Nitkin | David Nitkin,SUN STAFF

With a deadline for deep budget cuts rapidly approaching, some lawmakers in Annapolis are growing hungry for a tantalizing $120 million fund that would be available if Maryland and attorney Peter G. Angelos settle a dispute over tobacco-case legal fees.

Lawmakers who meet with Gov. Parris N. Glendening are increasingly asking him to resolve the tobacco case, aides to the governor say. Angelos argues that he deserves at least $1 billion, while a national arbitration panel has recommended a $132 million fee.

The matter is scheduled to go to court in May. Until the dispute is over, a judge has ordered that 25 percent of the state's share of the national tobacco settlement be placed in an escrow account, which will exceed $120 million next month.

FOR THE RECORD - An article in the Maryland section yesterday incorrectly stated the amount of money a state Senate subcommittee has recommended cutting from the governor's proposed budget for historically black colleges and universities. The proposed cut is $2.6 million. The Sun regrets the error.

At least some of the money would be available for state programs once a resolution is reached.

"I've been encouraging [the governor] to get it settled," said House Speaker Casper R. Taylor Jr. "It will clearly help us with our recessionary problems."

For lawmakers contemplating how to balance next year's $22.2 billion budget while paying for the final stage of a 10 percent income tax cut, the escrow account is a tub of mortar that could fill any number of holes.

Legislators would love to rule out some of the less palatable options they are considering, from significant cuts to environmental programs to a plan to borrow $50 million from an automobile insurance fund.

Yesterday, a Senate budget subcommittee agreed to recommend cutting $31 million from the University System of Maryland and $26 million from the state's historically black colleges.

"I think the governor knows we'd like to see it settled," said Del. Howard P. Rawlings, chairman of the House Appropriations Committee. "We have legislation that would take the money and put it in the rainy day fund."

Michael Morrill, a spokesman for Glendening, said the escrow fund is a hot topic of conversation in private meetings.

"Yes, there are a lot of legislators who see this as a help in what they see as a budget crisis," Morrill said. "That's not the best way to view it, or the way the governor views it."

Use for tobacco funds

Glendening believes tobacco funds should be spent on continuing anti-smoking and cancer-fighting programs, not as a one-time fix in a tight budget year, Morrill said.

The strategy over when to settle the case, and for how much, has evolved into a high-stakes chess match.

Late last year, Angelos offered to end the dispute for $250 million paid over six years. Glendening did not immediately accept, so Angelos employees briefed lawmakers on the deal. Some of them tried to persuade the governor to accept the offer, but talks stalled in the glare of publicity.

State lawmakers are scheduled to adopt a budget by April 1, so Glendening must reach an agreement with Angelos by then for maximum influence on how the funds are spent.

As the budget decisions proceed, it's unclear how close the Baltimore Orioles owner and the state's chief executive are in their negotiations.

Since December, "there has been no response from the governor's office," said John A. Pica Jr., a former state senator who is a lawyer and lobbyist in the Angelos firm. But the governor's office describes the talks as cordial and continuing.

A key point

A key sticking point, according to those familiar with the talks, is the amount of time Maryland gets to pay the fees. Because inflation erodes the value of money over time, Angelos' offer to accept payment over six years is worth more than the same amount paid over 10 or 20 years. The national arbitration panel's award would be spread over at least two decades.

As legislators clamor for the money, they are giving a lame-duck governor more influence over the budget process.

Because Glendening - and not lawmakers - will decide if Maryland will agree to end the dispute, the governor can use his authority to make sure his priorities remain in the spending plan. If he doesn't like the shape the budget is taking, he could threaten to delay a settlement.

`We'll survive'

Senate Budget and Taxation Chairwoman Barbara A. Hoffman, for one, is not relying on an imminent release of the escrow fund.

"If we get it, it would be nice, but if we don't get it, we'll survive," she said. "When I spoke to the governor, I got the sense a deal was doable quickly. And that's not what I'm hearing from the other side."

In Annapolis

Today's highlights

10 a.m. Senate meets, Senate chamber.

10 a.m. House of Delegates meets, House chamber.

1 p.m. Senate Judicial Proceedings Committee, hearing on drunken driving bills, 2 East, Miller Senate Office Building.

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