Allies, foes of mayor swap roles over loan

O'Malley's schools plan praised by labor, activists

business leaders worry

March 15, 2004|By Laura Vozzella | Laura Vozzella,SUN STAFF

Martin O'Malley has some new best friends. And some worried old ones.

The mayor, whose hard-nosed financial decisions over the years have made him the darling of business leaders and the nemesis of unions and activists, saw his fans and critics swap places last week as he offered to bail out Baltimore schools with a $42 million loan.

The scrappy community organizers who just months ago lugged a frozen Butterball to City Hall for the man they deemed the town's top turkey are looking forward to sitting down with their new champion on the second floor. Compliments are coming from the union head who once lobbed his version of the ultimate insult - Republican - on the mayor of Democratic Baltimore.

But business leaders, who have cheered O'Malley for reducing the city work force, outsourcing municipal jobs, and closing libraries and fire houses, are worried about what they see as a hasty effort to rescue the city schools that, in turn, would drain the city's rainy day fund. It's a move that is likely to lower Baltimore's bond rating.

O'Malley shouldn't rework his Christmas card list just yet, however.

"In politics, there's just issues. There's no permanent friends," said Glenard C. Middleton, president of the American Federation of State, County and Municipal Employees Local 44, which represents about 1,300 school system employees, including food service, grounds crew and maintenance workers, and bus drivers.

O'Malley can count Middleton among his admirers for the time being because the city bailout, which includes a $42 million loan, replaces a similar state loan that would have resulted in a virtual state takeover of city schools - and also would have given Annapolis authority to break union contracts.

"I believe that the mayor has done the right thing for the students and the citizens of Baltimore and the workers," Middleton said. "He's done the right thing as a leader."

This from a man who in June 2002 said O'Malley, a Democrat, qualified for membership in the GOP for contracting out hundreds of city jobs.

The turnabout is all the more remarkable because O'Malley supported hundreds of school layoffs in November. And, just weeks ago, O'Malley backed a plan that included a 3.5 percent pay cut for teachers. After teachers rejected the cut, killing the deal, O'Malley agreed to a plan from Gov. Robert L. Ehrlich Jr. that would have given the state power to tear up the teachers contract.

But in a surprise twist March 8, O'Malley spurned the state's offer of its own $42 million loan and came up with the money from the city's rainy day fund. The mayor has warned that his plan will cause "pain," which could mean teacher layoffs or salary concessions. But for now, he is a hero to labor - and a concern to business leaders who fear he yielded to union pressure and won't back needed job cuts to reform the school system.

The move won over members of the community group ACORN, who in November named O'Malley "Turkey of the Year" for praising school system layoffs. Members have long been at odds with the mayor, who they said put too much money into policing and not enough into communities. They once staged a demonstration outside the mayor's house to protest blighted neighborhoods.

After the school loan emerged, ACORN set up a meeting with O'Malley to talk about common ground on a range of city issues. It is scheduled for Friday.

"ACORN as a group realizes we cannot change the culture of the city without the assistance of our elected officials. The mayor is the mayor," said Jacquiline Johnson, an ACORN member and grandmother from Edmondson Village who described herself as "ecstatic" with O'Malley's plan.

The city's business community has been less enthusiastic about the loan offer, which already has led one New York bond-rating agency to threaten a downgrade and two others to investigate. The move - which could be approved by the Board of Estimates on Wednesday - would reduce the rainy day fund from $56 million to $14 million.

Several prominent business leaders who have supported O'Malley in the past have expressed concern, particularly because just hours after the loan was proposed Monday, the City Council approved it and O'Malley had legislation for the state bailout pulled.

Adding to the impression that the plan had a seat-of-the-pants quality was council members' confusion about it. They acted on the mistaken belief that the loan could not affect the bond rating and that it was just a backup in case the state plan failed in Annapolis. And council members didn't realize they were turning down $42 million in potential state aid.

Among those expressing "trepidation" is Donald Fry, president of the Greater Baltimore Committee, a business group that issued a report on the schools' finances in July.

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