Committee reaches tentative deal on $13.2 billion budget

$13.2 billion plan restores bay cleanup money, idles shifting of teacher pensions to local government

April 08, 2010|By Annie Linskey | annie.linskey@baltsun.com | Baltimore Sun reporter

The House and Senate members of a conference committee reached a tentative deal on the state's $13.2 billion spending plan Thursday morning, signing an agreement that restores funds to clean up the Chesapeake Bay and keeps the costs of teacher pensions on the state's ledgers.

"The budget is balanced," said Sen. James E. DeGrange Sr. "We would have liked to do more. All in all, there were a lot of items where we reached consensus."

The trims approved make no major changes to the plan that the governor submitted, but in future years, lawmakers project smaller increases to education and local aid funding. A small group of lawmakers from the House and the Senate have been meeting all week to reconcile differences between the budget plans approved by each chamber.

Gov. Martin O'Malley in January submitted a budget that closed a $2 billion shortfall by cutting roughly $1 billion and using a one-time measure like fund transfers to make up the rest. Previously, the conference committee agreed to cut 500 executive branch positions and funding to the arts counties with horse racing tracks.

Still, the plan is projected to leave the next legislature with another shortfall, which has drawn criticism from Republicans. "This budget will guarantee massive tax increases," said House Minority Leader Anthony J. O'Donnell. "The governor and the Democrat majority have a complete lack of political will to reduce spending." O'Donnell wanted the final product to include a pledge not to raise taxes next year, an idea that was not adopted.

The committee was supposed to meet Wednesday afternoon but postponed several times while key leaders met behind closed doors. Around 7 p.m., conferees were told to return early Thursday morning to wrap up discussions.

A sticking point was determining who would pay for teacher pensions, which cost the state $900 million this year. The Senate adopted a plan to slowly shift some of the cost to the local governments, but conference committee members instead created a commission to study the state's pension systems and make recommendations on their "sustainability."

The move disappointed Sen. David Brinkley, a Western Maryland Republican who with E.J. Pipkin, an Eastern Shore Republican, floated the idea of shifting half the pension costs to local jurisdictions this year. "We are in a death spiral," Brinkley told the committee. "Something has to happen."

House Speaker Michael E. Busch has said the idea does not have the votes to pass in the House. It was not included in a House Republican budget plan.

Environmentalists immediately applauded the committee's decision to restore $10 million to the Chesapeake Bay Fund, which brings the total for that account to $20 million. "It is a statement that leaders really believe a healthy bay is important," said Kim Coble, the executive director of the Chesapeake Bay Foundation.

Committee members resolved a spat between the two chambers, restoring a controversial $11 million legislative scholarship fund that the Senate wanted but that the House had eliminated. The program lets lawmakers award grants to students in their districts and is popular among senators who each can award about three times the funds as delegates. A committee that met later Thursday agreed to restore bond bills to future capital budgets, a program the Senate had removed but the House favors.

The distribution of road maintenance money to local governments also will shift in the coming years. Baltimore, which receives the lion's share of that money, will have less of an increase in the future. But the counties, which divvy up about a tenth of the money Baltimore receives, are set to get more.

"We would have rather seen the local share either maintained or increased," said Michael Sanderson, the executive director of the Maryland Association of Counties.

The committee rejected a last-ditch effort by Del. Murray D. Levy to borrow an additional $100 million from an obscure account where local income taxes are collected. Levy would have put $50 million toward a fund balance and distributed $50 million to the counties. "I thought it was a good way to beef up the reserve accounts," Levy said.

"I've never understood the feeling that the account is a private piggy-bank for the state," he said, defending his idea to distribute half of the funds to the counties, which paid into it.

O'Malley's plan borrows $350 million from that account to pay for services, one of the few maneuvers that raised some concern from analysts at rating agencies who gave the budget their highest mark. He also borrowed $376 million from that account to balance the current year's budget.

The governor also put forward a supplemental budget that restores $18 million in local funds to Prince George's County and adds funds for the Heritage Tax Credit.

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