Lawmakers reach deal on pensions, retiree health care

After weekend impasse, legislators resolve most budget issues

April 04, 2011|By Annie Linskey, The Baltimore Sun

Lawmakers reached deals Monday on the thorniest issues left in the $14.6 billion state budget, finding common ground on state workers' pensions and health care benefits and education funding.

House Speaker Michael E. Busch said the pension and health care compromises reached by delegates and senators working to reconcile the spending plans passed by each chamber would preserve benefits for state workers while keeping the budget affordable for the taxpayers.

Senate President Thomas V. Mike Miller said that "breakthroughs" in the negotiations forestalled the double sessions that had been planned for this week.

But proposed changes in the spending plan for the fiscal year that begins July 1, plus a supplemental budget offered by Gov. Martin O'Malley last week, would leave the state with a mere $22 million in extra cash, well below the $120 million that O'Malley initially proposed in January.

"This is the lowest it's been in many years," said Warren Deschenaux, the legislature's top fiscal analyst. Much of the new spending, which includes funding for nearly 1,000 summer jobs in Baltimore and additional money for mental health centers, was proposed by O'Malley.

More money could soon be available as a cushion: A House panel could take up a new sales tax on alcohol as early as Wednesday. Delegates are discussing increasing the rate all the way from 6 percent to 9 percent next year instead of phasing it in over three years, as the Senate planned.

Miller has said he is open to that change. House Ways and Means Committee Chairwoman Sheila Hixson said she has the votes in her committee to approve the tax — though she said she has not yet felt out support for increasing it to 9 percent in a single year.

The budget conference committee, composed of delegates and senators, is set to meet again today to resolve a few remaining differences, including a $6 million discrepancy on funding to the University System of Maryland. The revised budget could be passed by both chambers by the end of the week.

The pension changes and retiree health care took up most of the focus Monday.

Under the pension compromise, state workers would increase their contribution to the plan from 5 percent to 7 percent of their income, the age at which they could receive retirement benefits would go up and the conditions under which they could receive a cost of living increase would change.

Union leaders complained that the proposal would introduce a two-tiered system where employees hired after July 1 would get smaller pension checks than their more senior co-workers.

Union leaders mounted a last-minute fight to prevent the two-tiered system, briefly derailing budget talks over the weekend, but they failed to persuade lawmakers to adopt their plan.

Leaders of the Maryland State Education Association, which represents 71,000 educators, said the new pension plan is "totally unacceptable" and would make Maryland's teacher retirement benefits among "the worst in the nation."

Sue Esty, with the Association of Federal, State, County and Municipal Employees, said government workers are "taking the fall" for Wall Street blunders. She said her union would try to undo some of the changes in coming years when the economy improves.

But Esty's assessment was not entirely negative: She said she was pleased that the General Assembly is now poised to extend far better prescription drug coverage to seniors than Gov. Martin O'Malley had proposed.

Lawmakers agreed to restore a $5 million incentive to the state's community colleges aimed at keeping tuition down. That idea passed in the House but was stripped out by the Senate.

Counties will take a hit under the new proposal: They will have to shoulder 90 percent of the costs of collecting property taxes, a function traditionally funded by the state. It's similar to what O'Malley proposed, but county executives were teased briefly when the House floated a more generous deal.

Rural lawmakers requested that several state agencies report on how the permitting process works for new construction. The issue arose frequently during the 2010 campaign in the roundtable meetings that Republican former Gov. Robert L. Ehrlich Jr. held with small-business owners, who complained of unresponsive agencies.

"How do we get these permits in a timely manner?" asked Bohanan, a Democrat. House Appropriations Chairman Norman Conway, an Eastern Shore Democrat, noted a dearth in new chicken houses and blamed the shortage on hang up in the permitting process.

Lawmakers discussed strengthening Miller's idea of combining the University of Maryland campuses in College Park and Baltimore into a single mega-university.

They would withhold $1 million in funding until the concept is studied. They were expected to resolve details of the proposal today.

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