A lot of money

January 24, 2012

When you have 50 cents, $2 for a cup of coffee seems like a lot of money. Pulling $1.50 out of various crevasses in the car is a daunting task.

While a billion dollars always seems like a lot of money as the lottery game that has a prize in that range has yet to be devised, that amount really pales compared to the substantially larger numbers associated with the state government's annual budget.

For years now, and under the administrations of governors Robert L. Ehrlich Jr., a Republican, and Martin O'Malley, a Democrat, the folks in state government have been kvetching about what has come to be known as the billion dollar structural deficit.

This year's solution put forth by the O'Malley Administration is to require the county governments to pick up half of the cost of pension plans for teachers — a cost previously wholly covered by the state — and in exchange, the state will pay half the cost of teacher Social Security costs — previously covered wholly by the counties.

The effect in Harford County will be a shortfall of $8 million in the spending year that begins July 1.

If the adjustment were being made simply to make more equitable the state and county obligations to the school system, the idea would have a lot of merit. The cost of operating public schools in Maryland historically has been shared, split down the middle, albeit a very rough split.

There's also the matter raised by the governor's office that county school boards — with no input from the state — negotiate pension and salary packages with the teachers unions, so as long as the state carries the pensions in full but the counties are obliged on salaries, there's good reason for the counties to push for fat pensions in exchange for leaner salaries.

If these were the reasons for making the change, and there were some sort of phasing in of the change, the idea would have a lot of merit.

That, however, isn't what's going on here. Maryland is cynically shifting the cost of teacher pensions to the counties solely to deal with an inability to properly manage the state budget. This is little more than a ploy that will require Harford County and the County Public School system to come up with $8 million in extra money or cuts so the state can spend that money.

As it turns out, Harford County could probably make $8 million in cuts and not bat an eye. Public school enrollment has been inching down for years, even as inflation has been flat and the school system budget has been increasing.

The ability of the county and schools to take the hit, however, doesn't make the governor's proposal any less onerous. The harsh reality is, just as Harford County is able to absorb a hit of $8 million in a budget totaling about $600 million (a cut of about 1.3 percent), the state should be able to make permanent cuts totaling $1 billion from a budget that totals about $36 billion. The state would be obliged to cut spending 2.8 percent to permanently deal with the infamous billion dollar structural deficit.

The cold reality of the financial situation of the state and county governments is a simple one: When they are faced with shortfalls, the seemingly large raw numbers are wheeled out for public display, and generally not in relation to the amount being spent. As a result, we end up with discussions that lament the billion dollar structural problem, even as the state budget as drafted includes what might be characterized as a "modest increase" of $1.38 billion.

Heck, if that increase were held to $.38 billion (which translates to $380 million or $380,000,000), there would be no structural deficit.

Given the perspective of the percentages, there's every reason to believe finding a billion dollars in permanent cuts to the state budget would be quite a bit easier than finding $1.50 in change under the seat cushions of a car. Certainly it is easier for the governments to cut than it would be for the taxpayers, many of whom also have what the state might describe structural deficits, to pay more.

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