Maryland counties may gain revenue and costs

ANNAPOLIS — An expected special session this month could be a double-edged sword for counties that stand to gain revenues, but could also face millions in new costs.

The General Assembly will likely return the week of May 14 to finish business from its regular session, passing legislation that would raise income taxes and undo more than $500 million in reductions that resulted when lawmakers failed to pass two budget bills last month.

A special session could restore hundreds of millions of dollars in local aid for education and public safety, but it would also likely force local governments to begin sharing teacher pension costs with the state as a way of cutting state expenses.

This could put counties on the hook next year for about $130 million in costs, with payouts rising in future years.

“At the end of the day, there’s going to be a big new pressure on county governments as a result of the shift,” said Michael Sanderson, executive director of the Maryland Association of Counties. “It’s not like county governments have one good option and one rotten option — we’re facing a pretty tough budget situation as far as the state goes.”

Maryland is one of a handful of states that pays teacher pension costs without help from local governments. State lawmakers say that skyrocketing payouts that now come to more than $1 billion a year have forced them to ask for help from the state’s 23 counties and Baltimore.

During its regular session this year, the assembly failed to pass a bill that would force counties to pay 25 percent of costs next year and 50 percent of costs by 2016. It is expected to pass a similar proposal this month.

County leaders have spent years fighting a pension shift and many said the added burden could force them to make cuts or raise taxes.

Montgomery County Executive Isiah “Ike” Leggett, a Democrat, said last month in a radio interview with WTOP that his county is better off with the default budget because the pension shift would hurt residents more than additional revenues from a special session could help.

While a special session appears to be a sure thing, county officials who are preparing their own budgets say they do not know exactly what to expect from the state’s revisions.

Prince George’s County officials say budget revisions during a special session could leave them with tough choices, but they would prefer more revenues and a pension shift to the default budget, which state Democrats have called a “doomsday” proposal.

Thomas Himler — the county’s deputy chief administrative officer for budget, finance and administration — said the county could lose more than $30 million in revenue if the default budget goes into effect, but would only stand to lose about $5 million from the pension shift.

“It’s to some extent lose-lose, but the doomsday budget is far worse,” he said. “We’re obviously going to work hard to make sure it doesn’t go into effect.”

Regardless of a special session’s outcome, many local officials say decisions made by this year’s assembly will make life more difficult for counties.

Officials say they have already been hamstrung by a successful bill this year that will toughen the state’s maintenance-of-effort law, which requires counties to match or increase their year-to-year per-pupil education funding.

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