BALTIMORE — Mayor Martin O’Malley’s refusal to allow the state to bailout Baltimore’s bankrupt public schools may have played to the hometown pride of his local constituents, but it was a far more risky move for a mayor eyeing the governor’s mansion.
“He gambled. He tossed the dice,” said Maryland Comptroller William Donald Schaefer, a Democrat and veteran of state politics who was Baltimore mayor for 17 years before twice winning the governor’s office. “If he pulls it off, it’s fine. But if he doesn’t, there will be political damage.”
When Mr. O’Malley, a Democrat, last month made himself the lone rescuer of the schools — which had an immediate $58 million cash-flow shortfall and a reoccurring $58 million deficit expected when the next school year begins in September — the mayor inextricably tied his political future to the fate of the schools, Mr. Schaefer said.
But spurning the state’s help also served as a snub of Gov. Robert L. Ehrlich Jr., who brokered the deal to keep the schools afloat with a $42 million state loan in return for temporary financial oversight of the system, which had been run independent of city government since 1997.
The jockeying appeared to be the first leg in a long, tough race for governor in 2006. Mr. O’Malley, a popular first-term mayor who also fronts an Irish rock band and is considered a rising star in the Democratic Party, is a likely challenger to Mr. Ehrlich, the state’s first Republican governor since 1968.
“There are a lot of people who believe there was never a plan to accept state aid,” said Chip Franklin, host of a political radio talk show on WBAL-1090 AM in Baltimore. “There’s a lot of speculation that [Mr. O’Malley] orchestrated the whole thing.”
Mr. Franklin said that some Baltimore Democrats believed the mayor “pulled a fast one” and embarrassed the governor, but his listeners elsewhere in the state were telling him “’I like O’Malley, but this is a joke,’” he said.
“The schools are an albatross across [Mr. O’Malley’s] neck. The schools squander money with no accountability,” said Mr. Franklin, who supported Mr. O’Malley when he took office in 2000 but has grown increasingly critical of him in recent years. “I’ve never seen him tighter and more humorless. He’s in a free-fall mode.”
Mr. Schaefer said he was surprised Mr. O’Malley rejected the governor’s offer, since the mayor had bargained hard and won numerous concessions in negotiating the state bailout. And the odds of the mayor turning around the schools’ and the city’s budget problems are slim.
Mr. O’Malley loaned the schools $42 million from Baltimore’s rainy-day fund, jeopardizing the city’s bond rating but gaining control of school finances with a three-member oversight committee appointed by the mayor.
The schools must repay $34 million by Aug. 2 and the remaining $8 million by June 30, 2006, with 1.5 percent interest. Meanwhile, the mayor needs a plan to erase the looming deficit and get control of the school accounts.
“He has no money,” Mr. Schaefer said. “He just borrowed $7 million from [the state] for sewers and his budget is in disarray. The police are in the red, transportation is in the red, schools are in the red. I don’t know where he is going to get the money.”
However, Rep. C.A. Dutch Ruppersberger, Baltimore County Democrat and former Baltimore County executive, said Mr. O’Malley has much to gain from attacking the school mess on his own, even if the final solution must involve the state, which funds about 80 percent of the city school budget.
“I know Martin cares about the city and [he] is extremely tenacious, but there is a lot at stake here,” Mr. Ruppersberger said. “If he comes up with a good plan that deals with the deficit and deals with accountability, he moves up to a whole new level.”
Isiah Leggett, chairman of the Maryland Democratic Party, agreed with the congressman but added a word of caution. “He is positioning himself to be a hero, but if there are negative consequences, that will be something he will have to deal with,” he said.
Mr. Leggett also said to expect much finger-pointing from both parties, regardless of the outcome. “This is the mayor’s and the state’s problem,” he said, “so the state will have to assume some of the blame for it as well.”
Baltimore City Council President Sheila Dixon said Mr. O’Malley did not reject the state loan but the strings attached to it. And the episode should enhance Mr. O’Malley’s stature throughout Maryland, she said.
“It shows leadership on the part of the city, that we were not just going to allow total control by the state,” said Mrs. Dixon, a Democrat who said she hoped to succeed Mr. O’Malley as mayor.
However, John Kane, chairman of the Maryland Republican Party, said that Mr. O’Malley is responsible for transforming the school crisis into a showdown between the mayor and the governor.
“He missed a great opportunity for a bipartisan group to come in and fix things,” Mr. Kane said. “I think the grade he receives is the grade the Baltimore city schools receive, which is an ’F.’ … He is setting himself up for failure and he will have nobody to blame but himself.”
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