- The Washington Times - Monday, April 4, 2011

ANNAPOLIS | Maryland legislators reached a compromise Monday on changes to the state pension system, resolving one of the key undecided issues remaining in the state’s fiscal 2012 budget.

House and Senate committees reconvened talks in the morning after skipping sessions Friday and Saturday because of vast differences in their respective chambers’ versions of the $34.2 billion spending plan.

“We were trying to look ahead and realize the fiscal implications in the long term,” said Sen. Edward J. Kasemeyer, Baltimore County Democrat and chairman of the Senate Budget and Taxation Committee.

Pension reform has been a major issue in the 2011 General Assembly session. Legislators at first considered shifting as much as half of pension costs to counties before settling on several less- jarring changes such as raising the retirement age and requiring larger employee contributions.

Both chambers agreed to increase employee contributions from 5 percent to 7 percent of annual salaries, but differed on cost-of-living-adjustments and increases in out-of-pocket medical costs.

On Monday, they settled on a 2.5 percent cap on cost-of-living increases — splitting the Senate request for 3 percent and the House request for 2 percent. They also agreed on increasing the maximum out-of-pocket expense from $700 to $1,500 for individuals and $2,000 for couples. The Senate had proposed raising the respective limits to $2,000 and $3,000 for out-of-pocket expenses.

The chambers also settled on a “rule of 90” for state retirees younger than 65, requiring that their age plus years of service add up to at least 90. The Senate had considered a “rule of 92.”

“It’s been more difficult” than past years, said Delegate Tawanna P. Gaines, Prince George’s Democrat. “When the money is short, it becomes more difficult.”

The committees also resolved a difference over sharing with counties the cost of real property valuations. The House wanted to push 50 percent of costs or $15.9 million onto counties, while the Senate proposed shifting 90 percent, or $28.6 million. As a compromise, the state will shift 90 percent onto the counties for the next two years, but shift just 50 percent in subsequent years.

The sides will meet at 3 p.m. Tuesday to settle several more major issues, including differences over cuts to higher education. The House proposed $8.1 million in cuts while the Senate wants to cut just $2.1 million. They hope to settle the entire budget that night.

Analysts have said the budget is underfunded by about $221 million because of less-than-expected revenues and greater-than-expected demand for some programs. Unallocated funds, which currently sit at $22 million, would go toward closing the gap, and a remaining shortfall would have to be addressed next year.

Still, legislators are considering last-minute changes this year to cut costs or generate revenue, such as revising a proposal to increase the tax on alcohol sales. They would increase the tax immediately from 6 percent to 9 percent, rather than 1-percentage-point increases in each of the next three years.

Senate President Thomas V. Mike Miller, Prince George’s Democrat, floated the idea Friday, saying it could generate an additional $56 million in revenue this year. The alcohol tax bill has passed the Senate and is in the House.

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