- Associated Press - Wednesday, March 26, 2014

ANNAPOLIS, Md. (AP) - A plan to avoid cuts to education, health and other programs in Maryland’s budget by tapping into $200 million originally set aside to strengthen the finances of the state’s pension system has won over the House of Delegates, which gave preliminary approval Wednesday to state budget legislation.

Republicans derided the move by the Democratic-controlled House as a raid on funds not intended for a quick budget fix.

The Senate already has approved the plan to use the $200 million, and House lawmakers rejected efforts to change the plan. In 2011, when the state approved a plan to move the pension system toward full funding, lawmakers agreed to pay $300 million each year beyond the required pension payment.

“We wanted to put extra money on our pension liability, and we’ve determined based on the fiscal condition of the state that we can’t put in as much as we would like,” Del. Melony Griffith, D-Prince George’s, said.

In Gov. Martin O’Malley’s $39 billion budget plan, he proposed using $100 million of the money, permanently in future years. The Senate decided to use more money in upcoming years while returning to the full $300 million payment in fiscal year 2019. For example, under the current budget plan the state would use $200 million of the $300 million in the next fiscal year to balance the books.

Critics said the decision to pay less in upcoming years will cost the state more in later years, as the state moves toward full funding of the pension system by 2039.

“It’s better to eat the pea than to eat the elephant on live TV when it comes back to haunt you,” Del. Mike McDermott, R-Worcester, said. “This is your opportunity to eat the small things that you don’t like, as opposed to having to have future generations eat something that’s impossible to digest.”

The House rejected two amendments by Del. Charles Barkley, D-Montgomery, who criticized the move for reneging on promises to state employees, who ended up paying more into the pension system for fewer benefits under the 2011 pension changes. One amendment would have reduced the contribution of state employees from 7 percent back to 5 percent. Another amendment would have restored the full $300 million supplemental payment in the next fiscal year.

The House also shot down an alternative Republican plan to hold budget growth at 1 percent, instead of 3 percent.

The House will likely vote on the bill this week. The Senate already has passed budget legislation.

Differences between the House and Senate will need to be worked out before the Legislature’s April 7 adjournment. Del. Norman Conway, a Wicomico County Democrat who chairs the House Appropriations Committee, said differences between the House and Senate on as big on the budget this year, largely because they are in agreement on using the pension money to make up a budget shortfall, instead of searching for a large variety of different budget adjustments.

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