Can Teacher Pensions be Fixed? Part Four

Interest is growing in Annapolis in sending teacher pensions down to the counties. Manno’s bill offers a way out. But we are very cautious about predicting a happy end to this problem. Here’s why.

1. Target MoCo.

Is there anything easier to do in Annapolis than target MoCo? Our delegation has just two Committee Chairs and is packed with freshmen. Our County Executive does not have nearly the sway in the state’s capital that his predecessor had. And the county receives NO sympathy from any other part of the state. “You guys come across as a bunch of whiners,” says one high-ranking Annapolis source. The ICC is the one MoCo project that will be subsidized by the rest of the state through toll revenue transfers, and boy are they howling about it. Who cares when we howl about paying billions for Baltimore’s broken and convict-headed city government?

The only chance our delegation has at preventing a pension handoff is to emphasize its disastrous effects on the rest of the state. Here are the top ten beneficiaries of the subsidy in per-pupil terms in FY 2010.

1. Worcester: $1,134
2. Montgomery: $1,097
3. Kent: $1,050
4. Howard: $1,048
5. Somerset: $1,002
6. Baltimore City: $969
7. Prince George’s: $943
8. Allegany: $936
9. Garrett: $918
10. Calvert: $909
State Average: $931

2. Opposition from the business community.

Even if you are a tool-wielding proletarian, you should have sympathy for Maryland’s besieged business community. They have been clobbered again and again in Annapolis. The 2007 special session raised the top income tax rates, raised the corporate income tax and brought the hated computer tax. In 2008, the computer tax was replaced by the millionaire tax. Later that same year, transportation spending was slashed and the state’s tax competitiveness ranking dropped from 24th to 45th. And now there is talk of combined reporting and a permanent millionaire tax. Do the business lobbyists get paid enough to put up with all this?

Manno’s bill would stick the business community with the tab for teacher pensions. Business will reply, “It’s not our fault. The state screwed up its pension funds, not us. And you guys supposedly want to create more jobs, but where are they going to come from with new taxes?” One of our spies in the business community comments acidly, “I think they believe there is a jobs fairy.”

If the state employee unions get on board with Manno’s idea, there will be a titanic lobbying battle pitting labor against business. But it may not come to that. If the General Assembly decides to keep teacher pensions at the state level, they will choose the path of least resistance to finance them. Business will fight hard and perhaps avoid the guillotine, though some business taxes will surely pass. The ultimate targets will be the ones who are least aware of what is going on. As House Majority Leader Kumar Barve once told us, “In politics, when something unpleasant has to be done, it’s usually done to whoever squirms around the least!”

3. The chaotic nature of legislation.

In his comment above, Barve was referring to the genesis of the 2007 special session’s computer tax. The special session is not a desirable model for the inevitable 2011 deficit reduction package, but it is a very likely predictor of what will happen next time. Just as in 2007, the Governor’s staff will prepare a plan. Unlike in 2007, the Governor will not travel the state to sell it because no one talks about tax increases when running for re-election. In 2011, lots of freshmen will be serving in their first session. They will have no idea what is going on and will be easy prey for leadership and bureaucrats. Then the lobbyists will swarm in, ideas will be discarded as soon as they are created and chaos will ensue. The final result will bear no resemblance to sound public policy, but will be the easiest “fix” that can get to the Governor’s desk. We find nothing encouraging in such a scenario, but that is the way of Annapolis.

Manno’s bill is a sincere and intellectually honest effort to remedy the problems of the state’s pension system – problems which the state largely brought upon itself. Those who oppose his bill must either identify alternate revenues to pay for pensions or admit that county taxpayers will be on the hook when they are passed down. For us, honesty counts in government. Let’s see how much of it can be found outside Roger Manno’s office door.