A press release from Our Future Montgomery, a new coalition formed by MCEA, MCAAP, and SEIU Local 500 formed to fight for more funds for MCPS
SCHOOL WORKERS REACH OUT TO COUNTY RESIDENTS AROUND MCPS BUDGET CUTS
Unions representing 21,000 school employees hope to raise awareness about drastic cuts to K-12 education being considered by County Council
Rockville, MD (May 9, 2011) – As the Montgomery County Council considers the unprecedented step of rejecting nearly $30 million in state education aid in order “reset” education funding levels in the county, permanently lowering per-pupil investments, stakeholders are mounting a campaign to educate voters on the consequences of such proposals.
The first mailing from the group, who call their initiative Our Future Montgomery, will reach Montgomery County residents early this week (it can be viewed at http://ourfuturemontgomery.org/files/2011/05/Education_Matters.pdf).
A wave of online activity including social media outreach, online advertising, and calls to action around Mother’s Day and the education budget have already garnered thousands of visits to the group’s website www.OurFutureMontgomery.org and hundreds of emails to members of the Montgomery County Council.
“So many families locate in Montgomery County because of the quality of public education here. They’re education voters, and they need to know that the decisions being made right now in Rockville could affect their children’s education and their property values,” explains Doug Prouty, President of Montgomery County Education Association.
“This is an issue of fairness. Because schools employees have found ways to work together to absorb year after year of budget cuts, the official spin is that MCPS hasn’t taken a hit. Well, that’s just not true,” explains Merle Cuttitta, President of SEIU Local 500. “In particular, when my members, who don’t make a great deal of money in the first place and who have seen their hours slashed over the past three years, are told they haven’t sacrificed, we have to push back against that!”
“Ultimately, this comes down to the kids and protecting their interests. They don’t have a voice in the political arena, particularly those kids who come from disadvantaged backgrounds. The support these kids receive that is closing the achievement gap in the county and helping MCPS be a model for the nation – that’s at risk with these budget cuts. We can’t abandon them now,” explains Rebecca Newman, President of Montgomery County Association of Administrators and Principals.
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Made up of parents, teachers and other school system employees, students and other stakeholders, Our Future Montgomery seeks a way forward out of our temporary – though dismal – economic circumstances and toward a brighter future for our great county. This path must involve wise and adequate investments in our institutions and our communities and most of all in our children – for they truly are Our Future Montgomery.
Thursday, May 19, 2011
Our Future Montgomery
Wednesday, November 03, 2010
Now Comes the Hard Part
Today, Maryland Democrats are celebrating the reelection of Governor Martin O’Malley, U.S. Senator Barbara Mikulski and their holding onto both chambers of the General Assembly. But the reality of governance will soon set in. Why?
Because the Republicans have won control of the U.S. House of Representatives, and that means federal stimulus aid for the state government has almost certainly dried up.
Maryland’s state government has been subsidized by federal stimulus money under ARRA (the American Recovery and Reinvestment Act of 2009) for three fiscal years: 2009, 2010 and 2011. According to the state’s latest Spending Affordability Committee report, the state government has received $4.4 billion of stimulus funding over the last three fiscal years. The largest subsidies have been directed to Medicaid ($1.6 billion), education ($1.1 billion) and infrastructure ($781 million).
The stimulus funds have been invaluable for closing Maryland’s general fund deficits. In FY 2009, 2010 and 2011, the state racked up $6.4 billion in structural general fund deficits. It has used $2.9 billion of federal stimulus money to help close those deficits. That means federal money has been used to plug almost half of Maryland’s budget gaps.
With the election of a Republican U.S. Congress, that money is gone. And Maryland faces a general fund deficit in FY 2012 that could be as high as $1.6 billion. That leaves a number of unappetizing options to deal with it.
Budget Cuts
In FY 2011, 41% of all state general fund spending was sent as aid to local governments. By spending category (which overlaps local aid), 50% of the general fund goes to education, 24% goes to health care and 9% goes to public safety. Those three items combined account for 84% of the general fund in FY 2011. It’s probably impossible to have meaningful long-term spending cuts without touching one or more of these areas.
Teacher Pensions
In the 2010 session, the Senate passed a plan to phase in a partial handoff of teacher pension obligations to the counties. The plan would have saved the state no money in FY 2011, $63 million in FY 2012, $194 million in FY 2013 and more than $300 million annually in the out years. Those out year revenues are significant, but the state’s budget problems may necessitate collection of them earlier. So the General Assembly could well choose to accelerate the phase-in and make the counties assume a greater share of the cost than in the Senate’s plan.
Diversion of Transportation Revenues
The Transportation Trust Fund (TTF) claims over $800 million a year in state funding. The TTF’s revenues include vehicle titling fees (20%), gas taxes (19%), registration fees (15%), operating revenues (10%), sales taxes (6%), corporate income taxes (4%) and more. All are ripe for diversion to the general fund. The General Assembly has already seized transportation money due to the counties so state transportation money could be next. That would be a disaster for the state’s infrastructure, but if transportation advocates are pitted against education advocates, who do you think will win?
Tax Hikes
The three most discussed taxes are an extension of the millionaire tax (which was supposed to last for three years), the imposition of combined reporting to capture more corporate income taxes and an extension of the sales tax to services. The first two options will be resisted by the business community and both have very uncertain revenue generating capabilities. The last time the state tried to extend the sales tax to services, the result was the much-hated computer tax (which was repealed in 2008).
Casting a long shadow over the taxation debate is the state’s competitive position with its neighbors – especially Virginia. The Tax Foundation’s FY 2011 tax competitiveness report ranks Delaware #8, Virginia #12, Pennsylvania #26, West Virginia #37 and Maryland #44 of the fifty states. Here is how Maryland compares to Virginia on a few tax measures.
Corporate Income Tax
Maryland: 8.25%
Virginia: 6.00%
Top Income Tax Rate
Maryland: 6.25% (at $1 million income)
Virginia: 5.75% (at $17,000 income)
Sales Tax
Maryland: 6%
Virginia: 5%
Maximum Unemployment Insurance Tax Rate
Maryland: 13.5%
Virginia: 6.2%
At least the state will not have to pay for Bob Ehrlich’s proposed $700 million sales tax cut.
Now what were we saying about celebrating?
Thursday, October 07, 2010
Ehrlich vs. O’Malley on School Construction
State political news has been dominated this week by the debate between Bob Ehrlich and Martin O’Malley on state education aid, a worthy topic on which we will have some comment. But operating support is only one side of state funding for local schools. The other side is capital support for school construction. How did the two Governors do on that measure during their terms in office?
First, let’s understand how the state makes funding decisions on school construction. The Public School Construction Program (PSCP) is administered by staff overseen by the Board of Public Works, a three-person body consisting of the Governor, the Comptroller and the state Treasurer. Every year, the state’s twenty-four local school districts submit capital funding requests to PSCP. Those requests are reviewed by the staff and an inter-agency committee comprised of the State Superintendent of Schools (Nancy Grasmick), the Secretaries of the Departments of General Services and Planning, and one member each selected by the House and the Senate. The staff and the inter-agency committee review each school district’s capital submission to determine those projects with the most merit and forward their recommendation to the Board of Public Works. State support is given in the form of matching grants for local contributions, with the state paying a higher percentage of project costs in “poor” jurisdictions than in “rich” ones. The school districts can appeal that recommendation to the Board before the Board takes a final vote.
Obviously, the Governor is not the only player in this process, but he is the single most important player. Early on, the Governor determines a preliminary allocation for school construction, which sets the total pie available for school construction funds. This preliminary allocation then forms the basis for a bond authorization to be passed by the General Assembly which actually pays for the state’s school construction funding. And while the Governor does not directly determine funding allocations by county, he can substantially influence that decision through his appointment of two of the five inter-agency committee members and his relationship (or lack thereof) with Grasmick.
In practice, the counties submit more money in requests than they know the state will approve. Many small jurisdictions submit small requests and get most or all of them approved. Big jurisdictions submit massive requests and get less of them approved, but they also get more money. The biggest factor influencing the entire process is how much money is available – and that is the Governor’s call.
Here are the amounts of school construction funding requested by the counties and approved by the state during the Ehrlich and O’Malley administrations.
Unsurprisingly, the amounts requested by the counties have gone up – WAY up – during the last eight years. In Ehrlich’s first year, the counties asked for $310 million in school construction money. This year, the counties asked for $729 million. The state’s approval rate has varied between 30% (in FY 2005) and 45% (in FY 2008). Total amounts have risen substantially over time as O’Malley has raised his school construction funding allocation to keep pace with the counties’ rising requests.
Here are the total amounts of school construction funding requested and authorized by county for the two Governors’ terms.
The Ehrlich administration approved $765 million in school construction money. The O’Malley administration approved $1.2 billion in school construction money, a 63% increase. Part of this was driven by more funding requests from the counties, but O’Malley made more money available to meet them. Nineteen of the state’s twenty-four jurisdictions received more school construction funding under O’Malley than under Ehrlich. Every county that saw a decrease asked O’Malley for less money than they asked from Ehrlich.
Here are the school construction funding increases enjoyed by the state’s eight largest jurisdictions under O’Malley’s term relative to Ehrlich’s term.
Anne Arundel: +95%
Harford: +93%
Montgomery: +92%
Baltimore County: +89%
Baltimore City: +82%
Prince George’s: +73%
Howard: +56%
Frederick: +37%
Bob Ehrlich served as Governor in fat budget times but only made school construction a priority in the year he ran for reelection. Martin O’Malley has served as Governor in lean budget times but has made school construction a priority every year.
For those who are concerned about crowded schools, the choice is clear: O’Malley.
Monday, August 02, 2010
Friday, April 16, 2010
Leaders Facing Fiscal Challenges
Now is not an easy time to govern. Revenues are down--way down--and officials at the state and county level can only offer an unpalatable menu of reduced spending and higher taxes. Neither is appealing to an electorate and one suspects that sounds of distress arising from the land will only increase as the General Assembly comes home to campaign and the County Council wrestles with the budget.
In the ongoing budget debates that will continue long beyond the primary or the general elections, it's easy to demand funding for cherished programs or rail against tax increases. It's a lot harder to say what tax you'd raise or other program you'd cut to pay for them. Amid the cacophony, several leaders at different levels of government have impressed me with their willingness to grapple with tough issues. I thought I'd highlight a couple of them here:
(1) Aaron Kaufmann, Vice Chairman of the Montgomery County Commission on People with Disabilities, could just highlight the many challenges faced by disabled people as part of his fight to secure more funding for disabled people. They're certainly a compelling group even in tough times and Aaron is a strong advocate.
Instead, Aaron has not just asked for funding but taken the far tougher road of not just advocating for more funding but coming up with a specific funding mechanism: a five-cent increase on the alcohol tax. Would that every person advocating for more spending or lower taxes be so forthright.
(2) County Councilmember Marc Elrich would have pleasanter meetings, and probably an easier reelection bid, if he would agree to advocate for more spending on worthy causes when speaking with constituents. Instead, the liberal councilmember has taken a page from Nancy Reagan (!) by just saying no. As the Gazette reports:Elrich has met with many people who want money restored in the county's fiscal 2011 budget for worthy projects and services, and he has said the same thing to all of them: "No."
No doubt there are many other examples of fiscal backbone and public officials making hard choices. Feel free to mention your favorite examples in the comments. It would improve our public discourse in these fiscally tough times if not just public officials and candidates but constituents as well would follow the challenge outlined by Aaron and Marc and tell us how you'd pay for any increased spending or cut in taxes.
"I've told everyone I'm not putting a dime back in the budget," he said.
The council learned Tuesday that County Executive Isiah Leggett (D) will revise his budget proposal to include an additional $168 million in cuts.
Elrich said it is understood that no "pet projects" will be pushed through this year. "I can't think about how I add that without imagining where I'll subtract it from," he said.
The recent fracas over teacher pensions in the General Assembly shows how valuable these debates can be and the difficulties faced by legislators who not only have to cope with demands by constituents who have real needs but other legislators who likely have a different set of preferences. You may hate Sen. Rich Madaleno's work on this issue in the past session but budgeting is making choices and he was willing to engage in the debate and make tough choices as part of his effort to fight off worse options for the County.
It's fine to argue against these choices as many have, and certainly no one has the monopoly on wisdom, but to be credible in my book you have to lay out real options and spell them out in meaningful detail. You favor higher taxes? Then tell us how much the taxes would go up and on whom to fund your program. You favor lower taxes? Then tell us which programs you'd eliminate. (And pointing to old saws like "waste, fraud, and abuse" or talking in vague terms about budget reforms doesn't cut it.)
When sizing up candidates this year, look not just at their priorities but at their ability to deal responsibly and honestly with the public. If someone is telling you something that sounds too easy in these tough times, check your wallet.
And yep, it applies to me too. I'm the Town Treasurer and have to outline the budget proposed by the Council at the Town of Chevy Chase's Annual Meeting on May 4th at the Lawton Center.
Thursday, April 15, 2010
Who’s the Big Spender?
At his campaign announcement in Arbutus, former Republican Governor Bob Ehrlich characterized his term as an era of fiscal restraint and said, “They spent beyond our means, and we spend within our budget.” And in a fundraising solicitation sent out on Monday, Ehrlich criticized “liberals in Annapolis” for “out-of-control spending.”
Oh really?
Below are all line items in the state’s General Fund for FY 2003 (the last budget from the Glendening administration), FY 2007 (the last budget of the Ehrlich administration) and FY 2011 (the most recent proposal from current Governor Martin O’Malley) that exceeded $100 million in FY 2003.
Below are the rates of increase in each line item over the four-year terms of both Ehrlich and O’Malley.
Ehrlich cut only two of the eighteen line items during his time in office: human resources and agriculture/natural resources/environment. O’Malley cut ten line items. O’Malley had lower rates of spending increases (or higher rates of cuts) than Ehrlich in fifteen of the eighteen spending categories. Ehrlich grew the general fund by 37% in four years while O’Malley has cut it by 7%. Since the legislature has added more cuts, O’Malley’s ultimate cut figure is bound to be even higher. And bear in mind that since state law does not permit the legislature to add general fund spending to a Governor’s budget proposal, Ehrlich cannot blame the Democrats for his spending record.
Now let’s be honest. O’Malley has not been a budget-cutter by choice; the economy has forced him to do it. And he has relied on both federal stimulus money and one-time fixes as well as real cuts to help him balance the state’s budget. Both O’Malley and Ehrlich have been burdened by the fiscal recklessness of the Glendening administration, which approved major income tax cuts in 1997 and 1998 and a giant 2002 increase in education spending that have created structural deficits ever since.
But at least O’Malley has shown some fiscal restraint when he had to. Ehrlich coasted on the economy, boosted spending even further by raising property taxes and fees and even signed a gigantic state pension benefit hike without paying for it. Now he promises to “fix” the budget while proposing a sales tax cut that would grow the state’s deficits by a third.
The mainstream media has breathlessly covered trivialities such as the candidates’ sparring over a radio debate. That may be fun for political reporters and easy to cover, but it means nothing to the future of the state. When one candidate has based his campaign so far on as much fiscal falsehood as has Bob Ehrlich, the media has a responsibility to call him out on it. If they don’t, they are abdicating their duty and should drop their pens.
Tuesday, April 13, 2010
Republican Delegate Defends the State Budget
As the Gazette reported, just two GOP Delegates voted for the state budget: D. Page Elmore (R-38A) of Salisbury and Wendell Beitzel (R-1A) of Garrett and Allegany Counties. Beitzel is a member of the House Appropriations Committee, which helped write the budget, and took the floor to argue on its behalf.
One person present in the room told us that House GOP leaders Tony O’Donnell (R-29C) and Christopher Shank (R-2B) took great offense at Beitzel’s show of bipartisanship. This informant reported, “Delegates O'Donnell and Shank both turned their chairs all the way around to glare at Delegate Beitzel as he explained why he is supporting the budget. I guess they didn’t want a Republican defending their own work product and wanted to express their displeasure and try to intimidate him into not speaking to defend funding for schools, hospitals and police.”
Following are Beitzel’s remarks from his Saturday floor speech.
Delegate Wendell Beitzel
1st Session, April 10, 2010
1:37:50 – 1:41:30
Thank you Mr. Speaker, I just want to make a few comments on the budget. You know, I think this budget begins to deal with some of the serious problems that all of us here recognize and one of those is mandates. There are many mandates that are in the budget that result in very large increases in expenditures for the state and I think many people have concerns with that.
One of the things we do in the committee is look at out years and we looked seriously at out years in this budget and four years ago it was indicated that this year we would have a 1.5 billion dollar structural deficit. Well at the end of this budget, it presents that we will have at least 200 million dollar surplus.
The great concerns expressed about what we are doing here in this body on the counties. I come from county government and I know my people are really seriously concerned about what the impact of this budget on the counties. We in the house tried to really address these issues and do things that would minimize the negative impact of this budget on the counties. The taking away of the highway user funds is a serious concern and has serious negative impact not only on the counties, but municipalities. We in the House tried to protect and do things in the out years that would minimize that impact. The other body tried to take away all highway user moneys and we tried hard to come to some resolution and did in conference committee to protect at least some of those funds. The other body wanted to take away all the teachers pensions and return all those costs back to the counties and stack teacher pensions on top of the highway user monies that they are taking away. We know how seriously that impacts our counties, local jurisdictions, and cities.
Let me point out also one of the things that was a main concern to us was legislative scholarships and how many of us have received letters from our constituents saying that these things need to continue and that was addressed in this budget.
I disagree with very many of the things in this budget. If somebody had made me king, I probably would have made a lot more changes than what’s there, but this was a committee process. We worked through the committee, the committee listened to some of my concerns and other concerns of other people in there and we came out with a product that I can support and we worked through a lot of the differences with the Senate and their opinions. We have a process that we worked through and we worked through that process and we have a budget and I intend to put a green vote.
Wednesday, April 07, 2010
Senator Kathy Klausmeier on the 2010 Session
Senator Kathy Klausmeier (D-8) represents Baltimore County and is the Chair of the Senate Rules Committee.
How Would Ehrlich Balance the Budget?
At his campaign announcement this morning, former GOP Governor Bob Ehrlich said he would seek a repeal of the 2007 increase in the sales tax from 5% to 6%. But given the state’s massive fiscal problems, how can Ehrlich do that and meet his constitutional requirement to balance the budget?
Maryland is facing gigantic budget deficits as far as the eye can see. A November fiscal update shows structural deficits of more than $2 billion per year every year through FY 2015.
A sales tax cut would make matters worse. A group of Republican Delegates sponsored a bill this year that would reduce the sales tax from 6% to 5%, which is exactly what Ehrlich is proposing. The bill’s fiscal note estimates that the cut would deprive the state of more than $700 million a year by FY 2014. And since the Transportation Trust Fund receives a small portion of the sales tax, transportation spending – a major priority of the business community – would take a hit too.
Here is what the state structural deficits would look like before and after the tax cut.
Let’s keep in mind how big these deficits would be. Three billion dollars is almost a quarter of the state’s $13 billion general fund in FY 2010. That sum exceeds what the state spends on higher education, the state police, foster care payments and the judiciary combined.
So how would Ehrlich balance the budget? His campaign statement does not include a no-new-taxes pledge but does promise to “fix” the budget and help small businesses. It is noteworthy that immediately after his election last time, Ehrlich raised property taxes – provoking grumbles from Republicans that he had gone back on his pledge to avoid new taxes in 2002. And if Ehrlich really wants to help small businesses, he would lower the top marginal income tax rates, which apply to business income earned by sole proprietors. Why didn’t he make that pledge instead?
The State Democrats would like the media to ask Ehrlich about his law firm activities and his former protégé, RNC Chairman Michael Steele. Our advice is to ask Ehrlich to reconcile his impossible fiscal promises.
Wednesday, March 31, 2010
Hurson Weighs in on Teacher Pensions
Hoisted from the comments: Former Delegate and House Majority Leader John Hurson (D-18) weighs in on the controversy over teacher pensions.
I hesitate to weigh in on this controversy but Adam is doing such a great job of imitating Blair Lee's usual flogging of the county's Annapolis delegation, I can't resist. Senator Madaleno's proposal on teacher pension funding may not be to the liking of many, but it was a smart move at the right time.
The teacher pension issue (Montgomery County's state share of funding tops all other jurisdictions shares) has been a Montgomery County liability in Annapolis for decades. I was a freshman delegate in 1992 when the state shifted teacher's Social Security payment responsibility to the counties. Everyone in the Montgomery County delegation strongly opposed the shift, but the legislature did it (to us!) anyway. It was not pleasant. The teacher pension issue has been sitting there ready for the same treatment for over two decades.
Senator Madaleno knows a train wreck when he sees it coming, and the inevitable shift to local jurisdictions of these costs was coming. The only question was "how" it was going to be done. By getting out ahead of this change and managing it's implementation he has done a very difficult, but important thing for the county.
Sure, we would all like to believe that somehow ( persuasion, pressure, mutual friends) we could avoid this change. Yes, there is alot of deception and delusion in Annapolis. But believing this change was not going to happen is self delusion and would get us right to where we were on the shift to the locals of teacher Social Security payments in 1992--embarrassed, isolated and paying for it anyway under implementation conditions that were very difficult for the county. Senator Madaleno has managed to gain leverage for the county by his proposal, and has put us at the table as the plan gets drafted. In Annapolis, we call that leadership.
Tuesday, March 30, 2010
How to School Annapolis
This year was supposed to be a lean year in the statehouse. Cuts were everywhere. Furloughs and pink slips were being handed out left and right. State aid and teacher pensions were on the chopping block. But somehow, the Prince George’s County state legislators were able to bring home an extra $18 million. How did they do it?
Take a seat, folks, because class is in session!
The Prince George’s delegation, also known as “the PeeGees,” is the second-largest county delegation in Annapolis. Six Senators and eighteen Delegates represent Prince George’s County alone. Two more Senators and five more Delegates have split districts that include pieces of Prince George’s. One of those Senators is Senate President Mike “Big Daddy” Miller, who has priorities that go far outside the county. The delegation has three standing committee chairs: House Economic Matters, House Judiciary and Senate Budget and Taxation. The group is more diverse than most people appreciate, ranging from do-gooder liberal Senator Paul Pinsky (D-22) to ethically-challenged, head-breaking Senator Nathaniel Exum (D-24) to young, wonky Delegate Justin Ross (D-22) to old, gruff House Judiciary Chairman Joe Vallario (D-27A) to smart, savvy House Economic Matters Chairman Dereck Davis (D-25), a potential future Speaker of the House. Senate Budget and Taxation Committee Chairman Ulysses Currie (D-25) is one of Big Daddy’s top lieutenants and makes sure his committee never strays too far from the boss. The Senators are all men, but a pack of young, hungry female Delegates is breathing down their necks and may someday take a couple of them out.
One spy says, “They are great street fighters. O’Malley fears them. They are the ‘victimized’ and they all believe it. They are much better at the ‘game’ – they take it personally, they take pride in ‘winning,’ and they are held accountable for playing it well by churches, etc. – not just one union.” The only sense of victimization felt by many MoCo legislators is the fact that they have not yet been elected to Congress.
As powerful as the PeeGees are, they have a problem: despite the incompetent administration of County Executive Jack Johnson, the county’s wealth is growing relative to the rest of the state. You might think that’s a good thing, but not in Maryland. The state’s wealth formulas punish economic success by diverting aid away from rich counties towards poorer ones. In the Governor’s FY 2011 budget proposal, Prince George’s was scheduled to take a 3.0% cut in aid, the biggest drop in the state. That’s just disrespectful, and no one disses the PeeGees. Here are the three things they did to turn the tables and bring home eighteen million slices of bacon.
1. Get Some Leverage
As of February 2010, 57% of Montgomery County registered voters were Democrats and the county votes overwhelmingly Democratic in every statewide election. So there has always been a sense that Democratic Governors can take MoCo for granted and hand out goodies for votes elsewhere. But 78% of registered Prince George’s voters are Democrats. Why doesn’t the same conventional wisdom apply to them?
The reason is because Prince George’s support does not come for free. They make a Governor work to get it. Three years ago, the biggest issue in the county was its deteriorating hospital system, which was on the verge of outright collapse. Governor O’Malley moved to save it by pouring tens of millions of state dollars into the system until a buyer was found. Meanwhile, the county government is trying to weasel out of its own payments to the hospital.
But the Governor’s unprecedented intervention wasn’t good enough for Prince George’s politicians as many of them withheld their endorsements last fall. (At the same time, nearly all MoCo politicians jumped on the O’Malley bandwagon despite having been screwed on school construction money the year before.) Prince George’s Delegate Dereck Davis, a power broker who chairs the House Economic Matters Committee, explained his non-endorsement to MPW this way:…I have not endorsed anyone for Governor. Quite candidly, I think it is premature to endorse anyone until after the 2010 legislative session has been completed. Then, and only then, will I be able to make an informed decision about what’s best for the community I represent.
Translation: Give us a little more, Governor. That opinion was shared by the legions of Prince George’s politicians who swarmed into potential primary challenger Wayne Curry’s birthday party. The party was a bombshell that scattered shrapnel all over Annapolis and in hindsight was one of the best things to happen for the county.
So isn’t this ungrateful behavior by the PeeGees? Of course, but it also creates the most valuable commodity in politics: leverage. And O’Malley’s promise to help the county in its quest for more aid was a direct response to such tactics.
2. Be Persistent
Prince George’s politicians have been beating the drum on state aid for a long time no matter who has been in the Governor’s office. The latest rumble started last year, when the county’s increasing wealth caused a 1.2% cut in its state aid. Exum confronted O’Malley aide Joe Brice about it:“It is clear Prince George's County has been hurt by these cuts,” he said. “We want to know what the Governor is going to do to rectify this? Because next year is 2010. And who is the Governor going to look for in his reelection campaign?”
Delegate Justin Ross followed up with a bill to change the school aid formula, telling the Post that it was a “fairness issue.” The bill was voted down by the House Ways and Means Committee, but the PeeGees had laid down their marker for 2010.
Brice responded that O'Malley would try to bring all lawmakers together and work with them on the budget.
“As long as he is aware,” Exum shot back.
This year Ross reintroduced that bill, which would have generated $39.6 million in new school aid for the counties. Prince George’s would have received $13.4 million, the most of any jurisdiction. Charles County would have been second with $4 million. MoCo would have received zero dollars. The PeeGees began sniping at MoCo in the Post over aid even though they were already getting FAR more aid than MoCo. Clearly, the PeeGees were not going to give up. O’Malley and the General Assembly leadership got the message.
3. Get Some Allies and Cut a Deal
There are three ways to get allies and cut a deal: persuasion, pressure and working out mutual gain. The PeeGees used all three to fix their aid problem.
Persuasion: The case made by Ross for a formula change involved the appropriate timing to determine wealth. Current state wealth formulas are based on tax returns filed through August 15 or September 1, but wealthy people often get extensions and file later. Ross and the PeeGees argue that undervalues the true wealth of jurisdictions with a lot of rich people in them, like MoCo, so they want to move the formula date to November 1. MoCo budget expert Senator Rich Madaleno (D-18) bought that argument, telling Ross that he had made a “compelling case” for changing at least one of the state’s formulas. Ross said, “Prince George’s County has no greater friend than Montgomery County in the legislature.” Oy!
Pressure: This is the product of the leverage and persistence discussed above. O’Malley needed Wayne Curry out of the way and the PeeGees were not going to cooperate until they got some bacon. As a result, the General Assembly’s leadership understood the importance of taking care of Prince George’s.
Mutual Gain: No budget bickering occurs in a vacuum in Annapolis. Everybody has complaints, and those who want to play ball can get some relief. This year, Baltimore City, MoCo and Prince George’s were each thrown a bone. The city got to keep the street maintenance money that some other jurisdictions were trying to take away. MoCo got to escape its Maintenance of Effort (MOE) fine. And the PeeGees got a change to the wealth formula covering disparity grants, which subsidize “poor” jurisdictions, that gave them $18 million. (They’ll be back for the much-larger education formula next year, and that will cost MoCo big-time.) So the city got to keep something it already had, MoCo avoided a fine it should never have had to pay and Prince George’s got brand new money. Who do you think made out the best?
Let’s not overstate our case. There are no LBJs running around the Prince George’s delegation and they have problems like everyone else. A few of them are deadwood, a few of them are banana-cakes and at least a couple of them are probably crooked. But as a group, they know how to squeeze the orange and get some juice to come out.
Now compare the above to our legislative “strategy” on teacher pensions. Our plan to avoid having Big Daddy stick it to us next year was to stick it to ourselves this year. Leverage, persistence, pressure, negotiation, posturing, recruiting allies, lining up votes, tough bargaining – you know, all those unsavory things that Big Daddy and the PeeGees do – well, some of our guys are too good for that. Others just don’t care because they are in Annapolis for other reasons. “Frankly, funding Ike and Nancy Floreen’s pet projects doesn’t get me out of bed in the morning,” sneers one MoCo delegation member.
Hear that? That was the bell. Class is dismissed.
Did we learn anything?
Friday, March 26, 2010
Rich Madaleno on Teacher Pensions
Over the past week, the Senate completed its work on the state budget for the fiscal year that starts July 1, 2010. The budget plan is now being deliberated by the House of Delegates. The plan adopted by the Senate includes $2 billion worth of cuts and transfers, including, as you know, a plan to revise the way the employer obligation for teacher pensions is funded beginning in Fiscal Year 2012. Under this plan, roughly one third of the obligation would be shifted to the counties. While this is a change in a longstanding policy, let me explain why I helped draft this compromise which will balance the needs of our county and our state.
As this point, most people are aware of the unprecedented impact the recession has had on our state's finances. Revenues are five percent lower this year than last year - easily the worst drop in revenues since the Depression. Even the state's current optimistic revenue projections – which anticipate a robust economic recovery happening sooner than what now seems likely – anticipate a gap of $2 billion, or 15% of planned expenditures, for each of the next four years.
During the next four years, state funding for teacher pensions will nearly double to $1.25 billion. That is a devastatingly large sum. That’s more than the entire amount the state will be spending for our public universities and colleges. In fact, that one expense will account for roughly one-quarter of our projected four year deficit.
Even if we were to raise taxes substantially – a political impossibility in Annapolis during the current political climate – we couldn’t cover these costs. We could raise the state sales tax by 1%, repeal the Glendening 10% income tax cuts, maintain the “millionaire’s tax,” and institute combined reporting for the corporate income tax - and we still wouldn’t have enough money to cover our forecast deficit.
Our current approach to spending is simply not sustainable.
For several years, some of my colleagues have been determined to change our approach to funding teacher pensions, and several proposals were floated again this year. Adoption of any one of them would have been disastrous for Montgomery County.
o The first would have transferred fully one half of the cost of pensions immediately - forcing the counties to instantly swallow $450 million in new costs, an untenable situation for any county including Montgomery.
o The second would have transferred to counties the responsibility of funding the pension contribution for all new hires and pay increases - a proposal that would have eventually shifted 100% of pension costs to the counties.
o The third proposal would have made the counties responsible for all contributions in excess of the FY07 salary base. While this option would have required a similar initial contribution from counties, costs to Montgomery County would balloon over time, placing severe, ongoing, and crippling limitations on county finances.
Some have argued that our county's delegation should refuse to accept any shifting of teacher retirement costs on to county governments. That sounds great, but unfortunately, recent history shows that this approach not only does not work, it has devastating results. During the much less painful 1992 recession, Montgomery County refused to accept any shifting of teacher retirement costs on to county governments. Not a single county legislator participated in crafting the final plan. Nor did any vote for it. But Montgomery County doesn’t control a majority of seats in the General Assembly – not even close. So against our county’s united opposition, the rest of the legislature and the governor simply ignored us: the state shifted the entire cost of social security as well as the pension cost for two years on to Montgomery County, effective immediately. Our county is still paying the price for taking what seemed to be a principled stand and not having a seat at the table.
It is essential for Montgomery County to have a seat at the table if we want to look after our interests. In fact, earlier this month, it became clear that the third of the above proposals – the one with severe negative long-term consequences for Montgomery County – had sufficient votes to pass this year. So I was determined to develop a counter-proposal that would reduce the unavoidable impact on Montgomery County.
The Senate Budget and Taxation Committee's proposed legislation, unlike the one in 1992, delays implementation of the cost-sharing by a year. It also phases the cost-sharing in gradually over three years, thus allowing time for counties to plan. In the end, the counties' contribution rate will be less than one-third of the total pension obligation. In addition, the county rate will adjust downward as the health of the pension trust fund improves. Under this plan, Montgomery County remains the largest beneficiary of state dollars for teacher pensions.
Sometimes as a legislator, one is faced with a series of unattractive choices. This pension plan passed the budget committee by a vote of 12 to 3. By my estimation, it would not have been responsible to sit back and watch a far worse deal pass by a vote of 11-4, with Montgomery County’s senators united – and almost alone – in their opposition. I did not want to see us get rolled again. On this one, I decided to engage in the hope of shaping a more favorable outcome for Montgomery County.
The Senate President commented that he did not anticipate the House passing the pension plan. I expect this issue to be assigned to study during the interim, and I hope it will serve as a "ceiling" for what a cost sharing approach might look like. I will continue to look at ways we can protect our commitment to a dignified retirement for teachers while balancing the competing and equally compelling needs of our state. Difficult choices lie ahead, and I hope my actions show that I am willing to take whatever means are necessary to ensure that Montgomery County contributes to the discussion and is not left on the sidelines holding the bag.
Sincerely,
Richard S. Madaleno, Jr.
Thursday, March 25, 2010
Chevy Chase Town Council Budget Work Session for FY11
The following is a summary of the results of the Town Council’s annual budget work session on Wednesday, March 24. Virtually all decisions were made consensually after discussion among the five council members and included the participation of the Town Manager and the Town Clerk.
Revenues and Expenditures in the Current Fiscal Year
The Council reviewed the current fiscal situation. Revenues were below estimates in the FY10 Budget in two areas: (1) highway user taxes and (2) income taxes. The State slashed Town revenues from highway user taxes from $121,000 to an estimated $6,432—a decline of $114,568.
The Town projected a sharp drop of 45% in income tax receipts in its FY10 Budget, a decline to $2.3 million from the approximately $4.2 million received in FY09, due to the severe economic recession. In fact, income tax revenues are estimated to fall by 50%--a drop of $178,825 more than anticipated in the FY10 Budget.
While total revenues fell by an estimated $293,393, the deficit projected for FY10 has increased by only $72,500 because the Town is projected to have spent roughly $221,000, or 7.4%, less than budgeted in the FY10 Budget. The total projected deficit in the operating budget for FY10 is now $327,000.
Revenues and Property Tax Rates in the Upcoming Fiscal Year
In my capacity as Town Treasurer, I worked with the Town Manager and Town Clerk to prepare a base budget in anticipation of this Council work session. The FY11 budget estimates that revenues from income taxes will remain the same as in FY10, and the Council maintained this approach in the final budget that it will propose to the community for consideration at the Town’s Annual Meeting on May 4.
The FY11 Budget takes into account that the State plans to continue transfers to the Town from highway user taxes at the drastically reduced levels instituted in the middle of the current fiscal year. Additionally, the County plans to reduce by 5% the amount it transfers to municipalities as payment for services performed by the Town instead of the County.
During the work session, the Council increased revenues over the projected amount in the base budget by a net of $7,500. The unanimous decision to retain the property tax at $0.01 per $100 of assessed value instead of reducing taxes to the constant yield tax rate of $0.0093 per $100 of assessed value yields an additional $9,000. The Council also estimated that it would collect $1,000 in municipal fines, the same level as in the FY10 Budget, which was viewed as more realistic than the projected increase to $2,500 in the base budget.
Operating Expenditures in the Upcoming Fiscal Year
The proposed budget retains all services at current levels -- from trash pickup and snow removal to policing. The Council rejected the elimination of yard trash collection between January 15th and April 1st—the only proposed cut in services—that would have saved an additional $8,000. The proposed FY11 Budget also continues the increased allocation begun in FY10 that allows the Town to employ off-duty Montgomery County police officers to patrol the town every night as well as during the afternoon dismissal at Chevy Chase Elementary School.
The base budget for FY11 considered by the Council reduced expenditures in FY11 by $28,000 from projected actual expenditures in FY10 and by $252,500 over the FY10 budget. At the work session, I proposed further specific cuts in expenditures, and the Council adopted a total of $23,500 in additional net cuts that are designed to save money without reducing services.
The most difficult decision made by the Council was to cut an additional $32,000 from the proposed FY11 Budget by delaying a planned increase in staff salaries. The Council did not take the decision lightly but felt unanimously that it is appropriate in light of the fiscal situation and current staff salary levels.
During the work session, the Council adopted a total of $63,500 in expenditure cuts, resulting in a reduction in the proposed deficit in the operating budget to $212,500 from the $276,000 in the base budget. The Council agreed unanimously that the deficit is sustainable in light of the Town’s reserves.
Capital Budget in the Upcoming Fiscal Year
The proposed capital budget for FY11 includes a little more than $1 million in expenditures needed to maintain the Town’s roads. The Town spent an estimated $1.1 million on roads this year. After FY11, the Town will have completed anticipated needed road improvements for some time with capital expenditures projected to fall dramatically as a result in subsequent years.
Budget Documents and Budget Narrative
Residents will be able to review the proposed budget online at the Town’s website (www.townofchevychase.org) by early next week. Budget worksheets posted there will include a budget summary as well as planned line-by-line expenditures, including actual numbers from FY09, budgeted and projected actuals for FY10, as well as the proposed FY11 Budget. Additionally, the Town will post the budget narrative, a document that provides a brief explanation of each line in the budget.
Budget Hearing
If you have any comments on the proposed budget, I encourage you to testify at the hearing at the Annual Meeting on Tuesday, May 4th. Residents are also welcome to speak on the budget during the public comments period at the Town Council meeting on April 7th or to write the Town at townoffice@townofchevychase.org. E-mails sent to this address are received by the Town Manager and all five members of the Town Council. Of course, you are also welcome to write me directly at dlublin@townofchevychase.org.
Wednesday, March 24, 2010
What We Learned from the Senate’s Teacher Pension Vote
The Senate’s passage of a partial handoff of teacher pensions to the counties last night – a proposal crafted by none other than MoCo Senate Delegation Chairman Rich Madaleno – contains quite a number of lessons for students of Annapolis. Here is what we learned.
1. Many Senators will vote against their own constituents on this issue.
Eight jurisdictions receive more than the FY 2010 average of $931 per pupil as a benefit from this program. They are:
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
Sixteen Senators represent parts of Montgomery and Prince George’s Counties. They voted 13-3 against the handoff, with only Madaleno, Budget and Taxation Committee Chairman Ulysses Currie and Senate President Mike “Big Daddy” Miller supporting it. Twelve Senators represent the other jurisdictions. They voted 11-1 in favor, with only Baltimore City Senator Lisa Gladden voting against. All three Howard Senators – Republican Allan Kittleman and Democrats Ed Kasemeyer and Jim Robey – voted in favor of the handoff. All three know that the county’s likely response to assuming the handoff will be to raise taxes. Robey, a former Howard County Executive, knows that better than anyone.
2. The Republicans are not unified.
GOP Senators voted 10-4 in favor of a handoff. Arguably the two most conservative Senators – Alex Mooney and Andy Harris – voted against it. Perhaps they agree with GOP House Minority Leader Tony O’Donnell, who says that shifting pension costs “almost guarantees the locals are going to raise your taxes.” O’Donnell is absolutely right. One possibility under discussion is that a future pension handoff be accompanied by allowing the counties to raise their income tax rates beyond the current cap of 3.2% to pay for it. Is that an idea that deserves support from the GOP?
3. Miller benefits from Currie’s weakness.
Two years ago, there was speculation that Currie’s legal problems would cause difficulty for Miller. In fact, the opposite has happened. Miller kept Currie in his Chair through all of his travails and they appear to have blown over. So while Currie has always been dependent on Big Daddy, he now owes everything to him – ensuring Miller absolute control over all budgetary issues. If Delegate Aisha Braveboy challenges Currie, she will be sure to point out how Currie voted against the interests of Prince George’s voters at Miller’s direction.
4. The teachers’ clout in Annapolis is over-rated.
Financing teacher pensions is one of the highest priorities for the state teachers, who fought hard to get a benefit hike back in 2006. They were either caught napping or reacted with docility to the Senate’s lightning-quick passage of a handoff. This follows their getting played by Governor O’Malley, who supported the backdoor-voucher BOAST bill shortly after the teachers gave him an early endorsement.
5. Rich Madaleno has taken a hit.
Madaleno drafted the pension handoff and was its floor leader last night. Joining him in speaking for it were Baltimore City Senator Nathaniel McFadden, GOP Minority Leader Allan Kittleman and former GOP Minority Leader David Brinkley. The spectacle of MoCo’s Senate Chairman teaming up with Big Daddy, Baltimore and the Republican leaders to erode a rare program that benefits Montgomery was too much for some of the county’s politicians to take.
“People here are talking about Rich throwing MoCo under the bus,” said one. Another official ranted, “Rich sold MoCo out, pure and simple. I am sick to my stomach.” A third person said, “Not sure what passing pension shift does from negotiating standpoint for our County. Does not look good to have Chairman of Delegation leading effort to have Montgomery County pick up 20% of the tab on pension shift.” Yet another said, “I wonder if Rich may be suffering from Stockholm Syndrome since he is basically a hostage to Miller and spends all day every day with Miller’s tightest cronies on the Budget and Tax Committee.” Madaleno did not attract a single vote from the MoCo delegation for his proposal, not from the liberal Brian Frosh, not from the conservative Rona Kramer, and not from anyone else in between.
Our informants do not expect the House to pass the Senate plan, but teacher pensions are sure to be raised next year. If so, the logical point person for Montgomery County would be its Senate Chairman and budget expert: Rich Madaleno. The problem is that he has written a proposal that targeted the county without vetting it with the rest of the delegation first, so trust is going to be an issue. How is our team supposed to prepare for the big game next year when some believe that our quarterback is wearing the other team’s uniform?
6. Big Daddy is still Big Daddy.
The biggest story of them all is once again the triumph of the Senate President. Annapolis is a grand echo chamber and Big Daddy is its master. He understands that if you repeat the same thing in private and in public for a long, long time from a position of authority that you will eventually get part or most of what you want. Better than anyone in the state, Miller uses patience, pressure and timing to move something from a crazy idea to an unlikely proposal to a serious policy consideration to a bill to a reality. That is why Maryland is getting slots. And that is why we are no longer arguing over whether to send pensions to the counties, but rather over how much of them to send. As long as the debate is conducted on Miller’s terms, he will command an overwhelming advantage.
And what happens then? A veteran Miller-watcher tells us, “You will never find anyone – ever – that has a better sense of how to smell and then exploit human weakness. He was born with this instinct.” MoCo, you have been warned.
Tuesday, March 23, 2010
Madaleno Rocks MoCo on Teacher Pensions
Sixteen months ago, Montgomery County Executive Ike Leggett stared Senate President Mike “Big Daddy” Miller in the eye at a Committee for Montgomery Breakfast and told him, “We leave here with a mission, and that mission is we’re going to draw a line in the sand… And we’re not going to step back; we will protect our teacher pensions.” And who should cross that line in the sand but one of MoCo’s favorite sons: Senate Delegation Chairman Rich Madaleno (D-18).
Last Friday, Madaleno introduced a proposal to phase in sending part of the obligation for teacher pensions to the counties in the Senate Budget and Taxation Committee. The proposal passed by a 12-3 vote, with only Montgomery Senators Nancy King (D-39) and Rona Kramer (D-14) and Prince George’s Senator Doug Peters (D-23) voting against it. Specifically, Madaleno’s proposal would require the counties to pay 1% of teacher retirement costs in FY 2012, 3% in FY 2013, and 5% in FY 2014 and 2015. By FY 2015, the counties would be paying $337.5 million towards teacher pensions, of which $69.9 million would be paid by MoCo – easily more than anyone else. Furthermore, the payments would kick in just as federal stimulus money for education runs out. Here is the fiscal summary.
Most other MoCo policymakers had little or no warning of the proposal. That includes the vast majority of MoCo’s statehouse delegation and officials inside county government. This development surprised MANY people for the following reasons:
1. Madaleno is one of the top budget experts in the General Assembly and is Montgomery’s leader on those issues. He has stood up for the county’s interests in the past, leading a failed battle against the millionaire tax and opposing Prince George’s County’s efforts to grab more aid at MoCo’s expense. Madaleno knows better than anyone that teacher pension payment is one of the very few state aid programs that disproportionately benefits Montgomery. The county is fifth-from-the-bottom in state aid per capita overall but second-from-the-top in teacher pension payments per pupil in the state. For Montgomery, what state program besides transportation funding is more worthy of protection?
2. Perhaps more than any other county, Montgomery is in grave fiscal trouble. The county’s Chief Administrative Officer estimates the county’s future budget deficits at $519 million in FY 2012, $600 million in FY 2013, $683 million in FY 2014, $715 million in FY 2016 and $752 million in FY 2017. Why add tens of millions of dollars to those deficits?
3. Teacher pension is not only a Montgomery issue. The following counties derive a per-pupil benefit that is greater than the state average of $931 as of FY 2010 from the program:
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
Despite the above benefit distribution, Howard County Senators Ed Kasemeyer (D-12) and James Robey (D-13), Baltimore City Senators Verna Jones (D-44) and Nathaniel McFadden (D-45) and Worcester/Somerset County Senator J. Lowell Stoltzfus (R-38) voted against their own constituents by supporting Madaleno’s proposal. Senate Budget and Taxation Committee Chairman and Prince George’s Senator Ulysses Currie (D-25) also voted in favor of it despite facing a possible challenge from Delegate Aisha Braveboy, who would be sure to use the issue against him if she ran.
Madaleno has enormous credibility in MoCo on budget issues, but he is taking some heat over this. One long-time admirer growled, “Rich is really off the reservation on this one.” Another observer was appalled, saying, “Wow, MoCo surrenders teacher pension without a fight.” Yet another complained about the lack of notice and said, “This is not the right way to do this.” And one influential policy maker, upon hearing of the cost to the county from the proposal, yelped, “We’re so screwed!”
Madaleno’s defenders offered theories to explain what happened while scratching their heads. One hypothesized that it was easier to negotiate with Governor O’Malley over the issue than with a possible Governor Ehrlich. Two more said that by offering a solution, Madaleno was earning MoCo a seat at the table. “If you’re not at the table, you’re on the menu,” said one veteran. Almost all our budget informants regard a partial handoff of pension obligations to the counties as inevitable. Even some of the fiercest public opponents concede - strictly off the record – that the counties are going to lose this issue. More than one believes that Madaleno’s proposal may be the best MoCo can get given the more draconian plans preferred by the likes of Big Daddy.
We will not raise the white flag until the last shot is fired. The teacher pension issue is hugely important to Montgomery County. It is not something to be given away for nothing in return because it affects our biggest long-term economic edge against our competitors in Virginia: the public schools. The Maryland Association of Boards of Education estimates that every $100,000 in pension costs passed down to the counties equals one-and-a-half to two teacher positions. MCPS is already preparing to increase average class size by one student due to existing budget problems. Montgomery cannot afford to maintain its per-pupil spending and will be applying for a state Maintenance of Effort waiver for the second straight year after never applying for a waiver in its previous history. What will happen to county schools if they bear even more budget problems? And how much more attractive will Fairfax become if MCPS suffers?
If Montgomery wants to preserve the quality of its schools, it must put up a tough fight and negotiate only when it has maximum leverage. That point is not now, but next year, when the next Governor – whoever it is – will have to pass a tax and spending package to deal with Maryland’s long-term budget deficits. Such a package cannot pass without MoCo’s votes. And that will be the time for the county to extract its terms on teacher pensions and anything else. As one of our spies says, “We are holding a handful of aces. Why fold when we can play them?”
Sunday, March 21, 2010
Senator Nancy King Comments on the Budget
Senator Nancy King (D-39), a member of the Budget and Taxation Committee, sent out the following legislative update to her constituents containing information on the current state of the budget.
Dear Friends and Neighbors,
As a member of the Senate Budget and Taxation Committee, I can tell you that this year's budget process is the most inclusive and consensus-driven in recent memory. Everyone knows that the national recession left us with a serious budget problem, and we have worked hard to ensure that everyone who has asked has had a seat at the table as we try to resolve it.
Working together, we have cut $5.5 billion in spending during this four year term, and we have reduced the State workforce by 3,500 positions. Our general fund - the State's equivalent of an operating budget - is smaller today than it was at the beginning of the term. This is the first time in four decades that we have reduced the size of government over a four-year period of time.
Our Spending Affordability Committee meets each year before session to recommend a spending goal to the Governor. Comprised of lawmakers from both political parties and private sector budget experts, the Committee recommended zero percent growth in the budget this year. The Governor met and exceeded this goal by introducing a budget with $1 billion in cuts.
Over the past 66 days, I have participated in public hearings on every aspect of the State budget, including a joint hearing where members of the minority party shared their budget proposals. Everyone's ideas - regardless of political affiliation, ideology or geography - have received a free and fair debate. This past week in the Budget & Taxation Committee, we have made additional cuts to the budget and next week we will spend hours debating the budget on the Senate floor.
If you'd like to better understand the cuts we are considering, and how those cuts might impact the State, the Maryland Budget and Tax Policy Institute has set up an on-line "Budget Game" that lets you try your hand at balancing the State budget. The site includes options under consideration, and might help you better understand the challenges we face. You can take a look here: http://iat.ubalt.edu/MDBudgetGame/.
While the politicians in Washington, D.C. are twisting each other's arms, here in Annapolis we are working together to solve the problems that Maryland faces. We're building consensus around a series of cuts that will ensure our budget is balanced, while protecting priority investments in public education, job creation and public safety.
Thank you for taking the time to read this and providing me with your input on issues facing our community. If there is anything I can do for you, or you have any questions or concerns, please do not hesitate to contact me at 301-858-3686 or email me at nancy.king@senate.state.md.us.
Sincerely,
Senator Nancy King
Friday, March 12, 2010
Where Do the Counties Rank on Returns from the State?
Ten-year data comparing state aid to state taxes paid by county illustrate a truth we all know: Maryland is a state of donors and recipients. Here are who’s giving and who’s getting.
Page 107 of last year’s Overview of Maryland Local Governments shows the amount of state aid and payments-on-behalf (like teacher pensions) per dollar of state taxes paid for each of the state’s 24 jurisdictions. We reproduce it below.
Over the FY97-06 period, Montgomery County received 15-19 cents in aid and payments-on-behalf for every dollar in taxes its residents paid to the state. Only Worcester (11-13 cents) and Talbot (11-14 cents) received less. The biggest recipients were Somerset (91-114 cents), Caroline (91-107 cents) and Baltimore City (81-108 cents). The state average was 34-40 cents over the ten-year period.
There is a major omission from the above data: transportation spending. Of the $9.1 billion six-year Consolidated Transportation Program, the ICC accounts for $2.6 billion and WMATA will receive $658 million in debt service and $1.3 billion in construction spending and equipment. (A lot of the above funds are federal.) But the ICC and Metro serve many non-Montgomery residents and their inclusion would not come close to eradicating Montgomery’s status as a donor county.
Why does Montgomery do so poorly? We explored this issue in 2008’s MoCo: Not as Rich as You Think series. On the one hand, Montgomery residents need higher salaries to pay for higher costs for gasoline and real estate. The state’s income tax brackets, which treat income equally in every jurisdiction without regard for costs, pinch Montgomery’s residents harder than elsewhere. And on the other hand, most of Maryland’s aid is driven by wealth formulas that depend heavily on real estate values. High home prices in Montgomery may mean more home equity for some, but they also mean higher mortgage payments. In 2006, Montgomery mortgage holders paid an average $2,285 per month, the highest in the state.
The net effect of the system is to drain Montgomery residents of both tax dollars and aid. High nominal salaries are needed for high real estate and fuel prices, which ripple through to increase other costs in the county. Uniform state income tax brackets capture disproportionate amounts of that income. High home prices lead to greater wealth calculations in state formulas, which reduce state aid. And the county government must react by raising its property taxes to make up for relatively low state aid levels.
Anyone up for moving to Crisfield?
Thursday, February 18, 2010
More Budget Bull from the GOP
A couple weeks ago, the Senate and House budget committee chairmen wrote to the GOP leadership in the General Assembly asking for their recommendations on how to cut the general fund by $2.5 billion. After all, Republican legislators had voted for such a cut in the Spending Affordability Committee and their leaders were complaining about short-term budget fixes in the Gazette. The House Republican leadership has replied, and has said...
Absolutely nothing.
We reprint the reply letter from House Minority Leader Tony O’Donnell (R-29C) and House Minority Whip Chris Shank (R-2B) to Speaker Mike Busch and Senate President Mike Miller below. In the letter, the two GOP leaders totally dodge all reference to specific cuts and say that they will present a proposal only if the Democrats do. Clearly, they would like to talk about cuts in general in the newspapers, but that did not mean that they wanted to talk about actual, real-live CUTS.
And so Busch and Miller repeated their invitation to the GOP to present their proposals for actual, real-live CUTS before the General Assembly budget committees on February 23rd. Let’s see if they show up.
Now we believe in helping the less fortunate, and in that spirit, we extend a helping hand to the hapless House minority. The Governor’s budget proposal is a good place to begin looking for the actual, real-live CUTS that perhaps a couple Republican legislators (and certainly a big part of their conservative base) may be interested in. Note that the FY 2011 general fund proposal is already $265 million less than FY 2010, so the Governor has given the GOP a head start.
$2.5 billion would equal:
More than half of all state aid to public schools and libraries
More than the state spends on foster care, medical assistance and property tax credits
More than double the public safety budget
More than double the amount the state spends on its university system
More than spending on the state police and the universities combined
So the question posed by the Democrats – and also the conservative Tea Party base – is really quite simple. Where would you cut?
We cannot let this post pass without mentioning Delegate Chris Shank (R-2B), co-author of the Republicans’ non-reply reply. Shank is challenging Senator Donald Munson (R-2) in the GOP primary from the right. Shank said in his announcement: Over the next year, I intend to lay out my views about moving this state forward with conservative policies of pro-economic growth, limited spending, and government reform. On these issues and many more, there will be a real choice between us, a real contrast for the voters to decide. Senator Munson will need to answer for his decisions to abandon our conservative values and instead choose political expediency time and again.
And so the Speaker and the Senate President gave Delegate Shank a golden opportunity to prove that he is a real conservative by laying out actual, real-live CUTS totaling $2.5 billion. And what should he do but cut and run instead!
Saturday, February 06, 2010
DeGrange on the Capital Budget
Senator James DeGrange (D-32) is a member of the Budget and Taxation Committee and is the Chairman of the Capital Budget Subcommittee.
Monday, February 01, 2010
Dems Call GOP Bluff on Budget
Maryland Republican legislators have been yapping up a storm about Governor O’Malley’s budget proposal, which relies almost as much on one-time transfers as it does on cuts to achieve balance for the year. So the Democratic budget chairs replied, “You don’t like it? OK, guys – you deal with it!”
The Governor’s FY11 budget proposal proposes $913 million in transfers and $1.014 billion in cuts to resolve a $1.95 billion deficit. That continues what has become an annual tradition of using band-aids to deal with current deficits and postponing more lasting fixes until next year or beyond. The Gazette carried quotes from the Republican leaders in each chamber of the General Assembly who complained about the practice:House Minority Leader Anthony J. O'Donnell (R-Dist. 29C) of Lusby called that method of budgeting unwise.
So the Chairs of the two budget committees – Senator Ulysses Currie and Delegate Norm Conway – sent a letter to Kittleman and O’Donnell, noting that GOP legislators had voted for $2.5 billion in spending cuts in the Spending Affordability Committee. Currie and Conway want to know where the GOP would find these cuts. We reprint the letter below.
“We’ve got to stop taking their money from them and do the spending reductions that we need to do,” he said. Republicans got a separate briefing from the governor.
Miller and Busch have said the legislature will not pass any tax increases in 2010, an election year. Senate Minority Leader Allan H. Kittleman (R-Dist. 9) of West Friendship raised the specter of future tax increases.
“They’re going to borrow and beg and steal from fund balances to do whatever they can to get through this year, and you and I and all the citizens of Maryland are going to get socked next year,” he said.
The GOP does not have an easy task. Eighty-five percent of the $13.2 billion general fund (which is smaller than in former Governor Ehrlich’s last year in office) goes to education, health and public safety. It is virtually impossible to implement large budget cuts without touching those items.
So to be consistent with their statements and record, the Republicans would have to run on a platform of cutting schools, health care and police. Good luck with that!
