MD General Assembly passes budget in special session

On Wednesday, May 16^th, the Maryland General Assembly passed a budget and revenue bill for FY 2013 in a special session. The bill includes an increase in income taxes that will benefit the counties and help offset a 50% push down of the Teacher Pension. For more information, please see the Gazette article.

MD General Assembly to have special session for budget

On Monday, May 14^th, the General Assembly will convene for a special session to discuss and vote on a budget for FY 2013. According to an announcement yesterday from Governor O’Malley, the compromise budget proposal that will be discussed includes $109 million in spending reductions to the $35.9 million budget, as well as an income tax increase and elimination of exemptions that would generate $195.6 million in state revenue.

The plan also includes a shift of 50% of the “normal cost” of teacher pensions, or $136.6 million, to counties starting in FY 2013. This would increase to a 100% shift in FY 2016. The normal cost is the amount required to pay pension liabilities if the system had not been underfunded.

For more information on the budget proposal and the special session, including a video of O’Malley’s announcement, please see the Gazette article.

The General Assembly did not pass a tax bill prior to the conclusion of the legislative session on April 9^th. This means that the state is scheduled to automatically go into FY 2013 on July 1^st using the “doomsday” budget, which includes a $512 million cut for education, libraries, public safety and other programs. (For more information, see the earlier blog post.) If the General Assembly votes in favor of this new proposal, the state would not implement the “doomsday” budget.

MD Legislative Session ends with “doomsday” budget

The 90-day session of the Maryland General Assembly ended last night and legislators failed to pass a tax bill that would help balance the $36 billion budget. This means that as of July 1^st, the “doomsday” budget, which is balanced by more than $500 million in cuts, will go into effect unless something is done. This would not include a shift in pension costs from the state to the local governments, but would cut $512 million for education, libraries, public safety and other programs (approximately a 10% cut to public library funding).

Governor O’Malley could call a special session to work on a plan to increase taxes and limit or eliminate the budget cuts. The Governor has not yet said what he will do.

For more details about the outcome of the legislative session, see these articles:

• Assembly fails to pass tax bill, adopts ‘Doomsday’ budget (Baltimore Sun)
• General Assembly adjourns without completing work (Gazette)
• What now? Legislative leaders decry budget cuts, say special session is needed (Baltimore Sun)
• Editorial: Debacle in Annapolis (Baltimore Sun)

Budget passed in Senate; moves on to House

The full Senate has passed the budget and it has moved on to the House. It appears that the House and Senate versions of the budget will have major differences, including how revenue will be raised and over how many years to spread the pension push down. The House is expected to finish its work on the budget this weekend. This Gazette article gives an indication of how the budget is taking shape in the House.

Update and History of the State Teacher’s Pension

County officials have begun to respond to the recent revised budget plan passed last week by the Senate Budget & Tax Committee. See this Gazette article for more details.

This editorial by Blair Lee gives a good history of how the state started paying the pension. It also provides a counterpoint to the state’s view.

Proposed budget to share total retirement costs between state and locals

Governor O’Malley released his FY 2013 proposed budget yesterday. It does include a shift of retirement costs to the local governments. Currently, the state pays all of the costs for teacher pensions (a total of $946 million) and the counties and Baltimore City pay all of the costs for social security. O’Malley’s proposal would combine these two retirement costs and split them 50/50 between the state and the local governments. Although this is still an increase in the costs for local governments, it is not as high as if there a shift of pension costs and no change in social security.

 

At this point, the budget is in the hands of the General Assembly. The General Assembly may take things out of the budget, but not put something in it. This means that they can choose to reduce the costs being pushed down to the local governments; however, to do that and keep the budget balanced they must reduce spending elsewhere. Concern over this push down will be raised at the Maryland Library Legislative Day.

O’Malley’s proposed budget to include shift of teacher pension costs to counties

On Wednesday, January 18^th, O’Malley will release his FY 2013 budget. It is believed that the proposal will include a $240 million shift of teacher pension costs, including that of public librarians, to the counties and Baltimore City. Currently the state pays $955 million per year in teacher pension costs.

For more information, please see the Baltimore Sun article.

Libraries receive flat funding from state for FY 2012

The Maryland General Assembly approved no change to the per capita funding for libraries as part of the Budget Reconciliation and Finance Act (BRFA).  This translates into another year of flat funding for Public Libraries, Regional Libraries and the State Library Resource Center (SLRC).  Because the per capita funding is based on population and real property wealth, individual library systems may notice a slight change in their funding amount, but it will otherwise remain the same.

Pension changes coming in FY 2012

The State Teachers Pension has been a topic of budget discussions throughout this session of the General Assembly.  In addition to O’Malley’s proposed changes, many bills were introduced to make additional changes to the pension plan.  However, none of the bills made any progress beyond public hearings.

The House and Senate have passed the Budget Reconciliation and Finance Act (BRFA), including an employee contribution increase to 7% while maintaining the 1.8% benefit multiplier at retirement.  New employees will automatically contribute 7% and have a 1.5% benefit multiplier.  These changes will go into effect on July 1^st.

State Senate approves level Public Library Funding

The Maryland State Senate approved the Budget Reconciliation and Finance Act (BRFA).  As did the House, the Senate kept flat funding for public libraries, as it was in the original proposal.

The BRFA will now go to Conference Committee to allow representatives from the Senate and House to reconcile the differences between the Senate and House versions of the budgets.  Since level funding for public libraries was included in both budgets, this should not change.