“This puts a potentially devastating squeeze on local government,” said Howard County Executive Ken Ulman, a Democrat. “Find the $239 million somewhere else in the budget.”

The local officials pointed to libraries, public safety and education as services that could be hurt if the General Assembly transfers millions of dollars in costs to them.

Ulman was joined at a news conference by Rawlings-Blake and county executives John R. Leopold of Anne Arundel, David R. Craig of Harford, Rushern L. Baker III of Prince George’s and Isiah Leggett of Montgomery, as well as county council members and commissioners from around the state.

Absent from the gathering, organized by the Maryland Association of Counties, was Baltimore County Executive Kevin B. Kamenetz. Donald I. Mohler III, Kamenetz’s communications director, said his boss would find O’Malley’s proposal “reasonable” if it were changed to pass the cost on to county school boards rather than county governments.

As part of his budget for next year, Gov. Martin O’Malley has proposed a plan that would shift part of the cost of teacher pensions — now borne entirely by the state — to the counties. It would pool the pension costs with the Social Security employer contributions now paid by the counties and split them 50-50 going forward. He estimates that the change would save the state $239 million next year.

To help ease the blow to counties, O’Malley has proposed a plan that, among other things, would raise income taxes on the top 20 percent of earners in a way that would also provide revenue for county governments. The governor has proposed additional tax measures that would provide money to the counties.

County officials contend that the compensatory revenues are not sufficient, particularly after the first year of the shift. The Maryland Association of Counties estimated the second-year cost to the counties at $330 million.

“In the out years, we’re really hit by this,” said Baker, a Democrat. “Collectively, we cannot absorb this, and we’re here to stop it.”

Rawlings-Blake told reporters that O’Malley’s formula does not provide enough in “wealth equalization” to mitigate the impact on less affluent jurisdictions.

The issue is pitting state officials against local officials who would have to make tough decisions by either raising taxes or cutting programs if the shift is approved.

“This is not an issue of Democrat versus Republican. It’s not an issue of rural versus urban,” said Craig, a Republican. “All of us in county government know we can’t shift costs and cannot shift services.”

While county officials took a hard line Wednesday, they also signaled that they expect negotiations to reach a deal on a package they would find less onerous.

Ulman said county officials are aware that if the pension shift were to be eliminated, General Assembly leaders would have to find $239 million somewhere — either in additional revenue or deeper cuts — to balance the budget.

“We’re not oblivious to that,” he said.

michael.dresser@baltsun.com

Prince George's County executive Rushern Baker speaks in Annapolis against the move, flanked by other county executives, supervisors, and mayors from around the state.

It isn’t only his plan to raise taxes on gas that has some fellow Democrats upset with Maryland Gov. Martin O’Malley (D). After years of resisting pressure from leaders in the General Assembly, the governor this year is proposing that county governments and the city of Baltimore start picking up part of the tab for teacher pensions.

Worse, they fear the proposal, even if defeated this year, will frame the debate of the state budget for years to come.

More than two dozen local lawmakers gathered Wednesday in Annapolis to argue that because their governments have had little input into pension reform or how the pension fund is managed, they should not have to bear the burden of the shift.

“I want to also make clear one thing: The state caused this challenge,” said Howard County Executive Ken Ulman (D). “We weren’t the key drivers. We don’t negotiate those salaries, we don’t affect the pension benefit, and we don’t manage the investments. To send us the bill?”

The Montgomery County board of education echoed Ulman’s argument.

Actions that led to underfunding of the pension — including the 2006 enhancement of benefits and “corridor funding,” which allows underfunding by as much as 10 percent — were the result of state-level decisions, the board said in a statement.

The Maryland Association of Counties, which is spearheading the opposition and telling lawmakers they simply must vote against the proposal, also is working with state education organizations and public employee unions to create a coalition against the plan.

State payments toward public school teacher pensions have more than doubled in the past five years — to more than $900 million annually. The state currently pays 100 percent of the costs, while local jurisdictions shoulder the entire cost of teachers’ Social Security, which is lower.

Under O’Malley’s plan, the state and jurisdictions each would pay half of the total cost of pensions and Social Security, a move that would shift $239 million of the burden onto local governments.

The plan also includes $244 million in increased local revenue, aid to less-wealthy jurisdictions and other budget relief to soften the blow in the first year.

That’s not enough, said Montgomery County Executive Isiah Leggett (D).

“There are some offers of sweeteners or things that could be done to soften the blow,” Leggett said. “The problem with that is that we don’t have those.

“Those are somewhat speculative and many of them may not come year after year, it may be simply for the first year. You really need to have something that is permanent, something we can accept.”

Eloise Foster, O’Malley’s secretary of the Department of Budget and Management, argued the governor is not shifting a broken system to the counties, rather that he ushered in pension reform last year.

Baltimore County Executive Kevin Kamenetz (D) did not attend the news conference and supports the governor’s plan.

“County Executive Kamenetz has great respect for his colleagues in MACo. More often than not, they agree. On this issue, they do not,” said Donald Mohler, his chief of staff.

Other supporters of the proposal, such as Senate President Thomas V. Mike Miller Jr., who has championed the shift for years, argue the pension costs should be transferred to the counties because the state doesn’t have a say in teacher salaries.

When pressed by reporters to offer an alternative to the governor’s proposal, officials at the meeting said only that they would not support a shift.

Harford County Executive David R. Craig (R) said he anticipated a long fight.

“My fear is that even if we get this resolved this year, we’ll still be looking at this next year and the year after that,” he said.

dgaines@gazette.net

The group, called the Maryland Association of Counties, said passing the buck could cost local governments in the neighborhood almost a quarter of a billion dollars.Politicians said if they’re forced to pick up the tab for teacher pensions, they’d be limited not only in what they can spend on schools, but the rest of government as well. Tooten said that’s why they showed up in Annapolis to try to help lawmakers see the big picture.

“This is not just a teacher pension issue,” said Howard County Executive Ken Ulman. “It is a huge, potentially devastating burden on local governments, and people need to know that’s where their trash gets picked up, their snow gets plowed, (and where they get) police officers, firefighters and libraries.”Ingrid Turner, the association’s president, said, “This is going to affect all of county government, and we’re here to stand together to say we can’t take the teacher pension shift.”Baltimore City leaders said they may be in the worst shape to try and shoulder the financial burden brought on by paying the cost of teacher pensions.”Hopefully, we can get to a middle ground right now,” said Baltimore Mayor Stephanie Rawlings-Blake. “There aren’t any alternatives. There’s not talk of wealth equalization the same way the other education funds are dispersed, so there are a lot of concerns.”Tooten said those are concerns that some politicians said should remain in Annapolis.”We don’t control the pension system, we don’t run it, we don’t have no say in it,” said Council President Jack Young. “So I don’t think we should be involved in it other than letting the state do what it does with the pension system.”The teacher pension plan is on the table at a time when Maryland schools have been ranked as the best in the nation by a national education magazine.Some local leaders said they fear that taking on teacher pensions would force them to raise taxes.

Two Howard County offices hope to spend less on gas, with the addition of electric Nissan Leaf sedans, which County Executive Ken Ulman unveiled last week.

The Sheriff’s Office and the Department of Inspections, Licenses and Permits now have a 2012 Nissan LEAF, which can run about 100 miles per charge, according to a county spokesperson.

The vehicles, which cost $38,000 each, will use approximately $600 of electricity annually, according to a county press release.

“This is just the latest step in our initiative to make Howard County a leader in environmental sustainability and the protection of our natural resources,” Ulman said in a statement.

Employees will charge the vehicles at the Thomas Dorsey Building in Columbia, with the charging station provided to the county through a Maryland Energy Administration grant. The charging station is also free for employees and residents of Howard County.

In February of last year, the county announced the introduction of two hybrid trucks to the bureau of highway’s tree maintenance division.

These recent additions are far from the first electric vehicles to grace the Howard County fleet though, according to the Columbia Archives website. In 1976, urban planner Jim Rouse purchased a Sebring-Vanguard CitiCar as a county vehicle and drove it around the streets of Columbia, says the Archives website.

“I’m not satisfied,” Ulman said. “Too many strong communities have fallen prey to complacency and watched as the times passed by. I will not allow that to happen here in Howard County.

“We must seize this moment and remake our region as the model for the 21st century’s innovation economy,” he added.

The beginning of Ulman’s speech, which was delivered Thursday afternoon before Chamber of Commerce members at a luncheon held at Turf Valley Resort in Ellicott City, harped on the “innovation economy” and what Howard is doing and can be doing to create jobs and opportunities.

Howard County, Ulman said, has a wealth of resources and bright people.

“Our opportunity, and the one we must commit ourselves to seizing, is creating an environment where the big ideas that surface are nurtured, supported and given the resources they need to become the next big thing in the marketplace,” he said.

Ulman noted the recent creation of the Maryland Center for Entrepreneurship, an arm of the Howard County Economic Development Authority that he said “will wrap resources around entrepreneurs and provide the road map from innovation to commercialization.”

However, Ulman said Howard County cannot transform the economy alone. He talked about the importance of regionalism, providing the Inter-County Broadband Network project as an example.

“Fast, reliable and affordable broadband is as critical to the 21st century economy as the electrical grid and interstate highway system were to the 20th century economy,” Ulman said.

The first half of the speech really resonated with the audience full of business leaders.

“It was positive,” said Mark Cissell, who is the president and CEO of a public accounting and consulting firm. “It’s good to know that our (local) economy is still thriving in a rather dismal (national) economy.”

Cissell agreed with Ulman about the importance of job creation in the county.

“That’s why we spend 64 cents of every dollar on education,” Cissell said, repeating a fact Ulman mentioned in his speech. “Education leads to jobs.”

After listening to Ulman’s speech, Randy Gartner, who works for a marketing firm, said: “Ken is a great example of enthusiastic leadership, and it’s contagious.

“It’s also motivating because if he’s starting all these initiatives, so could we,” he added. “We’re looking for ways of bringing that innovation.”

Accomplishments

Ulman also talked about how important it is for Howard to continue to provide great schools, safe neighborhoods and a high quality of life. He said the economy and continuous cuts in state assistance — from $30 million in state aid (not including aid for the school system) in 2007 when Ulman took office to $4 million this past year — make it difficult to sustain Howard’s quality of life.

“And now the state wants to send Howard County a bill for $17 million to cover the costs of teacher pensions,” Ulman said. “If lawmakers in Annapolis fail to fight against this shift, the progress we have made here will be in serious jeopardy.”

After the sour note about state assistance, Ulman went on to conclude his speech by listing all the county has accomplished in the past year.

His mention of Superintendent Sydney Cousin, who is retiring this year, as “the best superintendent in the country” and police officer Nick Bingham and firefighter Josh Angelo, who helped citizens caught in the flood currents from Tropical Storm Lee, as “hometown heroes” drew standing ovations.

Ulman also touted the county’s environmental efforts, including the 2,000 solar panels that help power Worthington Elementary School and the county’s food scraps recycling pilot program. He announced that the county’s fleet of hybrid vehicles has grown with two new, all-electric vehicles that went into service on Thursday.

Another announcement Ulman made is that next month the county will open the first part Blandair Park in Columbia, which will include three synthetic turf fields, a large playground and a picnic area.

After the speech, County Council member Greg Fox, a Fulton Republican, said Ulman “didn’t really tell us anything new or exciting.

“I think it would have been nice to hear a little bit more about where we stand financially,” Fox added.

Council chairwoman Mary Kay Sigaty, a Columbia Democrat, said Ulman “speaks very honestly about the leadership role (Howard County) has in several different areas.”

However, she noted she is worried about what he said regarding the possible teacher pension shift.

“I don’t think the governor has stopped to think about the ramification it will have on county budgets,” Sigaty said.

By Lindsey McPherson, lmcpherson@patuxent.com

The Jan. 20 editorial “Mr. O’Malley’s bold budget” praised the proposal by Maryland Gov. Martin O’Malley (D) to shift the obligations for teachers’ pensions to local governments as “courageous.” It would, The Post wrote, “restore some balance” by creating an incentive for localities to rein in teacher salaries and thus retirement costs. Sadly, the proposal does no such thing.

In Maryland, we operate under a well-intentioned but often dysfunctional system for paying for our top-ranked public schools. Teacher salaries are negotiated by school boards, which are then in charge of writing the education budget. The minimum amount of that budget is set by state law. But school boards have no taxing authority in Maryland. So school budgets are passed on to county governments for funding.

This is a problem, and the governor’s plan exacerbates it. Under his proposal, half the cost for teachers’ pensions would be passed on to county governments — not to school systems. The distinction is important. The shift would create enormous pressures on human services, road maintenance, police protection and everything else that local government does.

While I oppose shifting teachers’ pensions, the governor’s proposal has opened an opportunity for much-needed discussion. We need to create an incentive-based system so that school boards look for savings in conjunction with county governments. In Howard County, we have produced savings by eliminating our print shop and cable TV studio, among other things. School boards can do the same, and counties can be the source of that savings, through consolidation. As a lifelong supporter of public education, I’ll be backing legislation during the General Assembly session to accomplish this.

As part of a plan to address Maryland’s $1 billion budget shortfall, O’Malley will propose a groundbreaking shift of teacher pension costs from the state to local governments, legislative sources said Tuesday.

The governor’s budget proposal, which must be approved by the General Assembly, also will include spending cuts to Medicaid as well as higher income taxes for the top 20 percent of Marylanders by phasing out exemptions and deductions, the sources said.

In addition, O’Malley will propose collecting sales taxes on some purchases from online retailers that don’t impose the levy now and taxing cigars at the same higher rate as cigarettes.

Some details of the plan emerged after legislative leaders and others were briefed Tuesday.

The most significant change would be a sharing of the burden for paying the retirement costs of public school teachers between the state and local jurisdictions — the 23 counties and Baltimore City. Since the pension system’s inception, those costs have been borne by taxpayers at the state level. Changing that system would put added pressure on the counties and city to raise taxes — or to hold down teacher salary costs.

The change is expected to save the state an estimated $240 million the first year by shifting costs to the counties — an amount that is expected to increase over time. The figure effectively comes from shifting half of pension costs for teachers to the counties but shifting half of teacher Social Security costs to the state. Currently, the state pays about $955 million a year to cover the full cost of teacher pensions, and it pays none of their Social Security costs.

The General Assembly will spend much of the next 21/2 months considering changes to the governor’s plan, but Democratic leaders reacted positively Tuesday. House Speaker Michael E. Busch called the pension plan a “balanced proposal by the governor.” Senate President Thomas V. Mike Miller said the governor “has made some very bold decisions.”

But some county leaders were dismayed after being briefed by the governor late Tuesday afternoon.

Montgomery County Executive Isiah Leggett, a Democrat whose county is facing a budget shortfall of more than $100 million, called the teacher pension proposal a “non-starter.”

“The shift is not acceptable,” he said. “The mechanisms to soften the blow are, I think, insufficient. I’m not prepared to accept it.”

Howard County Executive Ken Ulman noted that O’Malley didn’t propose a transfer of teacher pension costs during his first five years as governor.

“I think he understands the impact is very difficult. I’m disappointed that there’s going to be a proposal to shift the burden to counties because I don’t think we’re in any better position to be able to afford it than the state is,” said Ulman, a Democrat.

Anne Arundel County Executive John Leopold, a Republican who was not briefed by O’Malley, derided the governor’s plan to shift teacher pension costs to the counties, calling it a “heavy burden” that would make it “extremely challenging” to uphold Leopold’s plan to eliminate furloughs for county employees in his next budget.

“Essentially the state is asking the counties to bail it out,” said Leopold, who has furloughed county employees for the last two years. “They want to set the rules and pass the bill to the counties.”

The Senate GOP caucus has long called for the pension burden to be moved to the counties, a point Sen. David Brinkley noted Tuesday. “I’m glad he’s coming around to our plan,” he said.

But a House Republican leader objected to the tax provisions in the package.

“We should really be focused on reducing our spending, and we should be focused on the economy, business and jobs. And from what I know so far this budget seems to be very contradictory to that,” said Eastern Shore Del. Jeanne Haddaway-Riccio, the minority whip. “Obviously it is going to be a concern when you make changes that affect business and taxpayers.”

If lawmakers were dismayed by some provisions, they were relieved by some things that are not in the plan. Despite O’Malley’s musings last week about the advantages of a sales tax increase, he will make no such proposal, officials said. While some individuals’ tax payments may go up, rates themselves will not be touched. Nor will the budget rely on transfers from the Transportation Trust Fund or an increase in the state property tax, sources said.

“This is really a crippling blow to our local budget,” said County Executive Ken Ulman, a Democrat, noting that the proposal would cost Howard County $16 million. “We’re sending a message to the County Council and all our department heads that this throws all our budget planning up in the air.”

He called the proposal “the worst deal that could have been proposed.”

O’Malley’s fiscal year 2013 budget proposal, which must be approved by the General Assembly, aims to reduce the state’s projected $1.1 billion deficit by $656 million. One of the largest and “most controversial” reductions O’Malley is proposing is shifting $239 million in teachers’ retirement costs to the counties.

“Our proposal would require local jurisdictions to pay 50 percent of the combined cost of (teachers’) social security, which the counties are already (fully) covering, and other teachers’ retirement costs, which the state is currently paying,” he said. Currently, counties pay one-third of the total retirement costs.

O’Malley explained the rationalization for shifting teachers’ retirement costs at a budget presentation for reporters Wednesday, Jan. 18.

“I have become convinced that some better sharing of that responsibility is in order, primarily because the counties are much more closer to the negotiation table than the state is,” he said.

But Ulman rejected that argument.

“It’s just not true; we’re not at the negotiation table,” he said. Ulman explained that the Board of Education negotiates contracts with the teachers’ union and “they send me a bill.”

Howard County Education Association President Paul Lemle said O’Malley’s proposal, if approved, probably would result in teachers’ contracts that do not include cost-of-living or salary adjustments, as well as other unintended consequences.

“You don’t recruit and retain good educators by cutting their pay and benefits,” he said.

So far, O’Malley’s proposal is proving to be a tough pill to swallow for state lawmakers, too.

“I’m going to have to be really convinced,” said Del. Guy Guzzone, a Columbia Democrat who sits on the House Appropriations Committee, which is responsible for vetting O’Malley’s budget plan before sending it to the House floor.

Del. Gail Bates, a West Friendship Republican who also sits on the Appropriations Committee, recalled that when teachers’ social security costs where shifted to local jurisdictions years ago it was “devastating for the counties.”

She said O’Malley’s proposal could have the same effect.

What will likely be one of the deciding factors for some legislators is whether the counties can count the pension costs toward “maintenance of effort,” the state-mandated requirement that school systems must budget as much per-pupil funding as they did the previous year.

“Unless you make it part of maintenance of effort, you’re going to start cutting other services and you’re going to force the locals to raise taxes,” Bates said.

O’Malley said maintenance of effort is “one of the big variables that we still have to work out.” He noted concerns about counties taking money out of the school system budgets because then “we’re not protecting the priority of education.”

Ulman, however, doesn’t see it that way. More than half of the county budget goes toward meeting the maintenance of effort requirement and if the teacher pension costs cannot be included in that, he said, “it gives me very little leeway.”

One of the problems is education spending varies widely across the state. Howard County, Ulman said, has consistently been number one in “local effort” — the portion of funding the county is contributing to the school system compared to the portion of funding coming from the state.

Ulman said Howard County asks its residents to pay the maximum piggy-back rate on income tax to help pay for quality of life services like education.

“Other counties have clearly not asked their citizens to chip in,” he said.

“Some counties provide minimal funding for whatever reason,” Guzzone agreed.”It’s not fair for those differences not to be taken into account.”

Asked if raising taxes or fees is something the county is looking at as a way absorb the cost, Ulman said: “We have very few options, but I think we have to keep everything on the table through this discussion.”

Ulman is term-limited as county executive and, therefore, has to look for a new job three years from now. He’s got a good head start, having raised $1 million between Jan. 13, 2011 and Jan. 11, 2012.

Annual campaign finance reports were due Wednesday, Jan. 18.

Over the past year, Ulman has received 1,500 donations to his campaign, coming from donors in 15 counties across the state, according to a news release from Rice Consulting LLC, a campaign fundraising consulting firm that represents Ulman as well as other Maryland politicians.

Despite support across the state, particularly the Baltimore metropolitan region, Ulman’s largest support came from his loyal Howard County supporters — 679 donations amounting to slightly more than $405,000.

Ulman’s fundraising efforts are on par with — and in some cases exceeding — other Maryland Democrats who have been named as potential 2014 gubernatorial candidates.

Attorney General Doug Gansler has raised $1.25 million over the past year. His nearly $4.1 million cash on hand is explained by the nearly $3 million he had reported in January 2011 after running unopposed in the 2010 primary and general elections.

Comptroller Peter Franchot reports having raised nearly $630,000 in 12 months, which brings his total cash on hand to slightly more than $1 million.

Lt. Gov. Anthony Brown’s report was not posted as of 10 p.m. Wednesday.