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Md. House gives preliminary OK to budget shifts

Delegates vote to restore some education funds, pay raises, cut promised pension payments

Maryland Republican gubernatorial candidate Larry Hogan laughs during an interview with The Associated Press in Baltimore, Monday, Oct. 20, 2014. (AP Photo/Patrick Semansky)

Maryland Republican gubernatorial candidate Larry Hogan laughs during an interview with The Associated Press in Baltimore in 2014. (AP Photo/Patrick Semansky)

ANNAPOLIS— The Maryland House of Delegates gave preliminary approval to two bills that make up Republican Gov. Larry Hogan’s first budget after debating Wednesday night whether to shift promised pension contributions to help finance education programs and state employee raises.

The 141 members acted Wednesday afternoon on a $16.4 billion general fund spending plan. The votes in both the morning and evening sessions featured attempts by Republicans to pass some contentious amendments as well as a focus on shifting $75 million in promised additional pension contributions to help pay for a 2 percent raise for state employees, which Hogan had cut.

Republicans argued that budget as amended in the House reneged on a promise to fully fund the pension system and will ultimately cost taxpayers additional money in the future.

“It’s going to cost an exorbitant amount,” said Nicholaus Kipke, R-Anne Arundel County and House minority leader. “We can’t print money. We have to live within our means.”

But Democrats countered that the state was meeting its obligation to being the pension system up to a level of 80 percent funding in the next 8 years.

“You’re going to get a pay raise that we promised,” said Del. Ben Barnes, D-Prince George’s County, as if speaking to state employees. “We’re going to keep your job.”

Additional pension payments and the raise were commitments made by Democratic Gov. Martin J. O’Malley.

The evening session debate focused on a budget bill in which the House cut $178 million that it would put toward restoring cuts to a non-mandatory education formula and 2 percent raises for state employees. The spending plan, in its current form, does not require Hogan to spend the money in most cases, but it does prevent him from spending the funds on anything other than what the Democratic-controlled legislature intended.

Both bills were given preliminary approval Wednesday in a voice vote. A final vote is scheduled for Thursday afternoon and then will be sent to the Senate.

The bill as amended by the House changes how the state will address a nagging structural deficit problem and the annual struggle to find ways to pay for a budget that exceeds the projected incoming revenue used to pay for it.

Hogan said earlier this year that his plan would eliminate a $750 million structural deficit in his first year.

But state employee and teachers unions groused about the elimination of raises promised by O’Malley and the $144 million reduction in expected additional education spending.

House Appropriations Chairwoman Maggie McIntosh, D-Baltimore City, said the House version of the budget would eliminate about 75 percent of the projected structural deficit without the need for new taxes. She said that figure grows to 88 percent when an expected 2 percent across-the-board cut to all state agencies is enacted. Hogan and his Cabinet have not yet offered specifics on what will be cut.

The House plan also includes the elimination of about $75 million in additional payments that were to go to the Maryland State Retirement and Pension System. The figure represents about half the amount promised in a budget agreement made last year.

That agreement represented a 50 percent cut from $300 million that O’Malley promised state employees in a deal that resulted in state employees contributing more to their retirement costs.

Currently, the pension system is 68 percent funded. The additional money, on top of the state’s required annual contribution, was meant to move the system to at least an 85 percent funded status.

A Hogan spokesman earlier this week expressed concerns about the use of the pension money.

“Governor Hogan has repeatedly been on record supporting a pay raise for state employees – he believes they deserve one,” Douglass Mayer, a spokesman for the governor said on Monday following a rally of state employees and teachers. “What we are concerned about is the proposal to divert contributions away from the state employee pension system to fund other parts of the budget.”