A stalled $20 million package of state aid to Northrop Grumman will move forward after months of uncertainty as part of a compromise deal in which Gov. Larry Hogan will provide an additional $20 million for local teacher pension plans in the coming year.
The deal was announced Tuesday afternoon in a joint statement issued by Senate President Thomas V. “Mike” Miller Jr. and House Speaker Michael E. Busch.
Tuesday’s agreement ends a roughly six-month standoff between the legislature, which refused to give final approval to the funding from the state’s so-called Sunny Day economic development fund, and the governor, who had steadfastly refused to release $80 million in funding fenced off by lawmakers earlier this year that included money earmarked to help counties offset gaps in teacher pensions.
The announcement also follows an October deal with Marriott International to provide $70 million in state and local tax breaks and incentives that included $20 million from the same Sunny Day fund.
“We are grateful and supportive of employers like Northrop Grumman and Marriott who have chosen to locate in our state providing good salaries and benefits for so many Marylanders,” said Miller. “At the same time, we must also hold strongly to our priority of supporting Maryland’s public schools, or we risk the very education pipeline that prepares our children for these jobs. Even in tough times, I believe we must do both.”
Douglass Mayer, a Hogan spokesman, called the agreement “a good day for Maryland.”
“Helping great Maryland employers like Northrop Grumman and Marriott create new jobs, and providing additional pension relief for local jurisdictions, are policy initiatives supported by the governor and this administration,” Mayer said. “We are happy to have found common, bipartisan ground with the presiding officers on all three of these issues and look forward to continuing this progress in the upcoming legislative session.”
Similarly, the deal was praised by Busch.
“I believe this is a great example of where everyone can work together – Republicans and Democrats alike – to not only assure Northrop Grumman that we are fully committed to their company investing in the state of Maryland and Anne Arundel County, while also investing in our students futures,”Busch said in the joint statement with Miller.
The $20 million would help keep 10,000 company jobs in the state. It is part of a $37.5 million tax-credit package promised over five years for the defense contractor in exchange for keeping those employees in Maryland. The bill contains clawback provisions that allow the state to reduce the amounts of the incentive package if the company fails to meet employment and investment targets.
“Northrop Grumman is pleased that Maryland’s Legislative Policy Committee will consider the Sunny Day loan in December and we urge that the loan be approved,” Randy Belote, a Northrup Grumman spokesman, said in a statement. ” We appreciate the continued support and confidence of Speaker Busch, President Miller, Governor Hogan, Commerce Secretary Gill, and the members of the Maryland General Assembly.”
The Legislative Policy Committee, which must approve the spending of the $20 million from the Sunny Day fund, delayed action on the item over the summer in response to Hogan’s refusal to release $80 million in funding that was paid for out of an over-attainment in the state’s reserve account, also called the Rainy Day fund.
Included in the fenced-off money was $19 million in one-time funding for local school systems, excluding Kent and Garrett counties, to help offset shortfalls in teacher pension system payments totaling $30 million.
“We weren’t opposed to the policy,” Mayer said. “What we opposed was the way the legislature tried to force us to do it and then claim we cut education.”
The legislature, under then-Gov. Martin O’Malley moved responsibility for local teacher pensions to the counties as part of an effort to offset budgetary problems by reducing or eliminating aid to local governments.
Mayer said the deal to restore the pension funding will be a one-time move that will benefit all local governments. It will not affect the $80 million that remains unspent in the current budget.
The Legislative Policy Committee is expected to give final approval to the Northrop Grumman package when it meets on Dec. 13.