In his proposed fiscal 2013 budget, Maryland Gov. Martin O'Malley attempts to shift some of the state's current responsibility for public school teachers' pensions back to the individual counties that negotiated retirement packages that are too generous. That's a good thing. Maryland is one of only three states that pick up the entire tab for public educators' retirement checks without having a seat at the union bargaining table. The counties negotiate with the unions, but teachers pensions costs the state $1 billion annually -- and threaten to gobble up an even larger amount of state revenue in the future. As state Sen. E.J. Pipkin, R-Cecil, put it, "The current system is the equivalent of a teenager with a credit card that's paid by their parents."
O'Malley's uncharacteristic acknowledgment that local school boards have no incentive to keep negotiated pension benefits "within the leaps and bounds of the perimeters of fiscal responsibility" because they don't have to pay for them is correct. Requiring Maryland cities and counties to pay at least half of the benefits they so promiscuously promise educators is the governor's belated attempt to provide that missing incentive.
It's also as devastating a critique of public employee unions as anything Wisconsin Gov. Scott Walker has ever said about the excessive power of public employee unions in the collective bargaining process. But don't expect thousands of angry union demonstrators to descend on Annapolis like they did last year in Madison, Wisconsin, when Walker sought relief from rising public employee pension costs. The Wisconsin Republican is now the subject of a vindictive union-led recall campaign, but the pro-labor O'Malley will be spared the union hysterics. That's because his proposed budget also includes plenty of new tax dollars to line Big Labor's pockets.
O'Malley claims that his pension-sharing proposal will "save" the state $239 million annually, but it merely shifts what is now a state obligation to the counties, while leaving O'Malley with more state money to spend. In return, the governor has offered to pick up half of the counties' Social Security costs and spend $370 million on school construction so he can take political credit for creating jobs for his union supporters while county officials are forced to cut back.
The Maryland Public Policy Institute has a pension map that shows the total amount of each county's funded and unfunded pension plans. The top three jurisdictions with the greatest gap are the City of Baltimore, Montgomery County and Prince George's County -- which will also take the biggest hits under O'Malley's proposal. But they're also the ones most responsible for the system's $11 billion deficit.
