Worcester, Wicomico Officials Unite Against Pension Shift

ANNAPOLIS — In a rare moment of accord, all nine counties on Maryland’s Eastern Shore stepped up to oppose the shift of a traditionally state-paid fund to the county level. 
Though it’s too early to tell if the effort will sway state legislators, some Worcester County officials have adapted an attitude of reserved optimism.

“On a scale of 1-10, I think the meeting was about a 6,” said Worcester County Commission President Bud Church. “I’m not certain that our delegation, though united, has enough clout to stop the big boys.”

Commissioner Judy Boggs, who visited Annapolis with Church, gave the meeting a more positive assessment, though she agreed the outcome is unknown.

“I thought it went very well, but time will tell if we get results,” she said.

According to Church, “there was some lively discussion” during the meeting between Annapolis lawmakers and representatives from Cecil, Kent, Queen Anne’s, Talbot, Dorchester, Caroline, Somerset, Wicomico and Worcester counties. There was also some sympathy from the capital in regards to the burden of additional costs in the current economy, said Church, especially over the hotly debated possible transfer of teacher pension funds from the state to individual counties.

Wicomico County Executive Rick Pollitt noted that the pension shift would be piling on costs during a time when state requirements are high and county revenues are low.

“Our concern is that we can’t look at teacher pensions, MOE [Maintenance of Effort], and state funding formulas for education in silos – independent from everything else,” Pollitt said, “All of us want to do the best that we can for our children. When we were able to, almost every county has met or exceeded Maintenance of Effort. Our obligation should be to take a comprehensive look at how we fund education and the product that we deliver to our children.”

If the burden for teacher pensions is hoisted upon counties, officials warn it could be the straw that breaks the camel’s back, at least to the degree that taxes may need to be increased.

“If the state can’t afford to pay, how can we afford to pay?” asked Church.

According to a presentation made by the delegation, shifting the teacher pension fund onto counties would end up filling an average of 2.2 percent of each county’s fiscal year 2013 budget. The projected, combined five-year cost for the shift for all of the counties would be $26,040,366.

The delegation argued that budgets are already stretched thin and extra stress could lead to trouble. Officials noted that the housing market in Maryland, as well as the country, continues to struggle with “no clear recovery” in sight.

They also pointed out that counties on the shore have been clipping their budgets every year since revenue began to dry up in 2008. Most of that revenue loss comes from decreased property values and thus, lower property taxes. According to the presentation, “loss in property value is greater [now] than the Great Depression.”

The total average loss of revenue for counties on the shore since 2008 was 5.4 percent. Worcester saw losses at 7.5 percent while Wicomico came in at 10.9 percent.

The revenue plunge means shrinking general funds as well, with shore counties dropping a total of 26.7 percent. Worcester and Wicomico both slipped about 22 percent. The loss of income was further exacerbated by the state withdrawing Highway User revenue from all nine counties, with 89.6 percent or $31,558,795 total being pulled since FY2009.

Another hit to county budgets mentioned was State Department of Assessment and Taxation operating costs. Though only totaling $3,758,000 across the Eastern Shore, the delegation underlined that the fee “is an ongoing bill that is expected to increase every year without input or control from the counties.”

The presentation to lawmakers concluded by asserting that “the shore counties are tapped out.” The delegation did acknowledge that Annapolis has floated the idea of new policies to offset some of the costs of a teacher pension shift through disparity grants to a few counties and an increase in tax revenue by reducing tax exemptions in FY2013 and closing the Indemnity Deed of Trust loophole.

However, none of those offsets are guaranteed and the delegation asserted that, even if passed, “state estimates may be optimistic,” in terms of how much revenue is actually generated.

Boggs also stressed that many of the incentives would be “a one-time carrot”/

With several weeks left in the legislative session, Church confirmed that the delegation has made its case and won’t likely return to Annapolis this session.

In his online field notes, Delegate Mike McDermott said the counties, “provided a presentation on their current fiscal outlooks as it relates to absorbing teacher pension costs and the view was grim. … I doubt that this can be stopped though it might be slowed down. My advice to them is to prepare for the absolute worst and have no faith in a decent return of tax dollars to the shore. It is not going to happen.”