Maryland’s $2 billion budget shortfall is chump change compared with the $8 billion in state pension funding lost last year, some lawmakers say.
“The budget problem is completely eclipsed by our state pension system,” said Del. Roger Manno, D-Silver Spring. “The numbers are horrific. They are terrifying.”
Manno is backing a bill calling for reform and an infusion of money into the state’s pension system –underfunded by $19 billion — which administers death, disability and retirement benefits to more than 350,000 current and retired state workers. It is one of only a handful of bills before the General Assembly calling for tax increases in an election year.
The state’s pensions are only 65 percent funded — meaning that if all state workers retired in the next week, only six of every 10 retirees would get pension money. Pensions are tied to the stock market, however, so that 65 percent can jump quickly with an upswing in the markets. But another year like 2009 could reduce funding to 50 percent, Manno said.
To bring in revenue, the bill would extend the so-called “millionaire’s tax” on Maryland residentsmaking $1 million or more, which is set to expire soon. It also would require businesses operating in Maryland with headquarters elsewhere to pay Maryland corporate income taxes.
But it’s unlikely the bill will be successful in an election year, said Sen. J. Lowell Stoltzfus, R-Somerset, who serves on the Budget and Taxation Committee.
“I don’t think there will be any tax increases this year,” he said. “No one will support them. Not because they don’t want to, but because they can’t. … It’s an election year.”
