ANNAPOLIS — County officials warned they would raise local property taxes and other fees if Maryland lawmakers vote to shift some teacher pension costs onto their budgets. A proposal to shift 50 percent of teacher pension costs onto counties “would be equivalent to a five-cent increase in the typical county’s property tax rate,” according to a Tuesday report by the Maryland Association of Counties.
That equals roughly $250 more annually in local property taxes for Montgomery and Prince George’s counties’ residents with assessments worth $500,000 — according to the report, which assumes Montgomery would raise its 69-cent property tax rate per $100 of assessed value by 4 cents and Prince George’s would raise its 96-cent rate by 5 cents.
“On average for the locals to absorb state pension [costs] adds 5 cents on the property tax,” St. Mary’s County finance director Elaine Kramer told members of the House Appropriations Committee on Tuesday.
“But I would submit to you, in an era of declining assessments, it’s really far more.”
A commission studying pension reform in Maryland has recommended that the state pass 50 percent of teacher pension costs on to counties.
The Maryland Senate passed a similar measure last year, but the House shelved the proposal and instead appointed the commission to study alternatives.
Gov. Martin O’Malley said he won’t consider sharing costs with counties until the state passes structural reform to its ailing pension system, which is 64 percent funded.
But Del. John L. Bohanon Jr., D-St. Mary’s, said the counties should pay now because they have aggravated the state’s funding problems by promising teachers pay increases.
“One of the big drivers [in pension costs] is teacher pay increases, and I guarantee you your teachers have gotten pay increases,” Bohanon told a panel of county executives on Tuesday. “You do have to pay for what you want.”
He said he isn’t recommending that the state begin shifting costs, but “someone has ultimately got to pay for this.” Harford County Executive David Craig suggested that the state bill teachers or local boards of education — which have collective bargaining power with teachers — for the benefits increases.
Del. Ana Sol Gutierrez, D-Kensington, questioned whether the counties could use an additional taxing authority, such as the creation of a local sales tax. Counties are only authorized to rely on two main taxes for revenue: property and income taxes.
Revenues from both have declined precipitously since the recession, with property taxes falling 22 percent this year after a 20 percent decline last year.
