Governor Martin O'Malley Addresses the Need for Pension Reform, Commits to Reforming System before Sharing Costs

 

ANNAPOLIS, MD (January 6, 2011)–Governor Martin O’Malley delivered remarks before the Maryland Association of Counties (MACo) Annual Winter Conference tonight, where he directly addressed one of the most pressing challenges in the upcoming budget debate – pension reform.  During his remarks to Maryland’s county leaders, Governor O’Malley committed to reforming Maryland’s public employee pension system.  The Governor will propose ways to make the system more sustainable, and committed to doing so this year before exploring the option of sharing the costs of the system.

“We owe it to our police officers, teachers and other hardworking state employees, and we also owe it to our children, and to our taxpayers to find a sustainable way forward that protects our commitments and maintains fiscal responsibility,” said Governor O’Malley.  “It is my belief that we cannot have an honest conversation about sharing costs, or even the need to share costs, until we reach an agreement on how we can fix the pension system.  While other elected leaders may well offer other approaches, the balanced budget proposal I submit to the General Assembly later this month will not pass pension costs onto the counties.”

Governor O’Malley considered many options before ultimately concluding that the sustainability of the pension system is the most responsible way forward before discussing the sharing of the system’s cost.  Options included shifting 40% of teacher pension costs to local counties, as well as shifting costs based on wealth adjusted formulas. 

In his remarks, the Governor outlined the basic principles of pension reform the O’Malley-Brown Administration will pursue with this legislative session.  They include maintaining a public system, improving the funding level within the system, asking for greater contributions from members of the system, and establishing certain milestones to determine the need for further reform. 

Governor O’Malley stressed the difficulty of the choices ahead.

“Over the past four years, rather than playing the shell game of passing tough choices down to counties, cities, and towns, I’ve fought to shield you – to the greatest extent possible.  But the reality is that while our national economy is improving, times are tough in every state.  And although we in Maryland are in better shape than our counterparts, a $1.3 billion hole requires shared sacrifice,” Governor O’Malley told local leaders tonight.  “To protect this progress in the upcoming session and beyond, I will need your help in the fight to protect our largest-ever investment in K-12 education.  And I will need your help in working with your school boards to get more out of every dollar.”

Over the past four years, the O’Malley-Brown Administration has cut $5.6 billion from the state budget, including 4,200 state positions.  The state faces an approximate $1.3 billion budget gap for FY12, which the Governor has committed to closing with a budget proposal depending on cuts rather than new revenue measures.


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