WHEN THE big bond-rating agencies took Maryland’s financial temperature last month, they found the state in robust health — with the notable exception of Maryland’s undernourished pension fund. The fund needs a sustained infusion of cash if the state is to meet its long-term promises to retired teachers, police, judges and other public employees — a $20 billion infusion, to be precise.
So how did Democrats, who control the state legislature, respond to this red flag? A week after it was raised, they advanced a plan to make the situation worse — to raid the fund in order to forestall cuts in next year’s budget proposed by Gov. Larry Hogan (R). By grabbing pension dollars to plug immediate budget holes, lawmakers would risk the state’s future knowing that most of them will no longer be in office when the bill comes due.
At the turn of the century, Maryland’s pension system was fully funded. But the pile of cash proved too tempting for lawmakers, who began skimming from the state’s annual contributions in 2002. Thus short-changed, and then ravaged by the recession, the pension fund’s value fell to less than two-thirds of its long-term obligations by 2011. That’s when then-Gov. Martin O’Malley (D) struck a deal to add $300 million to the state’s annual contributions in return for workers agreeing to pay more of their wages into the system and accepting lower benefits for newer hires.