Follow the FreeStater Blog by Email

Friday, April 17, 2015

A Nonsensical End to the 2015 Legislative Session

Maryland's 2015 Legislative Session has come to an end, and what a silly end it was. Though the session got off to a rocky start - with a partisan State of the State address and a ridiculous overreaction to it by Democratic members of the Assembly - it quickly settled into a rather calm and productive session. Governor Hogan submitted his budget in late January and, as promised, he eliminated the state's structural deficit in a single year. The editorial boards of the Baltimore Sun and the Washington Post both saw much to laud in his budget. Many assembly Democrats were relieved that the budget was not a scorched earth effort to redefine state priorities. But Democrats did object to a few provisions. Hogan did not provide funds for a 2% cost of living raise (COLA) that had been given to state employees (essentially cutting their pay), he provided only half of the funding needed to meet the state's Geographic Cost of Education Index formula or GCEI (which provides additional funds to parts of the state where the cost of providing an education is higher), and he reduced Medicaid spending by taking away funds that would provide doctors with higher reimbursement and by eliminating Medicaid coverage for pregnant women earning between 186% and 250% of the poverty line.

Democrats pledged to find the roughly $200 million needed to fund those initiatives. The General Assembly cannot increase spending in the Governor's budget. They can cut spending, they can identify and recommend additional spending, and they can prevent a governor from spending money that they cut and recommended for other uses. The House budget committee found enough savings from cutting other programs to restore funding for the COLAs, the GCEI, and Medicaid. But in a controversial move, they found $75 million of that money by cutting in half a $150 million supplemental payment to the state pension fund proposed by Hogan. After years of underfunding the state pension fund, former Governor O'Malley and the legislature passed a plan to restore the pension balance via supplemental funds. But in his final budget, O'Malley reneged on the promise. Hogan attempted to meet the state's obligations, but the Assembly Democrats needed to find money to spend elsewhere. 

The revised budget was unanimously passed out of committee and then passed by the House with all but 10 members voting in favor. Democrats were criticized by the Washington Post for diverting the pension funds and the Senate attempted to compensate for the cut by passing a so-called sweeper amendment that would have dedicated up to $50 million of any year end surplus to the pension fund.

Initial indications were that Governor Hogan was satisfied with the budget deal. Though he believed that the budget was only part of a package that would include much of his legislative agenda. Though the Senate acted on much of his agenda items, the House was slow to follow suit. As the end of the session neared there was tremendous doubt regarding the outcome of the Governor's agenda.

As the final weekend approached, Hogan insisted that the General Assembly restore the $75 million in pension funds. The Assembly leadership was unmoved. The two sides attempted to reconcile their differences. On the final Friday of session, the House/Senate conference committee ultimately adopted much of the Senate's version of the budget. They offered the sweeper amendment, but not restoration of the $75 million. Hogan wasn't interested. On Saturday Hogan offered his plan - with roughly 60 hours remaining in the session. He was willing to fully fund the COLAs for state employees, he offered to increase funding for the GCEI from his initial 50% up to 75%, and he offered Democrats roughly half of the additional Medicaid money that they had sought. But in exchange, he wanted his legislative agenda enacted. Senate President Mike Miller and House Speaker Michael Busch said "no."

And this is where the nonsense reaches a fever pitch. Hogan, Miller, and Busch were arguing about $200 million in a $40 billion budget - roughly 0.5% of the budget. They all wanted to spend it, they just wanted to spend it differently. In the end, they were really only disagreeing about $75 million - Hogan wanted it dedicated to pensions and Miller and Busch wanted it to go to GCEI and Medicaid.

Neither side would budge. On the final day of session, the House and Senate passed their version of the budget. Neither the COLA, GCEI, Medicaid, nor pension money was going to be spent. Rather the budget recommended that Hogan fund the COLAs, GCEI, and Medicaid and he was prohibited from using the money on anything else. Hogan announced that he was unlikely to do so. Then, in the final hours of session, the House passed much of Hogan's agenda.

So session is over. There are no COLAs for state employees, the GCEI is only partially funded, pregnant women between 186% and 250% of poverty have no Medicaid, and the supplemental pension payment was $75 million short.

If Miller and Busch had simply agreed to Hogan's agenda (a rather modest one) on Saturday then they would've gotten the full COLA, 75% of the GCEI, and 50% of the Medicaid funds. Instead they said "No" and got nothing. Then they passed much of Hogan's agenda anyway.

As for Hogan, he was willing to give Miller and Busch nearly everything they wanted - save for the money he held back for pensions. But the Senate sweeper amendment offered a reasonable compromise. So Hogan walked away over a $75 million disagreement in a $40 billion budget - because he wanted all of his agenda.

What we witnessed in those final days of session was not governing. It was ego mixed with stubbornness. There was no reason for Hogan to reject the Miller and Busch plan and there was no reason for Miller and Busch to reject Hogan's plan.

Now the session is over. Hogan saw a significant amount of his legislative agenda passed by the Assembly. Much of it was modified and amended, but that's the nature of divided government and separation of powers. And the state has a budget. In that budget, roughly $200 million has been set aside by the legislature to fully fund state employee COLAs, GCEI, and Medicaid. It also has a provision to dedicate any surplus funds to the pension fund. All told, it's about $75 million away from Hogan's final offer to Miller and Busch. But none of it can be spent with Hogan's approval. With much of his agenda passed and the structural deficit greatly reduced, Governor Hogan should declare victory and agree to accept the Assembly's recommendations and spend the money they set aside. There's simply no good reason to keep saying "no."