Hogan, leaders OK deal on loan

Northrop Grumman, school pensions are paired in compromise

Gov. Larry Hogan and the Democratic leaders of the General Assembly unveiled a compromise Tuesday that will provide $20 million to Northrop Grumman Corp. and an equal amount to alleviate the cost of teacher pensions for local school systems.

Senate President Thomas V. Mike Miller and House Speaker Michael E. Busch announced the agreement in a joint statement. The deal ends a high-stakes game of legislative “chicken” in which the top lawmakers had threatened to scuttle aid to the giant defense contractor — which they both supported — in order to secure more money for the schools.

“We are grateful and supportive of employers like Northrop Grumman and Marriott who have chosen to locate in our state providing good salaries and benefits for so many Marylanders,” Miller said. “At the same time, we must also hold strongly to our priority of supporting Maryland’s public schools, or we risk the very education pipeline that prepares our children for these jobs.”

The accord comes at a time when the

Republican governor and Democratic-led General Assembly have been bitterly at odds over issues such as transportation and spending requirements.

Hogan spokesman Doug Mayer said that as part of the deal, Busch and Miller also agreed to support another $20 million Sunny Day Fund loan to Marriott International. The loan is part of a $22 million deal aimed at keeping the hotel chain’s headquarters in Bethesda.

Mayer said the governor supports the aim of helping Northrop Grumman and Marriott create new jobs as well as the goal of providing pension relief to local schools.

“We are happy to have found common, bipartisan ground with the presiding officers on all three of these issues and look forward to continuing this progress in the upcoming legislative session,” Mayer said.

Busch hailed the deal, which had been the subject of talks on the staff level for months, as a “win-win.”

“I believe this is a great example of where everyone can work together — Republicans and Democrats alike,” Busch said. He said the agreement shows the state is committed to helping Northrop Grumman stay in Maryland and also is committed to “investing in our students’ futures.”

Implementing the deal will require legislative action next year. A bill will be introduced in the session that begins in January to relieve local systems of $20 million of their combined contribution toward the cost of teacher pensions. Hogan has agreed to support that bill.

Meanwhile, Miller and Busch have agreed to round up support for the aid to Northrop Grumman and for the unrelated deal to provide state funds to keep Marriott headquarters in Maryland.

The $20 million Sunny Day Fund loan to Northrop Grumman will be on the agenda when the Legislative Policy Committee meets Dec. 13.

Typically such loans are forgiven if companies meet certain goals such as creating or maintaining jobs. That Legislative Policy Committee, co-chaired by the speaker and Senate leader, must sign off on Sunny Day loans.

Mayer said Hogan will include the money for the Marriott deal in his next budget. After the 2017 legislative session, that deal would go before the committee.

Miller and Busch had supported the aid to Northrop Grumman when Hogan requested it during this year’s legislative session. They pushed legislation through approving tax breaks for the aerospace company as a way of inducing it to keep its work force of roughly 10,000 in the state.

The measure had broad support, though some legislators opposed aid to the company as “corporate welfare.”

However, when Hogan refused last summer to spend $80 million lawmakers had trimmed from his budget and “fenced off” for purposes including the pension aid, the legislative leaders balked at releasing the money for Northrop Grumman. Both said they would have a hard time selling their Democratic members on aid for a giant corporation at a time the state was denying money for schools.

Mayer said the governor had not agreed to release any part of that $80 million, which also included about $6 million for the Aging Schools Program. He said Hogan was never against helping the counties with pension costs but objected to the method lawmakers used to achieve that goal.

Mayer said that Hogan and Miller ran into each other at a Navy football tailgate about a month ago and that the meeting helped put discussions on track.

The three men eventually agreed that there was “no reason not to move forward on items we all agreed on,” Mayer said.

John R. Woolums, government relations director of the Maryland Association of Boards of Education, called the agreement “wonderful.”

Woolums said that when Gov. Martin O’Malley and the legislature agreed to start moving part of the costs of teacher pensions to local systems in 2012, they agreed that local governments would have to keep up a certain amount of the payments until the 2017 budget year.

The expiration of the mandate left a gap for local school boards that lawmakers attempted to fill with state funds during the last session, Woolums said.

Northrop Grumman and its supporters welcomed the agreement.

Tom Delaney, media relations manager for the firm, said the company’s history in Maryland dates to 1938. He said it is the largest manufacturer in the state, with over 10,000 employees at more than 30 sites.

“The Sunny Day loan is key to helping sustain Northrop Grumman’s presence in Maryland while also laying the groundwork for future growth,” Delaney said.

Sen. James E. “Ed” DeGrange, whose Anne Arundel County district includes the massive Northrop Grumman complex near BWI Marshall Airport, said the compromise is “a good arrangement.”

DeGrange, a Democrat, said that not going through with the deal would have harmed the state’s business reputation. “It would send a bad message if we didn’t get something done,” he said.