Ho­gan, lead­ers OK deal on loan

Northrop Grum­man, school pen­sions are paired in com­pro­mise

Baltimore Sun - - FRONT PAGE - By Michael Dresser

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.

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