Saving Nonprofit Funding Requires Fixing State Budget Holes

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March 1, 2012; Source: Ellicott City Patch

Howard County, Maryland is midway between Baltimore and Washington, D.C. and is generally wealthy, but contains its pockets of poverty. Howard County human services agencies gathered in a town hall meeting to discuss the impacts of the Maryland state budget on the community, and none were particularly hopeful for good news. 

The state has to close a projected $1.1 billion budget hole. Maryland Gov. Martin O’Malley has proposed moving some of the cost of teacher pension payments from the state’s budget to county budgets (nearly all of Maryland’s local governments are counties). Human services nonprofits relying on county funding know that the shift of teacher pensions to county budgets would mean a big reduction in other areas of county funding, such as human services. The director of Maryland Out of School Time said that schools have already cut back on after-school and summer programs, leaving “nowhere [else] to cut” if the pensions get loaded onto the counties.

Nonprofits have cut back so much already that nonprofit staff themselves are in need of human services. According to the Patch, “Bita Dayhoff, president of the Community Action Council of Howard County, said that on her staff of 14 people, 10 could qualify for services provided by the Community Action Council, which serves the basic needs of low-income residents, if their salaries were cut any further.”

Howard County is part of a “stop the shift” campaign to convince the governor and the legislature that the teacher pension transfer is not a good idea. Henry Bogdan of the Maryland Budget and Tax Policy Institute advised that county officials who want to oppose the shift should also talk about being willing to “help the government raise money for the general fund,” but he said that he isn’t hearing that sentiment from the opponents of Gov. O’Malley’s proposal. 

Raise money from where? Montgomery County, loaded with lots of rich people, generally opposes a millionaire’s tax. Maryland’s Eastern Shore voters typically oppose raising the sales tax. And there seems to be a general concern that raising the corporate tax in Maryland would somehow drive business out of the state, especially since neighboring states such as Chris Christie’s New Jersey appear intent on cutting business taxes. 

While there may be few popular revenue raising options, Bogdan’s advice is on the mark. Nonprofits have to do more than simply chanting, “Don’t cut our programs.” They have to be in the game to help the state and localities puzzle through and overcome the structural budget problems government faces. Otherwise, nonprofits will find themselves defending an inevitably shrinking pool of human services program funds as government devotes resources to pay for mandatory expenditures such as pension payments.—Rick Cohen

  • michael

    If the problems in Maryland (like Pennsylvania) are caused by overly-generous teachers pensions, then nonprofits should band together to demand reform and a roll back of benefits. What nonprofits [B]must[/B] avoid is getting swept up in these [I]”raise revenue'[/I] movements orchestrated by entrenched interests. For one, it’s a political loser. For another, if the nonprofit sector is seen as a cheerleader for the welfare state the eventual blowback will include far more stringent oversight by the IRS and state charitable bureaus.

  • testing picnet

    testing this is a test of the commenting feature so that I can figure out what is causing the problem