City bailout carries risks, rewards

Sun Staff

By spurning the state's terms for a bailout of Baltimore's financially troubled school system, Mayor Martin O'Malley has embarked on a high-risk political strategy that could lead to great rewards or humiliating failure for himself and Baltimore.

After weeks of going to Annapolis with hat in hand, O'Malley and the city rejected Gov. Robert L. Ehrlich Jr.'s $42 million in rescue money Monday because of the "onerous" strings attached.

Instead, the city decided to raid its own reserve funds to get the troubled school system through the school year -- a decision that drew mixed reviews in Annapolis. While some lawmakers applauded the city's self-help approach, others weren't sure it would work.

"It would appear [O'Malley's] willing to put Baltimore's finances on the line so he wouldn't have to eat crow," said Sen. David R. Brinkley, a Frederick County Republican.

"I'm just wondering when the money will run out and whether we'll be in session or will be called into special session to bail them out," Brinkley said.

Matthew Crenson, chairman of the political science department at the Johns Hopkins University, said O'Malley was taking an enormous political risk by assuming responsibility for the future of the city's schools.

"If this doesn't work, it's going to be on his head, and it's going to come down hard," Crenson said. "If nothing else, he's proven he's got guts. This is an extremely courageous thing for him to do. Whether it's a wise thing is another question."

The perils of the city's course were brought home almost immediately yesterday as one of the three powerful bond rating agencies raised the possibility of downgrading Baltimore's credit. Some lawmakers and City Council members questioned whether fending off Ehrlich's demand for control of a majority of a new school board was worth the financial risk.

In an appearance at an Annapolis rally yesterday, the mayor adopted a tone of defiance toward Ehrlich, whose job the mayor may seek in 2006.

"Enough already. The torture has to stop," O'Malley said. "It's too bad the state couldn't help us through this without making onerous requests."

Earlier in the day, Ehrlich had accused O'Malley of wasting his and other state officials' time in weeks of wrangling over a $42 million state bailout package and the state controls the governor was demanding. Ehrlich said he and Budget Secretary James C. "Chip" DiPaula Jr. asked repeatedly whether the city could come up with more money and were repeatedly told no.

"If these dollars were always available, why come down here and make everyone go through the process? I'm not sure anyone has the answer to that," Ehrlich said.

O'Malley had no apologies.

"The governor didn't spend much time at the meetings," he said. "I'm not much concerned about wasting his time."

In Annapolis, the reactions to O'Malley's change largely followed partisan lines. Most Democrats professed admiration, though some expressed misgivings. Republicans predicted the mayor would soon be back in Annapolis, begging bowl in hand.

Senate President Thomas V. Mike Miller said O'Malley's decision was "a very smart move."

"It was probably political in the sense that I think he realized that if the governor had seized control of the Baltimore city school system, it would appear that the mayor and the City Council had not been doing their job," Miller said.

Miller noted that under the proposal the governor pressed for, power of the schools likely would have been concentrated in three white officials -- chief executive Bonnie S. Copeland, budget expert Robert R. Neall and state schools Superintendent Nancy S. Grasmick.

"So it became in my opinion a racial issue, and a matter of pride," Miller said.

O'Malley agreed that there were racial overtones to the debate and defended the city's ability to reform the school system. "We aren't stupid," the mayor said.

Republican lawmakers were far from confident that the Democratic mayor would be able to win concessions from the school system's unions and enact needed reforms.

Ehrlich said that if the mayor's strategy fails, the city will feel the consequences.

"If the same people who have lacked accountability continue to lack accountability, come back on our doorstep again at any time, we really have to question them, as far as their history and their motivation. We'll be there for the kids, but that's it," the governor said.

O'Malley dismissed such talk.

"I'm sure that's their hope, and I don't take counsel from the Republican Party of Maryland when it comes to reforming our public institutions," he said.

Crenson said the mayor faces a triple challenge in delivering on his promises. Not only does O'Malley have to see that the school system repays its loan to the city, Crenson said, the mayor also has to fix its long-term deficit and maintain the progress city schools have made in academics.

If O'Malley can show success on all three fronts by late 2005, "he will go into the gubernatorial campaign a hero," Crenson said. If the mayor fails, the political scientist said, "Ehrlich will smear it all over his face."

One challenge that looms for O'Malley is dealing with the school system's unions. By avoiding state control, he might have protected them from contract abrogations and unilaterally imposed pay cuts. But now he will be under pressure to show he can extract concessions by gentler means.

The mayor said his actions this week give him new clout with labor. Crenson agrees.

"Now he can go to them and say, 'I went to bat for you, now you've got to work with me. It's either me or the governor,'" Crenson said.

Though O'Malley has chosen a risky course, Crenson said, the decision to go it alone makes sense. He said while the mayor had little control over the school system, he was getting the blame for its ills anyway.

"If this works, it will build his reputation not just in the state but on the national level," Crenson said.

Sun staff writer David Nitkin contributed to this article.

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