Baltimore County Council Bill 63-26, a last ditch effort to stop Councilman Wade Kach from cashing in on the Great County Council Pension Grab of 2024, is an exercise in closing the barn door after the horse is gone.

The council is making a spectacle of itself as it seeks political redemption for its members by attempting to prevent Kach from taking advantage of an opportunity for an egregious, undeserved windfall that the council itself knowingly created.

It also is inviting another piece of litigation that should have been avoided. That litigation could embarrass the lawmakers even more.

Introduced at an emergency session of the council, the bill may come too late to deny Kach pension benefits in which he already has vested. Those benefits include a provision enacted by legislation he introduced, Bill 40-24, that calculates the amounts of the pensions of retired members by using the salaries of active members of the council, rather than the retirees’ own final earnings.

The provision will increase Kach’s pension from $41,000 to $84,000 if the salary increases recommended by the county’s Personnel and Salary Advisory Board for the next term of office, beginning in December, are adopted by the council.

Kach never earned more than $69,000 a year during his time on the council.

The salary increases recommended by the board are intended to implement the requirement that council membership “be considered a full-time position for the purpose of determining compensation” that takes effect next term as a result of a charter amendment proposed by Councilman Izzy Patoka in Bill 47-24.

Prior to the amendment, service as a council member was considered to be part-time, at least for purposes of compensation.

Kach, who will turn 79 in July, resigned from the council on May 7, which became his date of retirement for pension purposes. He is eligible for the new method for calculating pensions because Bill 40-24 made it applicable to current members who retire on or after January 1, 2025.

PREVIOUS BREW COVERAGE:

• County Councilman Wade Kach is angling to give himself and his colleagues a raise when they retire (5/30/24)

• Pension boost for Baltimore County Council members proposed by Wade Kach is approved by his colleagues (6/4/24)

• Poised to undo their pension grab, but pretending that’s not what it was (3/16/26)

• Baltimore County Council repeals pension bill denounced as self-serving (3/16/24)

The implementation date for the change was added by amendment to Bill 40-24. The date ensured that the new method did not apply to members who already had retired but did apply to incumbent members, including those who leave office at the end of this year.

The public uproar over the pension grab eventually embarrassed the council into enacting Bill 19-26 earlier this year. Bill 19-26 repealed Bill 40-24. The fact that three members of the council – Patoka, Julian Jones and Pat Young – are running for county executive undoubtedly helped persuade the council to act.

By the time Bill 19-26 took effect on May 11, however, Kach had already retired and was outside the scope of the repeal of Bill 40-24 enacted by Bill 19-26. Kach, who claimed that illness forced his retirement, retired four days before the window closed on the opportunity to take advantage of Bill 40-24.

If trying to backdate the effective date of a bill that already took effect sounds a little funky, that’s because it is.

The council responded with Bill 63-26, which would retroactively change the effective date of Bill 19-26 to April 10. If trying to backdate the effective date of a bill that already took effect sounds a little funky, that’s because it is.

In describing Bill 63-26, council chairman Mike Ertel told WYPR, “We’re fairly sure it’s legal.”

Based on firsthand experience, I’m not.

Legal Hurdle

Kach met the three criteria necessary to qualify for benefits under the provisions of the county’s Employees’ Retirement System applicable to council members that were in effect before May 11. This includes the new method for calculating pensions: He retired on or after January 1, 2025 at age 55 or older with at least four years of service on the council.

In pension plan language, that meant that he was fully vested in plan benefits by the time the repeal of Bill 40-24 took effect. It is black letter law in Maryland that pension plans create contractual duties toward individuals with vested rights under the plans.

Trying to divest him of those contractual rights by backdating the effective date of the repeal of Bill 40-24 implicates the Contract Clause of the U.S. Constitution, which prohibits state and local governments from passing laws that substantially impair the obligations of existing contracts.

I faced a similar challenge in the case of Andrews v. Anne Arundel County, 931 F. Supp, 1255 (D. Md. 1996) when I tried to defend an attempt by the Anne Arundel County Council to apply significant modifications to a lucrative pension plan for appointed and elected officials to vested participants in the plan. The plan had been established by a prior council.

Andre Davis, then a U.S. District Judge and later Baltimore’s city solicitor, issued an opinion concluding that the county had not met the heavy burden necessary to justify impairing contractual rights protected by the Contract Clause. The U.S. Court of Appeals for the Fourth Circuit affirmed his ruling.

The situations differ. The most obvious difference is that Kach can’t reasonably claim that he earned the windfall during his service to the county and relied upon it in making decisions about his career.

On the other hand, the county can’t claim that financial hardship justifies the impairment, given that we’re talking about $40,000 a year for a retirement system that annually pays out about $320,000,000 in benefits.

What They Knew, When They Knew It

If Bill 63-26 passes, a possible defense by the county against a lawsuit by Kach would be to try to exploit the language in the U.S. Supreme Court case of United States Trust Co. v. New Jersey (1977), noting that the “elimination of unforeseen windfall benefits” can constitute a reasonable basis for changes to contractual rights.

The problem would be proving that Kach’s windfall was “unforeseen” by the council.

It was the adoption by the voters of the charter amendment proposed by Bill 47-24 that requires an increase in the salaries of council members to reflect the change to full-time compensation beginning next term that turned the change made by Bill 40-24 to the way pensions are calculated into a major windfall.

The history of Bills 40-24 and 47-24 indicates that the members who voted for Bill 40-24 knew that they were setting themselves up for a windfall in the future.

The Structure Review Workgroup established by the council in October 2023 issued a report recommending that “the compensation for Council members should be increased to be commensurate with full-time professionals.” The recommendation was not a surprise, as the shift from part-time to full-time status was discussed for years. Dimwittedness is not an ideal defense to perjury.

The work group’s report was issued on March 31, 2024. On May 6, 20124, Kach introduced Bill 40-24. Patoka had Bill 47-24 drafted and ready to go for introduction on June 1, 2024, the same day that the council passed Bill 40-24.

Dimwittedness is not an ideal defense to perjury.

Ertel voted against Bill 40-24, and Councilman Todd Crandell was absent. The five council members who voted for it were fully aware that a significant increase in council salaries was in the offing.

All five stood to gain from the bill even without the charter amendment.

But it was the three incumbents who voted for the bill – Jones, Kach and Patoka – who are eligible to retire and plan to leave office at the end of this year, who were in line for the most stunning windfalls.

Under Bill 40-24, the amounts of their pensions would be based on the salaries paid to full-time members beginning next term, even though all of their service on the council was considered part-time for purposes of compensation.

One Final Spectacle

Ertel acknowledged the possibility of a lawsuit by Kach if Bill 63-26 passes. If there is a lawsuit, it won’t be hard to prove that council members tried to give themselves pension windfalls that they didn’t earn.

Proving that the windfalls were “unforeseen” is a different matter.

For the reasons described above, good luck to a member who testifies under oath that, when he voted to approve a bill tying the amount of his pension to the salaries of active council members, he had no idea that those salaries could significantly increase in the future and dramatically increase the amount of his pension. Dimwittedness is not an ideal defense to perjury.

The case may come down to Baltimore County arguing that its lawmakers did a stupid and greedy thing not in the public’s interest, and that one of its members shouldn’t be allowed to benefit from it.

In other words, the county may actually have to tell the truth.

• David A. Plymyer retired as Anne Arundel County Attorney after 31 years in the county law office. He can be reached at dplymyer@comcast.net and Twitter @dplymyer.