This commentary is by state Rep. James Harrison, R-North Chittenden.
If it was easy, the pension dilemma would have been solved. There is no hitting the Staples Easy button to solve this one.
The unfunded pension liability for teachers and state employees has grown from $1 billion to approximately $5.7 billion in the past 13 years. This is despite an extended market rally and ever-increasing contributions by the Legislature.
In the budget for the coming year, the state’s payment is up over $100 million to $316 million. In addition, the House budget set aside another $150 million of the current one-time surplus.
It’s clear that something must change, or the funds will go bankrupt. The situation has already caused a downgrading of the state’s bond rating.
It’s easy to find fault with the Legislature or governors in the 1990s, when the annual contributions were often reduced from recommendations; or the actuaries that didn’t forecast accurately the changing demographics (more retirees and living longer); or the treasurer or investment committee for utilizing an optimistic rate-of-return forecast in the past that masked the problem; or the pension boards themselves, which have a majority of plan participants that should have forced a discussion earlier.
The reality is that is all behind us and some changes will need to be made.
We should give House Speaker Jill Krowinski credit for a willingness to tackle this difficult issue, especially in her first term as the House leader. Her chair and vice chair of the House Government Operations Committee unveiled a plan that reduces benefits of future retirees and increases employee contributions.
Even though they indicated it was a starting point for discussions, the proposal has not gone over well. Emails coming in from union members have been strong in their opposition. I understand the frustration. While I don’t have a pension, if the folks in Washington were to decide to lower my Social Security benefits, I would be upset as well. However, while I am not on the committee trying to craft a path forward to sustainability, some type of shared sacrifice may be needed.
During discussion of a normally benign miscellaneous tax bill, a sign of the debate to come rose when a Progressive-led amendment was offered to add an income surcharge to high-income Vermonters to apply to the pension liability. The Ways & Means Committee opposed the proposal and it was defeated on a 125-21 vote by the full House.
Union leaders have been calling for a surcharge on the wealthy and more study on the pension issue. With the liability growing $600 million in the past year, another delay could make the solutions even more expensive and harder to enact and risk the future viability of the program.
