Refinancing Approved Amid Pension Reform Concerns
Lawmakers on Feb. 1 narrowly approved the agreement Gov. Dannel Malloy reached with state employee unions to spread payments to the state pension fund over several years.
The measure passed the Senate after Lt. Gov. Nancy Wyman broke a 17-17 tie.
A House resolution approving the agreement passed 76-72, largely along party lines.
Malloy said the deal was needed so state taxpayers wouldn’t be saddled with annual fund payments as high as $6 billion.
House Minority Leader Themis Klarides (R-Derby) who voted against the resolution, said that while the refinancing was necessary, state employee concessions should have been included in the agreement.
“Unless we make changes along the way that will change the problems that we’re in, just pushing this down the road, paying less than we’re paying now…is actually hurting the people we want to help,” she said.
Malloy said his administration is continuing to negotiate concessions with state employee unions.
State Senator Cathy Osten (D-Sprague), co-chair of the legislature’s Appropriations Committee, said linking the agreement to concessions could leave the state with no flexibility to manage spiking pension costs.
“The bird in the hand is better,” she said. “This is not about philosophy. We need to stabilize our cash flow, and we need to do it today. There still needs to be pension reform. There has to be.”
CBIA economist Pete Gioia said while the refinancing deal will stabilize future payments, long-term structural changes are needed to address the state’s growing unfunded pension liability.
“Without this agreement, which is essentially a refinancing of the state’s obligation, the state will be forced to make significant cuts to services, or yet again raise taxes—to unparalleled levels,” Gioia said.
“However, we still need an agreement to overhaul the entire State Employees Retirement System.”
Gioia called for comprehensive structural reforms, including ending the use of overtime pay to calculate pensions, which can double and even triple a retiree’s base pay, and stopping cost-of-living increases that exceed in percentage points what the pension fund earns annually.
For more information, contact CBIA’s Pete Gioia (860.244.1945) | @CTEconomist
EXPLORE BY CATEGORY
Stay Connected with CBIA News Digests
The latest news and information delivered directly to your inbox.