February 26, 2013 01:56 PM UTC

Montana Eschews "Welcher State" Moniker

• 3 Comments
• by: PolDancer

MONTANA GOVERNOR STEVE BULLOCK: WE WILL CRAFT A PLAN THAT “DOESN’T GO BACK ON THE PROMISES” WE’VE MADE TO MONTANA PUBLIC EMPLOYEES.

GOVERNOR, UNIONS, LOCAL GOVERNMENTS AGREE: USE COAL SEVERANCE TAX REVENUES TO PAY THE STATE’S PENSION DEBT.

BILL SPONSOR: “WE HAVE A CONTRACTUAL OBLIGATION TO EMPLOYEES AND RETIREES WHO ARE CURRENTLY IN THE TRS SYSTEM.”

Governor Hickenlooper is looking to rebrand the State of Colorado.  I submit for his consideration: “Colorado: The Welcher State.”

Link:

http://www.denverpost.com/breakingnews/ci_22474473/hickenlooper-unveils-effort-rebrand-colorado

Admittedly, this suggestion is made tongue-in-cheek, but as a Coloradan I wonder how our politicians arrived at the conclusion in 2010 that the state’s contracts with elderly Colorado pensioners should be broken . . . that the state should “welch” on its contractual obligations.  Why should Colorado break its contracts with pensioners, while the state’s contracts with corporations remain unscathed?  Are some contracts more important than other contracts?  How do we decide which ones to honor?  Which ones to discard?  Mitt Romney reminded us recently that corporations are “people” too.  Apparently, Colorado politicians believe that corporations are VIPs . . . superior to the caste “old Colorado retired public servant.”

In 2010, a majority of the members of the Colorado Legislature voted to break Colorado’s contracts with its pensioners in the bill SB10-001.  If their attempt to break the state’s contracts holds up in court, my arguments for rebranding with “Colorado: The Welcher State” will be bolstered.

The State of Colorado has a pension-administration arm called Colorado PERA.  Members of the PERA pension are parties to a contract with Colorado PERA and Colorado governments.  These governments made an offer to PERA members of fixed retirement benefits in exchange for decades of work and contributions to the pension system.  Colorado state and local governments entered into this contract with pensioners freely.  The pensioners held up their end of the bargain by paying into the pension and working for their public employers for 30 years.  The pension debt is clearly the legal responsibility of Colorado state and local governments.

Nevertheless, in 2010, a majority of Colorado state legislators decided to try and shift this debt from Colorado state and local governments onto the backs of retirees.  Legislators racked up the state’s pension debt by failing to pay their pension bills for ten years.  Then, the “solution” occurred to them . . . shift the state’s accumulated debt onto pensioners.  Although the debt is the responsibility of Colorado state and local governments, only a small fraction of the “fix” in SB10-001 comes from Colorado state and local governments.  The provisions of SB10-001 require that those who legally owe the debt contribute a mere ten percent of the “fix,” while those who do not owe the debt (PERA members and retirees) contribute 90 percent of the “fix.”  Do any Coloradans actually believe that this solution sought in SB10-001 is reasonable?  Immense quantities of contorted, twisted logic are needed to reach the conclusion that the SB10-001 debt shift is somehow “reasonable.”  Indeed, in 2010 a 17-member statehouse lobbying troop was required to persuade a majority of Colorado legislators that the provisions of SB10-001 were “reasonable.”  The legislators could never have arrived at such a conclusion of their own accord.

Colorado PERA’s Executive Director Greg Smith, at the “Fall 2011 Colorado PERA Shareholder’s Meeting” told us that: “‘Only ten percent of the fix” of the (SB10-001) reforms in 2010 came from additional employer contributions.

Link:

http://www.copera.org/pera/about/shareholder.htm.

Although the state’s public pension debt is owed by Colorado state and local governments, Colorado’s Speaker of the House told us on July 14, 2009 that he didn’t believe that they should be asked to actually pay their debts:

"I don't think at this point we can expect employer contributions to be part of the solution . . .".

Link:

http://www.9news.com/rss/story.aspx?storyid=119465

I’m aware that “state debt” is not a subject that Coloradans want to hear about.  Like the majority of Colorado legislators who voted to break PERA retiree contracts in 2010, most Coloradans wish the problem “would just go away.”  I’m also aware that most people have no concern about such matters unless they are personally affected.  So, let’s pause for a moment and thank God for our Judiciary.  Without the Judiciary, our politicians would casually discard the constitutional rights of vulnerable minorities.  (Many members of this minority are particularly vulnerable.  A number of PERA retirees were unable to leave nursing homes or hospital beds to fight corporate and union lobbyists at the Colorado Capitol!)

The articles I have written on this subject provide numerous examples of state legislation that addresses public pension debt without resorting to breach of state contracts.  Dozens of alternatives to state breach of pension contracts have been adopted in legislation across the country.  These alternatives were ignored by Colorado legislators in favor of “the easy fix.”  Our neighbor to the north, Montana, is currently considering legal, prospective pension reform options.  They are showing Colorado how it’s done . . . legally.

In his State of the State address three weeks ago, Montana Governor Steve Bullock stated his intent to honor Montana’s public pension contracts.  (Montana will make no attempt to “welch” on public pension debt.)

Governor Steve Bullock (36 minutes into his State of the State address):

“We must also meet our responsibility to fix a long-term problem created by our predecessors.  I’ve outlined a detailed plan that will shore up our public retirement systems and do so without raising taxes.  I look forward to working with this body to ensure that we craft a plan that honors our commitment to Montana’s public servants.  A plan that doesn’t go back on the promises we’ve made to our snow plow drivers, prison guards, teachers and other middle class workers who are our friends and our neighbors.”

Link to Governor Bullock’s State of the State speech:

http://watch.montanapbs.org/video/2331212142?starttime=1200000

The Billings Gazette is now reporting that a consensus has emerged in Montana to shore up the state’s public pension funds.  The Montana Governor, public sector unions and local governments have decided to skip the 3-5 year “pension reform litigation timeout” that the Colorado Legislature has embraced and address the Montana’s public pension system immediately.  This decision in Montana will prevent millions of taxpayer dollars from being wasted on a court battle to answer a question that has already been answered.  Public pension benefits are contractual obligations of their governmental pension plan sponsors.  Would we have it any other way?  Should we permit public employers to take earned, accrued pension benefits from their employees?  Should governments have carte blanche to take people’s property?

From the Billings Gazette:

“Gov. Steve Bullock’s bill to repair the financially troubled Montana Public Employee Retirement System drew widespread support Thursday, except from groups upset with budget cuts to programs to help pay for the fix.”

“The Joint Select Committee on Pensions heard, but didn’t vote on, House Bill 454, by Rep. Bill McChesney, D-Miles City.”

“‘It’s a reasonable, well thought out, responsible fix,’ McChesney told the committee.”

“Here is how the bill would work:

— State and local government employers would pay an additional 1 percent of their employees’ salaries into the pension fund, amounting to about $12 million more annually.
— Public employees would pay an additional 1 percent of their salaries into the fund, generating $10.5 million more annually.
— Additional state funding would come from the spendable portion of the coal severance tax, which would be about $17 million a year and increasing annually.
— Other state funding of up to $21 million a year from the interest income from the coal severance tax permanent trust fund would go into the fund until fiscal 2019 and then increase to $24 million a year.
— The bill provides a trigger that would allow the additional 1 percent from employers and 1 percent from employees to end once the system is fully funded. The added contributions stop when the amortization period would no longer be more than 25 years. The actuary estimates this would occur in 2033.”

“Roxanne Minnehan, executive director of the Montana Employee Retirement Administration, endorsed the bill on behalf of the Public Employees’ Retirement Board.”

“‘This is the only proposal significantly addressing the funding in the Public Employees’ Retirement System,’ she said.”

“Minnehan said the bill offers the ‘least impairing impact’ to current pension fund members, while preserving the defined benefit pension plan.”

“Also endorsing the bill were representatives of the Montana Association of Counties, Montana League of Cities and Towns, MEA-MFT, Montana County Attorneys Association, American Federation of State County and Municipal Employees, Montana Sheriffs and Police Officers Association, Montana Association of Clerks of District Court, Montana Magistrates’ Association and the Association of Retired Public Employees.”

(My comment: Montana public sector unions are supporting constitutional measures to shore up public pensions.  Colorado public sector unions supported the breach of the pension contracts of their retired union “brothers and sisters” in 2010.)

Link to article at the Billings Gazette:

http://billingsgazette.com/news/state-and-regional/montana/governor-s-pension-fix-draws-praise-criticism/article_eae3436d-1d98-5805-8c7c-e6e6eb268497.html

From yesterday’s Bozeman Daily Chronicle:

“I am sponsoring HB 377, a plan that proposes minor changes to existing employees plans while requiring somewhat more of a contribution from future employees.  The adjustments are as follows.  Existing employees would see their contribution go from 7.15 percent to 8.15 percent. This would be adjusted down once the total pension is 90 percent funded.  New employees would also contribute 8.15 percent of their salary, with an adjustment up or down of .5 percent depending on success of the fund investments. State taxpayer contribution rates would remain unchanged.”

“The major proposed change to TRS in HB 377 would be that new employees would have to contribute longer in order to qualify for a full pension.  Teachers would have to have 30 years of service and be at least 55 to receive a full pension instead of the current 25 years.  Personally, I think that this is a reasonable change and a reasonable expectation.  What would remain unchanged is that employees would still qualify for a partial pension if they have at least five years of service and are at least 60 years old.”

“We have a contractual obligation to employees and retirees who are currently in the TRS system.”

“A plan such as HB 377 is a reasonable approach to fulfill Montana’s contractual and constitutional obligations.  The longer we wait to address this problem the more it will cost us in the future.  Let’s get this done during this legislative session.”

“Tom Woods, who represents House District 64 in the Montana Legislature, is an adjunct instructor at MSU.”

Link to the complete article in the Bozeman Daily Chronicle:

http://www.bozemandailychronicle.com/opinions/article_6d5c013a-7f6f-11e2-91eb-001a4bcf887a.html

The battle to prevent Colorado from becoming “The Welcher State” is being waged by the organization Save Pera Cola.  If you are a person who supports the rule of law, and believes that the U.S. Constitution should not be discarded when convenient, consider contributing to Save Pera Cola.  (Their website, saveperacola.com, explains how to do this.)  Also, if you have a Facebook account, “Friend” Save Pera Cola on Facebook.