May 17, 2013 12:26 PM UTC

Hick Signs Next Year's State Budget; Provides More Evidence that the State Faces No Financial "Crisis" Warranting Breach of its Pension Contracts.

• 2 Comments
• by: PolDancer

STATE LAWYERS ARGUE THAT COLORADO CANNOT MEET ITS OWN CONTRACTUAL PENSION OBLIGATIONS.  IF THIS IS TRUE, HOW HAS THE STATE MANAGED TO PAY $700 MILLION FOR PENSIONS THAT ARE NOT ITS CONTRACTUAL OBLIGATION?

Three years ago, a mob of statehouse lobbyists (paid by self-interested parties) set their sights on breaking Colorado state and local government pension contracts.  These 27 lobbyists successfully persuaded a majority of Colorado state legislators to attempt to break the contracts of Colorado PERA pensioners.  In effect, the lobbyists intend to use the force of government to take money from older Coloradans to subsidize state and local government budgets.

The pensioners whose property was seized immediately filed a lawsuit, Justus v. State.  A defendant in the case, the Colorado PERA pension system, notes (in its May, 2010 Motion to Dismiss, page 12) that even the prime sponsor of the legislation they are attempting to defend considers Colorado PERA's pension debt to be a "financial liability" of the State of Colorado.

From the PERA Defendant's Motion to Dismiss:

"Senate Minority Leader Penry, another co-sponsor of the bill, called PERA’s unfunded pension liability the 'single largest financial liability facing the State of Colorado.' Id. at 9-10 (statement of Sen. Joshua Penry, Senate Minority Leader)."

The PERA Defendants also note, on page 27 of their Motion to Dismiss, that " . . . PERA is . . . an instrumentality of the state . . ."

http://saveperacola.files.wordpress.com/2011/04/2010-05-10-pera-defendants_-motion-to-dismiss-first-amended.pdf

The PERA Defendants highlight the fact that Colorado PERA pension debt is a financial liability of the State of Colorado in legal briefs, so why have they bothered appealing a recent Colorado Court of Appeals decision making this same finding?

The PERA Defendants would have us believe that meeting contractual public pension obligations is a financial burden on the State of Colorado.  The defendants would have us believe that the State of Colorado has insufficient financial resources to perform under the Colorado PERA pension contract.

If meeting contractual Colorado PERA pension obligations is such a burden on the State of Colorado, why has the Colorado General Assembly recently and voluntarily agreed to finish paying off $700 million of public pension liabilities that ARE NOT its contractual obligation?

The State of Colorado, the 15th wealthiest state in the nation, is fortunate to find itself with an extra $1 billion in next fiscal year's budget.  Yet, the defendants in the case, Justus v. State, would have us believe that the State of Colorado faces such a severe financial "crisis" that it cannot afford to meet its contractual pension obligations.

Further, if the State of Colorado is indeed confronted by a "financial crisis," how has the Colorado General Assembly managed to give away $105 million in discretionary property tax relief in next year's state budget?  The PERA Defendant's arguments continue to defy logic.

When a person hires a lawyer to file a civil case, isn't it generally safe to assume that the person will try to help their lawyer win the case?  That the person will avoid, to the extent possible, actions that are contrary to his legal interests?  If an organization is sued and hires a law firm to defend its interests, is it not generally expected that the organization will act in its own defense, and assist the law firm in building a defense?

The State of Colorado is an organization that is currently being sued by its retired workers.  The State of Colorado and its pension-administering arm, Colorado PERA, have in-house attorneys, state attorneys general, and an outside, hired law firm defending their breach of Colorado PERA pension contracts.  You might expect that the Colorado General Assembly, as a branch of Colorado state government, would assist this host of lawyers in building a case.

You would be wrong.

When the Colorado General Assembly broke the state's pension contracts in 2010, politics was in the driver's seat.  Is it really a surprise that short-term political considerations predominate in the minds of politicians?  Nevertheless, one might expect that Colorado state legislators would at least temporarily attempt to set political considerations aside in order to help Colorado PERA's in-house and outside hired attorneys build a defense in the case, Justus v. State, i.e., establish "actuarial necessity."

One would be disappointed.

In 2010, when a majority of state legislators violated Colorado PERA pension contracts, politics controlled.  Political calculations and ambitions continue to control in 2013.  At the recently concluded legislative session, Colorado legislators could not (even temporarily) resist the impulse to provide political favors to constituents and lobbyists in order to avoid harming the state's case in the PERA COLA lawsuit.  Thus, while their lawyers are trying to establish an atmosphere of "financial crisis," state legislators are using this year's billion dollar tax bonus to provide a gift to local governments, paying off local government legacy pension liabilities.  With an extra billion dollars in their pockets, we did not see a single Colorado legislator propose that the General Assembly meet ITS OWN contractual pension obligations.  At the recently concluded 2013 legislative session, not a single state legislator suggested that a good faith effort be made to catch up with a decade of underfunded PERA pension contributions.  Instead, we see a $105 million purchase of votes in the form of a discretionary grant of property tax relief.  We see local government lobbyists persuade state legislators to use state government resources to meet local government legacy pension debt.

I have no objection to discretionary expenditures that are deemed appropriate by the Colorado General Assembly.  However, I do object to arguments by attorneys representing the State of Colorado that the state cannot meet its own contractual pension obligations while it is giving away revenues to pay off local government pension obligations.  Having made such appropriations, representatives of the Colorado General Assembly cannot legitimately argue in court that financial need has forced the Legislature to break Colorado PERA pension contracts.

Business Week:

"Lawmakers are also paying down $140 million in state debt for police and firefighter pensions, and adding $30 million for water storage projects in rural Colorado."

http://www.businessweek.com/ap/2013-04-29/hickenlooper-signs-next-years-budget-for-colo-dot

Note again, that this $140 million is not "state debt," in spite of the effort of politicians to portray these local government pension liabilities as "state debt."  This deception serves their political purposes.

September 19, 2012, FPPA testimony (Dan Slack, CEO, FPPA) regarding the obligation of the State of Colorado to pay for local government "Old Hire Police Officers Pension Plans" to the Colorado General Assembly's Police Officers and Firefighters Pension Reform Commission (29 minutes into the hearing):

"So the State has made certain commitments, but has been very careful not to make binding obligations upon itself as the state to provide some assistance with funding for these plans."

Link:

http://www.leg.state.co.us/clics/clics2013A/cslFrontPages.nsf/Audio?OpenPage)

The fact that FPPA Old Hire Pension Plan unfunded liabilities are not a contractual obligation of the State of Colorado is also made clear in Colorado statutes and in the language of Referendum C.

The discretionary nature of state grants to fund Colorado local government pensions is stated clearly in the “Legislative Declaration” (preceding Section 31-31-101, C.R.S. ) in Colorado law.  Section 31-31-101, C.R.S. Legislative Declaration:

“The general assembly further declares that state moneys provided to municipalities, fire protection districts, and county improvement districts DO NOT CONSTITUTE A CONTINUING OBLIGATION OF THE STATE to participate in the ongoing normal costs of pension plan benefits, except for state funding of death and disability benefits as specified in this article, but are provided in recognition that the local governments are currently burdened with financial obligations relating to pensions in excess of their present financial capacities.”

http://www.leg.state.co.us/clics/clics2013a/csl.nsf/fsbillcont3/70EFF65CF1F144CF87257B34007B5B95?Open&file=SB234_r1.pdf

A few years ago, a Colorado Department of Treasury JBC Budget Briefing document provided an accounting of the Colorado General Assembly’s historical discretionary grants to meet local government public pension obligations:

http://www.state.co.us/gov_dir/leg_dir/jbc/2011-12/trebrf.pdf

Here are a few excerpts:

“State Contributions for Local Fire and Police Pension Plans: Since 1980, the State has contributed almost $540 million to the FPPA to eliminate the unfunded liability of the ‘old-hire’ pension plans.”

From page 29 of the JBC document:

“To put this figure in perspective, the total state General Fund operating budget in the FY 1978-79 Long Bill was just over $1.0 billion. Thus the $500 million shortfall in local plans represented nearly half of the annual state General Fund budget. If the magnitude of this shortfall were adjusted for inflation, it would exceed $1.8 billion.”

From page 31 of the JBC document:

“During the ensuing years, the State's contribution to the old hire plans equaled about 41 percent of the total combined contributions of the state, local governments and employees.”

From Senate Bill13-234  – $132.4 million to pay off local government pension obligations (this appropriation, coupled with funding in next year's Long Bill brings total state appropriations to pay off local government pension obligations to approximately $700 million):

SB13-234, CONCERNING THE STATE'S AUTHORITY TO PREPAY ITS OBLIGATION FOR THE UNFUNDED ACCRUED LIABILITY OF OLD HIRE PENSION PLANS THAT ARE AFFILIATED WITH THE FIRE AND POLICE PENSION ASSOCIATION.

(My comment: Note the deception present even in the title of the bill.  As with SB10-001, the rank and file membership did not bother to root out deception.)

Page 2:

"(b) ON MAY 31, 2013, THE STATE TREASURER SHALL TRANSFER ONE HUNDRED THIRTY-TWO MILLION FOUR HUNDRED NINE THOUSAND THREE HUNDRED THIRTY-NINE DOLLARS FROM THE GENERAL FUND TO THE OLD HIRE PLAN MEMBERS' BENEFIT TRUST FUND CREATED IN SECTION 31-31-701 (6)."

http://www.leg.state.co.us/clics/clics2013a/csl.nsf/fsbillcont3/70EFF65CF1F144CF87257B34007B5B95?Open&file=234_enr.pdf

Next year's property tax relief grant, from the Colorado Long Bill – $105 million in property tax relief:

Colorado State Budget 2013/2014 (Long Bill SB13-230), page 238, "Homestead" property tax relief grant: $105,200,000

http://www.leg.state.co.us/CLICS/CLICS2013A/csl.nsf/BillFoldersSenate?OpenFrameSet

Denver Post:

"But Joint Budget Committee vice-chairwoman Rep. Claire Levy, D-Boulder, lauded her colleagues on the committee and noted that with Colorado's economic recovery, the state is no longer in a position that requires it to cut programs."

http://www.denverpost.com/breakingnews/ci_23131374/hickenlooper-sign-next-years-20-5-billion-colorado

HICK'S LETTER TO THE GENERAL ASSEMBLY ON THE 2013/14 STATE BUDGET.

April 29, 2013:

"With thanks to the members of the sixty-ninth General Assembly, this budget is the result of a bipartisan dedication to Colorado’s values.  We are enacting this budget at a unique time in our
history.  After enduring a significant economic downturn, Colorado’s economy is outperforming the nation’s.  The resulting recovery is allowing us the opportunity to allocate resources for the common good."

http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheadername1=Content-Disposition&blobheadername2=Content-Type&blobheadervalue1=inline%3B+filename%3D%22A+letter+to+the+general+assembly+from+Hickenlooper.pdf%22&blobheadervalue2=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251854377268&ssbinary=true

Denver Business Journal:

" . . . Hickenlooper on Monday signed into law the $20.5 billion state budget for the 2013-14 fiscal year . . . "

"The new eco-devo money — a priority for Hickenlooper since he introduced his proposed budget in November — includes:

• $2.9 million more for incentives for relocating and expanding companies.
• $1 million for increased film incentives.
• $2 million for increased tourism marketing and development of a state branding campaign to attract tourists and entrepreneurs.

http://www.bizjournals.com/denver/news/2013/04/29/hickenlooper-signs-state-budget-with.html

Boulder Daily Camera:

"Lawmakers are also paying down $140 million in state debt for police and firefighter pensions, and adding $30 million for water storage projects in rural Colorado."

"We're in the happy position of no longer having to cut programs," said Rep. Claire Levy, D-Boulder, one of six budget writers.

http://www.dailycamera.com/nation-world-news/ci_23135284/hickenlooper-signs-next-years-state-budget

KDVR:

"Republicans support those pieces of the budget, as well as a measure House Republicans fought for to pay off a long-standing debt to the Fire and Police Protection Association."

http://kdvr.com/2013/04/29/hickenlooper-signs-next-years-20-5-billion-budget-into-law/

(My comment: Can you believe the voracity with which Colorado media will gobble up the propaganda?)

COLORADO COURTS: MEMBERS OF BOTH MAJOR PARTIES HAVE BEEN LOBBIED HARD AND PERSUADED TO TAKE MONEY FROM PENSIONERS, SO PLEASE GIVE IT YOUR BLESSING.

Much has been made in the press (and in legal briefs) of the fact that both Democrats and some Republicans voted for SB10-001 in 2010.

From the Colorado PERA Defendant's Motion to Dismiss:

"In a BIPARTISAN effort to address this critical funding shortfall, the General Assembly enacted Senate Bill 10-001 to make changes to the state pension system."

http://saveperacola.files.wordpress.com/2011/04/2010-05-10-pera-defendants_-motion-to-dismiss-first-amended.pdf

Of course, the term "shortfall" implies that PERA-affiliated employers need the ability to "pay off the mortgage" today, which is untrue.  If a Colorado PERA "critical shortfall" existed in 2010, as we have seen, the General Assembly is itself the author of that "critical shortfall."

This PERA Defendant argument distills to: "Colorado courts we both want to take money from old people, so please give it your blessing."  The fact that both a Republican and a Democrat support a bill does not necessarily place the stamp of morality or constitutionality on the legislation.

If a lobbyist persuades one Democrat and one Republican to mug an old lady, is the mugging thereby rendered "moral" because it was a "bipartisan" mugging?  If a lobbyist persuades both a Republican and a Democrat to raid an old lady's bank account, will the theft conform with statutory or constitutional law in the United States?  After all, it was a "bipartisan" theft.

Occasionally, members of both political parties find collusion in their interest.  Many Colorado conservatives would like to see the Colorado PERA defined benefit plan eliminated entirely.  A fraction of these conservatives will look the other way if constitutional rights are trampled in the process (as we know, not all conservatives will look the other way.)  Many Colorado Democrats naturally want to serve the interests of organized labor.  In 2009, Colorado's public sector unions decided that the breach of Colorado PERA retiree pension contracts would help to minimize future pension contributions from their dues-paying membership.  So, the unions supported SB10-001, and convinced some of their legislative friends to ignore their oaths of office.  As always, follow the money.

In 2010, it happened that "bi-partisan" Colorado political interests intersected on immoral and unconstitutional ground.  Collusion benefited some Democrats and some Republicans.  In this environment, a collective push from 27 lobbyists was sufficient to enact SB10-001.

Colorado PERA active and retired members, politics can be a filthy business.  Don't let dirty politics rob you of your constitutional rights.  Contribute at saveperacola.com.  "Friend" Save Pera Cola on Facebook!