House passes plan to preserve state employee pensions

Representative Keith Regier (R-Kalispell)

Representative Keith Regier (R-Kalispell)

The House of Representatives has decided to move forward with a plan to fix the state’s ailing pension systems, a plan brought forward by Governor Steve Bullock.

As we’ve reported, the  state’s biggest retirement systems are on pace to be more than $4 billion in debt over the next 30 years if their funding mechanism isn’t changed.

The Governor’s plan is split into two bills which separately address the state’s two largest systems, the Teachers Retirement System (TRS) and Public Employees Retirement System (PERS). Those plans require both employers and employees put in more money toward the pensions. They would also take more money from state trust lands. The House approved both by wide margins Thursday, 60-39 for the TRS plan and 64-35 for the PERS plan.

“I think most citizens of Montana are gonna see that we’re just trying to bail out a failed plan,” said Representative Keith Regier (R-Kalispell). He sponsored another bill which became the top alternative to the Governor’s plan. It would have moved all new hires over to defined contribution plans, which are similar to 401(K) plans used often in the private sector. Making that shift would have cost the state more money, but Regier argues only for the short term. Under his plan, the state could eventually transition out of the pension program. The state would contribute money to the defined contribution plans of the employees, but the stability of those plans would be based on the whims of the stock market.
“It comes down to who should have the risk for somebody’s retirement,” he said, meaning the individual employees with the defined contribution plans or the state with the current pension system.
Representative Tom Woods (D-Bozeman)

Representative Tom Woods (D-Bozeman)

Representative Tom Woods (D-Bozeman) sponsored the Governor’s plan to fix the Teachers Retirement System. He says House members realized it was the best way to move forward, “that it’s more expensive to close defined benefit plans than to fix them.” He believes the two bills have cleared their biggest hurdles as they move over to the Senate.

“I believe these bills will pass,” said Eric Feaver, President of the state’s largest public employee union, the MEA-MFT. “This is the session to do it, we have the money to do it, we have the commitment.” Feaver is a strong supporter of the pension fix bills even though he believes parts of the measures are unconstitutional. While the Governor’s pension bills were in a joint-select committee responsible for pensions, lawmakers added amendments which would lower the guaranteed cost-of-living adjustment built into the plans of current employees. Legislative legal staff have warned this could be a breach of contract.
“That’s a problem,” Feaver said. He says he will lobby to try to remove those amendments in the Senate or if the bill makes it to Governor Bullock’s desk. If they make it all the way through the process, he believes he and several other plaintiffs could mount a successful lawsuit to strip them.
“The bills need to pass anyway,” he said.
Lawmakers in favor of the 401(K) retirement plan shift are not giving up. On Wednesday, Senator Dee Brown introduced a bill which, if passed, would put the proposal before the voters.
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Governor-elect Bullock releases state budget proposal

Governor-Elect Steve Bullock announces his proposed budget Friday

Governor-elect Steve Bullock announces his proposed budget Friday

Governor Elect Steve Bullock has released his proposed state budget on the eve of the start of the Montana Legislature and his inauguration on Monday. The proposal makes modifications to the final budget submitted by outgoing Governor Brian Schweitzer, including what staff say is about $30 million dollars more in spending.

“Just like budgets that we come up with around the kitchen table, a state’s budget is truly a reflection of the values and the priorities of the people of Montana,” Governor-elect Steve Bullock said Friday after walking into the expansive rotunda of the Capitol Building, flanked by top-staffers handing out thin orange books.

The books contain highlights of the administration’s budget for the next two-year budget cycle. It will serve as a starting point for the State Legislature.

“Healthier Montanans will contribute to a healthy Montana economy,” Bullock said, announcing for the first time through the budget that he will support the optional Medicaid Expansion provision in the federal Affordable Care Act. “To prevent those cost shifts, to insure Montanans, to reduce losses to healthcare providers and to utilize federal funds which without Legislative Action will simply revert to other states.”

Medicaid Expansion is part of a wider initiative Bullock calls Access Health Montana. It also includes a proposal to expand opportunities for medical students and a two percent rate increase to healthcare providers.

The Bullock budget includes more education spending than Governor Schweitzer’s budget while keeping in Schweitzer’s tuition freeze at state colleges and Universities.

“We’ve proposed to fix the pension system,” Bullock said. The state’s two biggest employee retirement programs have large budget shortfalls, amounting to about $3 billion dollars over the next 30 years. Fixing the pensions has long been labeled a top priority for this upcoming Legislative Session. Governor-Elect Bullock’s pension fix proposal closely follows that of Governor Brian Schweitzer.

It calls for higher contributions from public employees, their employers, and an infusion of revenue from natural resource development. Local governments have been skeptical of the proposal, saying it could lead to a forced increase e in property taxes. But Bullock says since election day he has earned their favor.

“I’m happy to announce the Montana Association of Counties and the Montana League of Cities and Towns will join my administration… in putting forward a solution to the public employee retirement system that I think we can all support,” Bullock said.

Republican Speaker of the House Mark Blasdel is not ready to go that far.

“I think it’s a step in the process,” he said. Blasdel and lawmakers received the proposed budget at the same time as the press this morning.

“I’ve just briefly gotten to look at it, we welcome the Governor’s ideas,” Blasdel said.

He stopped short of outright endorsing or opposing priorities in the budget. Yet, he says Republicans support a form of permanent property tax relief rather than the one-time $400 dollar property tax refund present in the Bullock budget.

“If you look over the last few bienniums there’s been a surplus in most of them which means the taxpayers have over-performed,” Blasdel said.

Republican leadership has also been cold to the idea of Medicaid Expansion, not wanting to rely on the large financial support provided from the federal government. But leaders say they are still optimistic they will find common ground.

Blasdel says he needs to be a little vague in responding to the budget, considering the amount of discussion yet to come.

“Well absolutely,” he said. “I think every session takes on a life of its own. What may be the major issues at the beginning don’t always end up being the final issues at the end.”

Blasdel says he hopes this Legislative Session, and the Republican caucus remains focused.

“Focus on bills that you think the Governor can sign, work with people that you may have not worked with in the past, to see if there’s some kind of compromise without compromising your values as well,” he said.

That search for compromise begins Monday, when the 63rd Montana Legislature convenes.

Sally, Chuck and Mike preview the upcoming legislature….

Johnson, Mauk & Dennison 3SMALL
The 63rd Montana legislature convenes on Monday, with lots of ideas on how to spend the state’s healthy budget surplus. In tonight’s feature, News Director Sally Mauk talks with Lee newspaper reporters Chuck Johnson and Mike Dennison about what spending issues are likely to dominate the 90-day session…