by Don Turner
The last thing you do in the middle of a crisis is kick the can down the road. Yet, that’s exactly what the Legislature just did on Vermont’s mounting pension liabilities.
Earlier this year, State Treasurer Beth Pearce delivered a long overdue message to the Legislature–calling for painful cuts in order to keep the state employees’ and state teachers’ pensions operation. This comes years after resisting calls for structural reform to the pension system.
However, the Treasurer deserves recognition for having the courage to at least present a plan. The Legislature did too–with leadership in the House Government Operations Committee unveiling its own similar plan.
But, the Legislature’s plan broke our promises to state employees and teachers. It called for painful cuts and unfair modifications to arrangements that the state had assured its workers it would cover. Unions, state employees, and teachers were rightly outraged.
However, instead of considering other options to reform the pension system, Legislative Leadership caved to political pressure.
For example, Lieutenant Governor Molly Gray issued a vague, ambiguous statement criticizing the plan(link is external)–with absolutely no suggestion for any substantive alternatives.
Senate President Pro Tem Becca Balint did much the same.
And, unsurprisingly, House Speaker Jill Krowinski ditched the plan(link is external)–effectively throwing her own colleagues in the House Government Operations Committee under the bus. She called for Montpelier’s favorite tool–a “task force”–which really means doing nothing now.
It will also allow the Legislative Majority to deflect responsibility and start the blame game. I am sure that Governor Scott will be their first target.
In response, Treasurer Pearce rightly noted her disappointment(link is external) in the Legislature’s inability to come to an agreement. The Treasurer is correct. By delaying action this year, the Legislature is only making our problems worse. We can’t afford to break our promises, but we certainly can’t afford to delay action either.
There are other options out there–options that don’t break our promises and avoid painful cuts. The Legislature could give state employees an option to switch to less-expensive defined contribution plans (and transition new employees into these plans); move other-post employment benefits (OPEB) into the Vermont health exchange; impose a small tax on retirement allowances until we reach an 80% funded ratio (a far better alternative than deep cuts); slightly tweak up the retirement age to match Social Security; and perhaps most importantly, phase-in reasonable increases to employee contribution rates over time.
I would also encourage modifications to prevent future bureaucrats from gaming the pension system. It is far too common for agencies to promote or move staff around at the end of their career to inflate their retirement pension. Modifying the system to determine beneficiaries pension based on the average of their annual salary over their career versus the highest two years would be more equitable to all and would not allow someone to manipulate the pension system.
Put simply, there are other options out there. But instead of considering them, House lawmakers came up with a rushed, poorly-designed proposal–excluding key stakeholders from the process–and then abandoned it and established a measly “task force.”
While abandoning a bad plan is a good step, opting for no plan which will cost taxpayers hundreds of millions of dollars annually is not an acceptable alternative. I believe everyone involved in this conversation understands what needs to be done to stabilize the pensions now. The is problem lays with the political fortitude to get it done.
Moving forward, the Legislature should make sure the task force process is inclusive, open and transparent, and considers all ideas as timing is of the essence.
But the very fact that we’re in this situation is a sign of failed Legislative leadership. Let’s hope they wise up and incorporate some realistic, substantive ideas for next year–or else it will haunt them in the 2022 election.
This commentary is by Don Turner, a former Republican state representative from Milton, former House minority leader, current Milton town manager and longtime member of the Milton Fire and Rescue departments. He was a candidate for lieutenant governor in 2018.