Gov. John Hickenlooper should warm up his veto pen for any bill that puts the troubled state retirement plan's bailout on taxpayers. He should honor the stand he took when recommending a budget in November.
The Colorado House Finance Committee messed with Senate Bill 200, written to reform and rescue the Public Employees Retirement Association from unfunded liabilities estimated as high as $50 billion.
With a 10-3 vote, the Democrat-led committee killed the bill's measure to tap an additional 3 percent of public employees' paychecks to help resolve the pension problem. The committee's new version has state coffers paying the money instead, placing the burden on taxpayers.
Every new dollar spent from the general fund on government retirees is taxpayer money that cannot go directly to roads, education, and public safety. The additional $225 million taxpayers would immediately spend under this amended bill is more than enough to widen I-25 between Monument and Castle Rock. Instead, it will go to shore up a pension with benefits far more generous than anything most private-sector employees anticipate for retirement, as they struggle getting to and from work on neglected highways.
In November, Hickenlooper presented a budget that had retirees and public employees eating part of the pension's rescue costs. He argued taxpayers had contributed enough into the fund, and he was right.
Senate Bill 200 respected the Democratic governor's logic, bringing public employee contributions from an 8 percent payroll contribution to 11 percent. That apparently seemed unfair to a majority on the finance committee, who voted to add nothing to the employee contribution. Never mind the fact taxpayer-funded state agencies, such as the Department of Transportation, pay more than 20 percent of their budgets to fund employee retirements.
In addition to shielding public employees from higher contributions to fund their pensions, the committee deleted a provision of the bill that incentivized public employees to move their defined benefits pension funds into defined contribution plans, such as the 401(k) funds most private-sector employees contribute to and manage.
Under defined contribution plans, pensioners win and lose based on the economy's performance. Astute investors can maximize potential returns with wise decisions. Under defined contribution plans, government ensures retirees pre-established returns without regard for market conditions. That means private-sector taxpayers can suffer layoffs, stagnant wages, inflation, and poor returns on investments while their obligations to pay public-sector retiree debt remain unchanged.
Politicians are typically hard-pressed to impose responsibilities on public employees, because they are an easily defined and accessible constituency of voters. Public employees' unions, such as those representing teachers, draw money from public-sector paychecks and contribute to politicians who defend their interests. That's why politicians reliably resist proposals for government employees to contribute more to their future retirement costs.
No idea for bailing out the pension comes without pain. The state cannot easily correct for tens of billions in unfunded liabilities without someone feeling the pinch.
If a version of this bill hits his desk without public employees paying their fair share, Hickenlooper should remember those other Coloradans who don't have the security of guaranteed incomes during retirement. Depression, recession, or a typical stock market crash can wipe out their futures.
If the final bill does not respect the discrepancy between the public and private workforce, Hickenlooper should draw on his leadership skills. He should write "VETO" - big, bold and with apology to none. He should do it out of respect for everyone who doesn't have the state's guarantee of an easy retirement.