Protect us from ourselves.
That’s what a bipartisan group of state lawmakers is asking their colleagues to do this year by preventing future Legislatures from underfunding the state retirement system, as recent ones have.
They might not put it in so many words.
“Perhaps, ‘Save the entire state from all of us,’” Sen. Craig Pridemore prefers.
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“The reality is, most citizens out there aren’t saying ‘Please fund the pension system,’” the Vancouver Democrat explained. “They’re talking about transportation, talking about education, talking about health care.”
Lawmakers and State Treasurer Jim McIntire are hoping to force the conversation by tying the Legislature’s hands with a change to the state constitution.
If the Legislature and voters approve it, the proposed constitutional amendment introduced Tuesday would require the state to stay on a fixed schedule of paying off its two oldest pension plans over the next couple of decades.
The old plans, Public Employees’ Retirement System Plan 1 and Teachers’ Retirement System Plan 1, closed to new employees in 1977, are more than $6.8 billion short of what they will eventually have to pay out to their 103,000 members.
The constitutional change would prevent balancing the old plans on the backs of newer ones. Lawmakers would have to put money into open plans every year at 80 percent or more of the level recommended by the state actuary.
The Legislature hasn’t funded pensions at that level since 2001, wavering between 27 percent and 73 percent of the actuary’s amount.
Lawmakers have set a goal of returning to the 80 percent level, but majority Democrats pushed off the requirement in 2009 as the budget crisis deepened.
Now members of both parties are seeking handcuffs that would prevent them from delaying again.
“If not, we face the real serious fact that some of these unfunded pension systems will create a huge liability in the future that could really undermine completely that system and lead to dramatic cuts of benefits for retirees, which we don’t want to see,” said Sen. Steve Conway, a Tacoma Democrat.
Conway, Pridemore and Rep. Kevin Van De Wege, D-Sequim, joined the Democratic treasurer; Sen. Mark Schoesler, R-Ritzville; and Rep. Barbara Bailey, R-Oak Harbor, in touting the bill Tuesday to reporters. The Democratic chairs and top Republican members of the House and Senate budget committees have signed on.
But the idea of postponing pension obligations will once again be tempting.
Over the next two years, the actuary recommends state government contribute $1.48 billion into the pension system. If that amount were reduced, cuts could be less deep. Fee or tax increases could be smaller.
That shouldn’t happen, lawmakers insist.
“In good times and in bad times, we will continue to do the proper thing and fund our pension system,” Bailey said.
Some, though, might balk at having their hands tied in an economic downturn. McIntire said there has been talk of making an exception to the proposed restrictions: They could be bypassed by supermajority votes in the Legislature.
Gov. Chris Gregoire has a pension-reform proposal of her own that she says would close more than half the shortfall in the PERS 1 and TRS 1.
She would end automatic, annual cost-of-living increases for retirees in the plans. McIntire hasn’t taken a position on the proposal, but said he’s worried the courts would end up deciding whether it’s legal.
Public employee unions have criticized the idea of ending the annual increases, and Conway said lawmakers might look at suspending them instead.
Jordan Schrader: 360-786-1826 email@example.com, blog.thenewstribune.com/politics