Lawmakers take a page from Gov. Rowland’s playbook
May 27 – For decades state governments failed to pay for promises made to their employees. Connecticut’s elected leaders were hardly different, but in the 1990s, Gov. John Rowland and complicit union leaders developed a scheme to hide the real cost of pension promises.
While Gov. Dannel Malloy has proposed a plan to undo the damage with slightly increased annual contributions, he hasn’t set aside the proposed amounts each year.
The latest budget proposal from the General Assembly reverts back to the gimmicks of the Rowland era – and even doubles down on them. Rowland and the union officials across the negotiating table agreed to hide a small portion of the pension costs off the books. This new effort will take the entire cost of paying for state employee retirements off the books.
The latest policy brief from the Yankee Institute exposes exactly how this gimmick will disguise the real cost of state employee pensions.
“Now is the time for lawmakers to reform benefits for state employees, so that the state can get a handle on its pension debt and get onto a more fiscally viable path,” wrote Suzanne Bates, Yankee Institute policy director and author of the brief. “Making state employee pensions less transparent by moving them out from under the cap is a step in the wrong direction.”
“Lawmakers are trying to change a simple reality: each dollar spent on pensions is a dollar lost for other causes,” said Carol Platt Liebau, Yankee Institute president. “Many will miss the social programs cut in favor of pensions. For others, the underfunded priority is transportation. Unfortunately, hiding the cost of pensions doesn’t fund these priorities – it just becomes easier for the politicians to tax and spend.”
The policy brief raises the following points:
· Connecticut’s pension debt is growing even though the state is now paying over $2 billion a year into these funds.
· The pension debt went up 7 percent in two years – from $24.5 billion in 2012 to $26.3 billion in 2014, according to reports issued by the comptroller.
· Connecticut’s public pensions are the most generous in the nation.
· Payments to the state’s pension funds are crowding out other government spending, which is leading to lawmakers wanting to increase taxes.
· Moving pension debt payments out from under the cap will result in less scrutiny of this growing debt, and its cost to Connecticut taxpayers.
· Lawmakers want to make this change to the spending cap without a 3/5 vote – something that could be illegal.
· The pension debt was not moved out of the base year for the purposes of recalculating allowable budget growth. When the pension debt is removed, the budget proposed by the Appropriations Committee is $280 million over the cap.
A recent poll conducted by Cygnal, a national opinion research firm, found broad-based support for the spending cap.
The Yankee Institute for Public Policy is a Connecticut think tank that develops and advances policy solutions to promote smart, limited government; fairness for taxpayers; and an open road to opportunity for all the people of our state.