General Assembly Will Vote On Pension Deal
HARTFORD, CT — The Senate, according to a spokesman, is scheduled to vote Feb. 1 on a deal to level the pension payments to the State Employees Retirement System.
The House has yet to schedule a vote, but a spokeswoman for Democratic Speaker Joe Aresimowicz said a vote is planned.
The Dec. 8 deal struck between Democratic Gov. Dannel P. Malloy and the labor unions would automatically go into effect on Feb. 3 if the legislature took no action.
Republican legislative leaders, who believe all union contracts should be voted upon, applauded the decision to hold a vote. Republican Senate President Len Fasano, R-North Haven, said if there was not a vote scheduled then he would have requested a vote and under the new Senate rules it would have prompted at least a debate on whether to raise the agreement for a vote. In the meantime, his office has been gathering information used by the parties to reach the agreement.
Without a deal in place, the annual state contribution to the state pension fund will exceed $6 billion. That means, in order for the state to meet those obligations, it would have to drastically cut services and/or increase taxes to unprecedented levels. The state’s annual contribution to the pension fund is already $1.5 billion. Under the new agreement it would increase at the most to around $2.3 billion annually.
So even though it’s extending the agreement and contributing a little more, at least one of the four Wall Street rating agencies, said those changes are outweighed by other parts of the deal.
The agreement extends the pension amortization window from 2032 to 2046, which results in higher overall payments over the life of the debt, but those changes are outweighed by other changes, such as lowering the assumed rate of investment return from 8 percent to 6.9 percent, according to Moody’s analysts.
“We have been raising concerns since 2000 that the current level percent of payroll system insisted upon by then-Governor Rowland was not the best way to assure stable and reliable pension funding,” Stephen Greatorex, business manager for the 3,200-member Connecticut State University branch of the American Association of University Professors (AAUP), said when the deal was announced. “This agreement at last moves us to a funding system that does its job for the people of the state and the employees who serve them.”
The agreement does not make any changes to the benefits state employees receive.
House Minority Leader Themis Klarides, R-Derby, has said the proposed deal pushes off filling the gaping hole because it does not change the relationship state employees have with the state regarding their contributions to the plan.
“We appreciate all the work that went into this proposal but it does not include critical issues such as pension benefits and individual contributions that must be addressed if the state is serious about fixing the retirement system,” Klarides has said. “These plans will grow increasingly unaffordable for future generations. Quite simply, our children and grandchildren will get stuck with the bills.”
Normally, the legislature wouldn’t raise a labor agreement for a vote if it was going to pass. They would only raise it if it was going to be voted down, but this agreement seems to have widespread support from the business community, economists, and labor.
Malloy said he’s optimistic it will pass.
On Wednesday, Malloy said the legislature will vote in favor of the package “only if there’s common sense.”
He has previously said that voting against the package would mean a person is in favor of $6 billion in annual pension payments.
“It is a bullet dodged,” Webster Bank Chairman and CEO Jim Smith has said.
Republican lawmakers have said there should be a vote on all labor contracts or changes to those contracts. They also want the governor and the unions to
In Connecticut, the governor is the only one able to negotiate with the labor unions. Currently, his administration is negotiating with all but one of the bargaining groups over salaries and working conditions.
He’s expressed a desire to re-negotiate their pension and health benefits that don’t expire until 2022, but so far the unions have refused to open up that part of their contracts.
It’s also unclear how many contracts have gone through the collective bargaining process and may be raised for a possible vote before the legislature adjourns in June.