MONTANA DECIDES TO ATTEMPT A PENSION COLA-THEFT. GOVERNOR BULLOCK "QUESTIONS THE CONSTITUTIONALITY" OF TAKING THE COLA.
BULLOCK, INCREDIBLY, SUPPORTS A PENSIONER LAWSUIT AGAINST THE STATE, BUT WILL LIKELY SIGN THE BILL ANYWAY.
Theatre of the absurd in Montana.
The Montana Legislature has enacted a bill to retroactively take public pension COLA benefits from the state's public pensioners. Like the Colorado education establishment in 2010, education lobbyists in Montana have their fingerprints all over the Montana Legislature's attempt to break public pension COLA contracts. (If employers affiliated with the public pension system can break pensioner contracts, that minimizes future pension contributions for dues-paying union members and local government employers. If the bill gets struck down in court, the judges become "the bad guys.")
Governor Bullock didn't support the COLA-theft amendment to the bill. Although Bullock thinks the COLA-theft provision in the bill is illegal, it appears he'll sign the bill into law. (Odd that his primary concern is the taxpayers, but he doesn't seem to mind squandering millions of taxpayer dollars on litigation.)
Here's Montana Governor Steve Bullock in his State of the State address:
“We must also meet our responsibility to fix a long-term problem created by our predecessors. I’ve outlined a detailed plan that will shore up our public retirement systems and do so without raising taxes. I look forward to working with this body to ensure that we craft a plan that honors our commitment to Montana’s public servants. A plan that doesn’t go back on the promises we’ve made to our snow plow drivers, prison guards, teachers and other middle class workers who are our friends and our neighbors.”
Link to Governor Bullock’s State of the State speech:
"Feeling betrayed, retiree group asks governor to veto pension bill."
"Saying it was betrayed by Gov. State Bullock’s office, a group representing retired Montana public employees is urging him to veto the bill that seeks to fix pensions for public employees."
“We understand that the bill is your bill, and it would be highly unusual for you to veto it at this point, but that is what we are asking,” Russell E. Wrigg, president of the Association of Montana Retired Public Employees, said in the letter Saturday to Bullock. “House Bill 454 tramples on the statutory and constitutional rights of retirees and has the potential to inflict severe harm to current and future retirees.”
"About 2,000 retirees in the Public Employees’ Retirement System belong to the association."
"At issue was an amendment to the Guaranteed Annual Benefit Adjustment (GABA), to reduce the current 3 percent annual cost of living pension raises."
"In response, Bullock’s budget director Dan Villa said the governor’s office opposed the amendment that sought to change the GABA and questioned its constitutionality."
"'We understand that both current employees and retirees are considering legal challenges to address the amendments, and we support that action,' Villa said. 'It’s important to keep in mind that this likely unconstitutional amendment doesn’t change one important fact: by implementing the remainder of Gov. Bullock’s plan, Montana is the first state in the nation to fix our pension system without raising taxes.'"
"'Moreover, we were shocked to find out that the 1 percent contribution by the employees and the employers would only last six months, and would be eliminated Jan. 1, 2014,' Wrigg said."
(My comment: Employers affiliated with a public pension system collude with public sector unions to reduce their future pension contributions by taking money from pensioners. Been there.)
"The Legislature’s own attorneys have repeatedly advised it that GABA is a constitutionally-protected contract with public employees and should not be broken. If the Legislature chooses to advance legislation to renege on this important commitment it has to raise concerns with all citizens as to what other contracts the state may choose to ignore. If a 'deal’s a deal' only when the Legislature chooses to honor it, then what about Montana’s other contract commitments?"
"The Legislature should not violate the contract it statutorily committed to with Montana’s public employees. Rather, it should honor the commitments made to current and future government retirees including fully funding GABA."
Meanwhile, in Pennsylvania, Governor Tom Corbett's proposal for legal, prospective changes in the state's pension system is moving along:
"The governor also wants to change the formula for future benefits in current employees' plans. Beginning in 2015, he has proposed reducing the multiplier used to determine future benefits by 0.5 percent."
(Recall that the Colorado Legislature adopted a bill last year, SB12-149, providing such prospective, legal public pension reform for certain Colorado county governments. This bill honored the accrued public pension benefits of thousands of Colorado government workers and retirees, while two years earlier, the Colorado Legislature passed a bill to seize up to one-third of the accrued pension benefits of Colorado PERA retirees.)
I believe that this solution of prospective pension reform, reducing the rate of accrual of future pension benefits will ultimately prevail in the United States. It is emerging as a logical and legal pension reform alternative increasingly embraced by public pension legal scholars. Many politicians will not act responsibly unless forced to do so by the courts.
Colorado PERA active and retired members. Contribute at saveperacola.com, and Friend Save Pera Cola on Facebook!