An item on the BMG 5-point fiscal responsibility plan has been definitively checked off! From today’s Globe:
Governor Deval Patrick last week quietly vetoed a pension increase for retired teachers and state workers that would have boosted benefits by $120 per year, a major stand for a governor to take against unions that helped elect him….
“I recognize that people across the Commonwealth, particularly retirees on a fixed income, are facing difficult economic times,” Patrick wrote in his message informing the Legislature that he had vetoed the bill Friday. “However, I returned an earlier version of this legislation, expressing concern about adding significant costs to the Commonwealth’s already large unfunded retirement liability.”
The governor had been largely supportive of the pension boosts – and was expected to sign the legislation – but requested that the cost-of-living increases be restricted to workers with pensions less than $40,000. He argued that would make the plan more affordable for the state, while providing pension boosts for those who need it most.
One of the most interesting things about this story is the reaction to Patrick’s veto from the folks who most wanted the bill to go through. One might have predicted screams of bloody murder. Instead, we got this:
“We rolled the dice and came up empty,” said Ralph White, president of the Retired State, County and Municipal Employees Association of Massachusetts. “We were taking a certain amount of risk. Hindsight being 20-20, we underestimated the priority the governor placed on his amendment.” … “I truly believe the governor wants to do something,” said White, who represents retirees. “He was not prepared to handle this legislation at this time, but I believe he wants to do something to improve the [cost of living adjustments] for retirees.”
So maybe the thought is, OK, we tried for the full loaf, but the half a loaf represented by the Governor’s amendment (which the legislature rejected, hoping that the Gov wouldn’t veto) would be acceptable. Which may well mean that the bill will be refiled in the form the Governor suggested, will quickly pass, and will be signed into law.
In any event, the veto was the right thing to do, as I’ve said before. The evidence continues to mount that Governor Patrick is, in fact, quite serious about getting the state’s fiscal house in order, even at the cost of annoying “unions that helped elect him” (to borrow the Globe’s words). Here’s hoping that the forthcoming police detail regulations deliver a similarly bold message.
That was as fiscally dumb as is imagineable:
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p>-Record budgets,
-Record borrowings,
-Debt markets in the crapper,
-Economic slowdown,
-Income tax override vote pending
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p>Say guys, lets give all state employees more benefits!
that you get a response like this from a union by actually maintaining a dialog and wanting to work to provide a solution. This is not a Mitt Romney veto followed by placing blame on unions and the legislature.
Romney:
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p>Guppies: We want more money
Romney: No
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p>Patrick:
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p>Guppies: We want more money
Patrick: No, but I’ll give 87% of you more money. (the effect of his amendment)
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p>So, what do you suppose will happen? The next bill with contain the amendment giving 87% of all pensions a raise. Fiscally responsible, no. Politically expedient, yes.
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p>*Guppies don’t eat much, but enough of them will eat a treasury.
and the made up numbers, which you alway seem to pull out of your a**. To be honest, it’s getting tiresome.
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p>Here’s normal scenario:
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p>Union: Yes
Romney: No
Override: Yes
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p>There is a contrast when you have one governor placing blame and getting nothing accomplished and the other who is trying to reign in spending.
…a person retiring on less than $40K/year is a total guppie.
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p>Good lord, your posts definitely ARE tiresome.
I don’t know what it means to be a guppie. But surely that would include all recipients of SS that tops out at around $32K a year.
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p>Regardless, you assume that the state pension comprises someone’s full retirement income. Who are the pensioners receiving less than $40K a year? They include:
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p>- those who worked part-time
– those who didn’t have many years in the system
– those who chose to retire early
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p>For a proposal that is going to have such a long-term financial impact, a more objective examination is warranted.
I assumed ‘the guppy rule’ was well understood. Given the choice between my tiresome posts, and yours, bathed in stupidity, I’ll stick with the former.
and if the new revised COLA goes through, also let’s work on paying for it now, rather than in 2024 as the initial funding date (from the Globe editorial):
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p>
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p>That’s just silly math folks.
But the Governor deserves credit for standing up to many opponents and using his veto pen wisely. I have never nbeen a fan a Deval and I have many reservations, but the recent movement concerning “Flagmen” has potential and this veto is another fiscally responsible action.
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p>Great job Governor (did I say that?).
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p>The benefit of $120 to these retirees pales compared to the damage done in terms of increasing long-term indebtedness.
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p>Seems to me this is a sham political move orchestrated to fool people like you, defeat the income tax referendum, and make everyone feel like something is being done. The Governor’s own words (emphais mine):
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p>”In general, I recognize the need of our retirees, most of whom are on limited fixed incomes, for this very modest cost-of-living adjustment. This need is less critical, however, for those receiving larger pension payments. Considering the existing size of our unfunded retirement liability, therefore, I recommend limiting this adjustment to those retirees whose annual pension payments are below $40,000.”
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p>less critical?! Give me a break! If this is political courage, I’d hate to see cowardice.
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p>Remember, this increase is ON TOP of a 3% COLA. People who are making less than $40K on their pension are not just people who retired prior to 1990 and the increase in public wages that followed. They include people who retired early, who only had a few years in the system, or who worked part-time.
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p>Let’s also acknowledge the Governor did not take political heat for this. From the MTRS:
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p>
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p>Everyone’s happy. Is that all that matters?
the new road detail regulations will do little or nothing to curb state police overtime. There will be three tiers or levels of roadwork. Most of the state projects will require state police. Local police departments are already negotiating roadwork into their contracts.
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p>Mark
Municipalities have a beter sense of how much they cn afford, and that will be taken into account during the negotiations. One Cape town is facing its THIRD overide attempt – THIS YEAR – and if it fails, it’s police layoffs. Having the flexibility to use flaggers would save jobs in areas which aren’t showere with local aid by Boston.
The fact that we cannot afford a $10/month increase for pensioners should send up major alarms.
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p>Patrick’s veto is irrelevant in the face of the enormity of the problem. Baby steps are not going to do it.
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p>Wait until the effect of those who received salary increases of 5-6% annually during the last decade start pulling in their pensions.
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p>To recap:
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p>
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p>It’s not only taxpayers feeling the crunch, but teachers also take a hit paying an 11% contribution rate into their retirement system.
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p>It’s an untenable compensation system.
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p>There is no evidence that those who negotiate contracts on behalf of the employers are willing to do what is necessary. At a MASC meeting I attended last year, a group of more than 50 officials basically said there was no way they would put the brakes on salary increases, regardless of whether their budgets could sustain them.
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p>I imagine its the same for other employees in the state retirement systems.
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p>I’d like to see us transition from state and local retirement systems and pensions to SS and 401-type programs. It would make apple-to-apple comparisons with private sector easier; it would make transitioning from private to public sectors (and back) easier; it would make it easier to sustain salary increases as the hit on future spending (pension payments) would be greatly alleviated.
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p>Win. Win. Win. For all parties.
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p>
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p>Agreed. The political incentives to pass the costs of funding a DB plan along to future taxpayers are simply too great–probably even greater than the incentives a public company has to pass them along to a future reporting period. Changing to a defined contribution-type plan forces the government to recognize its payroll costs at the time the public employee performs the work rather than hiding the ball until an underfunding crisis demands a tax increase or a cut in other spending.
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p>I see this as a tool to force honesty in the budgeting process.
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p>TedF
Trustee must continue to be vigilent for stunts like thie where politicians try to direct the use the pension funds.
Retirement in this country was supposed to be a three-legged stool — Social Security, defined benefit pensions, and savings.
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p>Public pensions were not outrageous 25 years ago when compared to private defined benefit pensions. However, most companies have since moved to defined contribution plans (401k), effectively lopping off one of the legs of the stool, since now “savings” and “pension” will likely dip at the same time, if there is an economic downturn.
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p>[Since 401ks are a somewhat recent innovation, I suspect that we have yet to see the impact of this on a large scale — we will see what happens in 20 or so years when people covered by them start retiring.]
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p>I would venture that most people don’t know how much their companies contribute toward their 401k on an annual basis. So it becomes easy to gloss over this private sector benefit, particularly since there is no defined benefit to compare against.
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p>I can agree that supporting the 80% retirement option in a private environment that has no such benefit is untenable, particularly in the court of public opinion. This needs to change to fall into line with private pensions, even though I lament that reduction in standard of living, and wish that we could move back to the defined benefit model.
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p>I believe the whole public compensation model is outdated. Days when people signed up for a private sector company when they were 25 and retired from that same company 40 years later are now gone. The salary structure that used to be in place, where you started low, but got pretty good annual raises, is long dead. Now you start at a salary commensurate with your experience — it is not uncommon for a 25-year old to be earning the same wage as a 45-year old, if they do the same job. But you get 1-2% raises unless you get promoted.
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p>The problem is, public sector compensation has only half-transformed. Salaries are high due to complaints about salary disparities versus the private sector. For example, when analyzing a teacher’s salary, people compare the starting salary to similar-caliber private sector jobs. However, the raise structure is still geared towards the “old way”, with 5%+ increases each year (2% step raise, 3% COL raise). It makes private citizens mad when they see public-sector employees doing better than most.