March 27, 2011 in News

Retiree COLAs may help balance state budget

The Associated Press
 

OLYMPIA, Wash. (AP) — While state workers are taking home less money, the people who used to hold state jobs are being paid more.

Retirees 66 and older who worked for 35 years, for example, saw an extra $790 in their pension checks this year even though the cost of living has not really gone up.

The News-Tribune reports ending those cost-of-living increases would save the state an estimated $415 million. That may be too big to pass up for lawmakers trying to fix a more than $5 billion shortfall.

Whether lawmakers can make the cut may be decided in court.

“That’s breaking our contract,” said Ester Wilfong, a retired teacher and principal from Tacoma who is one of the 90,000 retirees on the two plans.

In 2010, Minnesota, South Dakota and Colorado cut cost-of-living increases for retirees. And according to the National Conference of State Legislatures, all three states now face legal challenges over those decisions.

Washington retirees and their union allies say the workers gave 6 percent of their paychecks to the pension system throughout their careers and now deserve what was promised them.

But the mood was bleak last week as they lobbied in Olympia, and their strategy has shifted from complete resistance to trying to devise an alternative version of the benefit cut.

Democratic Gov. Chris Gregoire is pushing to end the cost-of-living increases, and the bill she introduced this month is backed by Democrats, including House budget Chairman Ross Hunter and Vice Chairwoman Jeannie Darneille.

“I don’t know how you can do (the budget) without it,” Senate Republican Leader Mike Hewitt said last week.

And Sen. Craig Pridemore, a Vancouver Democrat, said, “If we’re going to actually be cutting the pay of current workers, we should not be increasing the (benefits) of retired workers.”

Current workers agreed to the unpaid time off in contract negotiations. Retirees say the state has a contractual duty to them, too.

The legality of ending cost-of-living raises could hinge on whether a King County judge’s ruling last year is upheld. The judge decided Washington lawmakers violated contractual rights by taking away a different pension benefit, known as gain-sharing, without providing comparable replacement benefits.

Another difference: The worker cuts are temporary, while the change for retirees would have to be permanent to create the big savings the state actuary predicts — more than $900 million to all state and local government budgets.

Workers say they shouldn’t be on the hook for the Legislature’s failure to put away adequate money.

“It’s not our fault,” said Wilfong, co-chairman of the legislative committee for the Washington State School Retirees’ Association. “They’ve underfunded it.”

There are lawmakers in both parties who side with the retirees. Rep. Mike Armstrong of Wenatchee said he would oppose the cost-of-living elimination, and some other Republicans would join him, seeing it as breaking a promise to retirees. And some labor allies among Democrats, such as Sen. Steve Conway, are looking for alternative ideas. Conway, of Tacoma, said he’s looking at whether the proposal could be made temporary or retooled with a “means test” to hit retirees differently based on income.

“Nobody’s real excited about that issue,” said Rep. Gary Alexander, R-Thurston County. “But $400 million is a big number to turn our heads away from.”


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