HARTFORD, CT—Democratic Gov. Dannel P. Malloy told Senate Republican President Len Fasano, R-North Haven, Tuesday that he won’t be withdrawing a proposal to restructure the state employee pension system.
The House and the Senate are expected to vote on the proposal later today.
Fasano wrote Malloy Tuesday and asked him to postpone the vote to give Republicans more time to do their own actuarial analysis of the data.
But Malloy swiftly fired back a response and attempted to correct the record of events as outlined by Fasano.
“It is hard for me to fathom a more deliberate, cooperative, and transparent effort,” Malloy wrote in response to Fasano. “At every step, we have communicated our goals, our process, and our progress.”
Malloy said Office of Policy and Management Secretary Ben Barnes responded within 11 minutes to Fasano’s Dec. 22 request for information about the full agreement and the actuarial computation.
Fasano responded in a second letter explaining that his caucus didn’t receive the 30 year actuarial analysis until the Jan. 24 public hearing. The new material included new figures that had not been detailed in previous documents.
But Fasano and his colleagues wanted to spend $12,000 to $15,000 to conduct their own actuarial analysis of the data.
“I believe it is in the state’s best interest to hold off on advancing the proposed agreement until we examine how the new data compares to projected savings from alternative methods to address the state’s growing pension obligations,” Fasano wrote.
Fasano said asking legislators to approve a plan that would add $11 billion in new costs to future generations without further exploring the details “would be asking us to abandon our obligations to the taxpayers we represent.”
He said there’s no harm in postponing because it won’t have an impact on the 2017 budget.
Malloy disagreed. He said if the deal is not approved today then it will create a $570 million hole in the state budget.
“Should you vote to derail the clear progress this agreement represents, I would look forward to your suggestions on where this funding would be found,” Malloy wrote. “I would also look forward to your explanation of why you were for this agreement before you were against it. And finally, since I would assume that anyone voting against this agreement believes Connecticut can afford the single-year pension payment of between $4 and $6 billion that our current payment plan will entail, I would ask that you provide me with a detailed explanation for how you believe that payment can and will be achieved.”
In a follow-up letter, Fasano questioned Malloy’s motivation to strike the deal.
“Are you pushing for this agreement to stabilize the state’s future obligations? Or are you doing this to push off costs to plug holes in the upcoming budget?” Fasano said.
Fasano supported the deal last week in the Appropriations Committee in deference to Malloy, but “after reviewing the final information, and learning that over $1 billion was going to be deferred from the already underfunded plan on top of the $11 billion in added burdens being placed onto future generations, I recognized the need to reevaluate this proposal based on the new figures.”
The agreement reached by Malloy and the state employee unions has been praised by state Treasurer Denise Nappier, state Comptroller Kevin Lembo, Democratic legislative leadership and it’s been looked upon favorably by the rating agencies.
“Rating agencies and our business community agree that this reform represents an important structural long term that will positively impact our budget outlook,” Adam Joseph, a spokesman for Senate Democratic caucus, said.
In a letter to legislative leadership Tuesday, Nappier said the agreement, which requires the state to make payments of as much as $2.3 billion a year, lowers the rate of return on pension investments, and upholds the 2032 deadline for paying off at least some of the unfunded liabilities, was a good first step.
“More needs to be done, however, to strengthen the Agreement’s intent to better manage the State’s ability to fund its pension obligations and also not shortchange its yearly funding requirement going forward,” Nappier wrote in a letter to legislative leadership.
The deal is not considered “pension reform” because it doesn’t change the benefit structure used to calculate pensions.
Malloy has been trying to convince labor unions to reopen the 2011 pension deal which doesn’t expire until 2022. So far the coalition of labor unions has not agreed even though the two sides continue to have conversations.
In the meantime, state employee pensions have been gobbling up a larger portion of the state’s annual spending and some lawmakers looking to balance the budget see pension reform as part of the solution.