HELENA – Gov. Brian Schweitzer proposed an aggressive public pension fix Tuesday, a plan that comes as he nears the end of his term and one that faces a very uncertain future when it goes to his successor and the Legislature next year for potential implementation.
Key aspects of the proposal met with immediate criticism from a leading Republican candidate to replace Schweitzer. The leading Democrat was more receptive.
The projected shortfall for the state’s government worker pension system exceeds $3 billion over the next 30 years. Lawmakers are currently discussing potential fixes in an interim committee but have not identified any solutions.
Schweitzer’s plan calls for employees and their public employers to each increase their contributions an additional 1 percent of the salary paid. His plan would also funnel some revenue from natural resource development into the pensions, and require local governments to kick in more for their employees as well.
Schweitzer said he expects local governments and school districts to pay their share out of current revenues and without raising taxes.
“This is a very deep hole,” Schweitzer said. “And you cannot continue to look the other way.”
An influential union leader, Eric Feaver of MEA-MFT, said employees would agree to pay more to fix the problem.
“We can do this quickly, and it is fair,” Feaver said.
Schweitzer leaves office in December. Republicans hold large majorities in the Legislature, and very possibly could control it again after November’s elections. In the past, the GOP has been hostile to the governor’s proposals and critical of several moves he has made since the Legislature adjourned last year.
The Democratic governor thinks the problem is so large that lawmakers will support it.
“I don’t think they have another choice,” Schweitzer said. “You can’t continue to kick the can down the road.”
Schweitzer argued the Montana Constitution requires the state to ensure the pensions are sound.
Many Republicans hope to take away the pension for new government employees and replace it with what is known as a defined contribution plan, similar to a 401K in the private sector.
Schweitzer beat back the idea, saying it is not fair to turn public employee retirements over to “the sharks on Wall Street.”
“I don’t trust Wall Street,” the governor said. “They are good at putting money in their own pockets.”
Rick Hill, a former congressman who has been topping a crowded Republican field for governor in fundraising, said he disagrees with the portion of the plan that earmarks increased revenue from natural resource development to fix the problem. He said it should be used as part of a plan that aims to reduce local property taxes.
“Government employees should not have benefits more generous than those offered in the private sector, but the governor’s plan would provide excessively generous pension benefits for eternity,” Hill said in a statement. “New government employees should have a defined contribution plan similar to those in the private market place and reform should include a shared responsibility between the employer and employees.”
Attorney General Steve Bullock, the presumptive Democratic nominee aiming to replace Schweitzer, will review the governor’s offering. Schweitzer said he would be talking to Bullock about it more. Like the governor, Bullock laid blame on pension decisions that preceded Schweitzer.
“Gov. Schweitzer is proposing responsible fixes to the big problems we face, and he’s proposing to do so without raising taxes,” Bullock spokesman Kevin O’Brien said. “Steve is reviewing the plan and looks forward to discussing it in detail with the Governor.”