Just days after a key Wall Street rating agency downgraded the state's bonds, Gov. Dannel P. Malloy called upon the state legislature to pour more money into the state pension plan.
Malloy said his actions had nothing to do with the downgrade by Moody's Investors Service, and instead was an action that he wanted to take for more than a year. Moody's, however, had specifically complained about the state's pension program in its analysis, saying the state has "pension-funded ratios that are among the lowest in the country and likely to remain well below average.''
State employee unions were pleased by the move, which requires their approval because pension changes are subject to negotiation. Specifically, Malloy wants to eliminate some provisions of an agreement that the State Employee Bargaining Agent Coalition, known as SEBAC, reached with then-Gov. John G. Rowland in 1995 and 1997. Those provisions included lowering the state's contribution to the pension fund and postponing payments into the future in ofrder to help close a short-term budget gap.
Top union leaders, including Sal Luciano of AFSCME Council 4, attended the announcement Monday and applauded Malloy's proposal.
In the short term, under Malloy's plan, the state would have to come up with a payment of $125 million in the first year. Malloy did not reveal exactly where that money would come from, saying that all the budget details will be unveiled to the legislature on opening day of the General Assembly session on Feb. 8. As such, the state would be putting money into the plan earlier than originally projected.
"This is the rough equivalent of starting a 401(k) payment plan when you are 20, not 55,'' Malloy told reporters Monday.
The pension plan, now funded at 48 percent, would not be fully funded until fiscal year 2032. House Republican leader Larry Cafero of Norwalk said the two-decade time frame raises questions about the long-term commitment of lawmakers to keep funding the pension program.
"Many of them know they won't be around for 20 years,'' said Cafero, one of the longest-serving legislators. He predicted that lawmakers would move to fund the pension plan "until we have a fiscal emergency, and we'll try to find a way not to.''
When asked what will happen to the proposed savings over the next two decades if he is not governor in 20 years, Malloy responded, "Who says I'm not going to be here? Listen to yourselves. With all due respect, listen to yourselves. You're so used to other administrations defending what they were doing by putting the damage off to some future date that you're asking me why I'm not willing to do that. That's how badly broken Connecticut is. And we're fixing it. Thank you.''
Malloy's news conference ended with those words.
Cafero began speaking a few minutes later, saying that he favors Malloy's idea on principle.
"The principle is fantastic. We have to pay our obligations,'' Cafero told reporters outside the House chamber Monday. "We proposed it long before the governor was governor.''
While Malloy blamed Rowland for signing the deal with SEBAC more than 15 years ago, Cafero blamed the Democratic-controlled legislature for postponing $100 million in pension payments in the first year of the previous two-year budget in 2009 and another $100 million in the second year in 2010. In addition, Cafero blamed the Democrats and Malloy for allowing the city of Bridgeport to defer its pension contributions in June 2011.
Senate Republican leader John McKinney of Fairfield said, "Paying off our pension debt is a good thing, but doing so outside of the spending cap shows that Governor Malloy is still not serious about reducing unnecessary state spending and, further, that he is not serious about pension reform. Clearly, his deal with SEBAC failed to adequately deal with our long-term indebtedness. Real leadership requires real reforms and that is what is needed in these difficult times."
Reprinted with permission of the Hartford Courant.
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