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GOP lawmakers won't budge on pension-overhaul plan
In the Legislature, Republicans and some Democrats want to end early-retirement options for new employees in the largest pension plans for state workers and teachers.
Seattle Times Olympia bureau
OLYMPIA — As the Legislature slogs through its special session, Republicans show no sign of backing down from proposed pension-system changes that public employees call a "war on workers."
Senate Republicans want to skip a $133 million payment toward funding older, closed pension plans for teachers and state workers as a way to help balance the state budget. It's a step the Legislature has taken at least twice in the past.
But the GOP tied that move to provisions ending early-retirement options for new employees in the largest pension plans for state workers and teachers.
Even if negotiators can reach a budget agreement without skipping the pension payment, Republicans still want to eliminate the early-retirement options this session, said Sen. Joe Zarelli of Ridgefield, Clark County, the architect of the GOP budget.
"It's the top priority of the reforms we're trying to get accomplished," he said.
Labor unions and many Democratic lawmakers strongly oppose both skipping the pension payment and eliminating early-retirement provisions, including one that allows state workers with 30 years of service to retire with full benefits at age 62.
"This is not policy; this is politics," said Greg Devereux, executive director of the Washington Federation of State Employees.
While Democrats hold majorities in both chambers, Republicans seized control of the budget in the Senate earlier this month with the help of three conservative Democrats.
They passed a budget different from Democratic proposals with a 25-24 vote and have retained numerical control.
Negotiators have been at an impasse ever since about how to close a roughly $1 billion budget shortfall.
The Legislature's regular session ended March 8, and a 30-day special session began March 12. For the most part, only a handful of budget negotiators have remained in town.
Whatever they agree on has to pass muster with Senate Republicans, House Democrats and Gov. Chris Gregoire, a Democrat.
Both parties have been trying to figure out a way around the biggest sticking points, namely whether to skip or delay certain payments as a way to free up money for state services.
Democrats propose delaying a monthly payment to K-12 schools by a day, pushing it into the next two-year budget and saving $330 million in the current biennium. Republicans oppose that move.
Nationally, most states have been trying to cut their pension costs since the Great Recession hit in 2008.
"My count is 43 states have done so for at least one major statewide plan," said Ron Snell, an expert on public-pension plans with the National Conference of State Legislatures.
States have increased the retirement age, boosted the number of years someone must work before getting a pension, and in some cases reduced benefits, Snell said, primarily for future employees.
In Washington, the most significant move to cut pension costs came last year when the Legislature eliminated automatic cost-of-living increases for the closed Plan 1 pensions.
That action was projected to save the state $3.3 billion over 25 years.
The new GOP proposal would eliminate early-retirement options for newly hired state workers that were made more generous by the Legislature in 2000 and 2007. Gregoire proposed eliminating the same early-retirement provisions last year.
Under the changes approved in 2007, state workers and teachers in the open pension plans can retire at age 62 with no reduction in benefits after 30 years of service. In addition, lawmakers reduced the penalties for retiring even earlier.
For example, a worker with 30 years of service can now retire at 55 and still get 80 percent of his or her pension benefit.
Washington's current retirement provisions are in line with what most states now offer, Snell said.
A report put together by the Wisconsin Legislature last year found that more than two-thirds of the plans reviewed nationally allowed retirement at age 55 or earlier. Penalties for doing so varied widely.
Before 2000, Washington state workers and teachers had to wait until 65 to get full benefits. Workers could retire early, but there were stiff penalties. For example, if a worker with 25 years of service decided to retire at 55, the worker lost more than 60 percent of the pension benefit.
Zarelli's pension proposal would revert early-retirement provisions back to the pre-2000 law.
"In this age, with people working longer and living longer, the reality of what this (early retirement) benefit provides, while nice, is not sustainable over the long haul," he said.
The GOP tied the skipped pension payment to the proposal as a way to pick up support but would prefer to just eliminate the early-retirement provisions, Zarelli said.
Republicans say getting rid of the early-retirement options would save the state $1.8 billion over the next 25 years. The state actuary's office said it has not completed a final analysis on the proposal and could not confirm the savings.
The early-retirement options were put in place when the Legislature got rid of another pension benefit, called gain-sharing, that was considered more expensive.
Gain-sharing beefed up benefits for retirees when the stock market was hot. As a result, it skimmed off cash that otherwise could have helped make up for low market returns in later years.
House Majority Leader Pat Sullivan, D-Covington, said it's not fair to take away the early-retirement options, even if it would affect only future workers.
"There was a commitment made around gain-sharing," he said. "When gain-sharing was ended, this was kind of ... an outreach to state employees saying, here is something we're willing to do in order to take away gain-sharing. That's what was negotiated."
Rep. Deb Eddy, D-Kirkland, supports getting rid of the early-retirement options.
"Conditions have changed. Life expectancies have changed and I think if we don't start tackling it, the public is going to continue to look at government and say, 'Get your act together,' " she said.
That said, Eddy doesn't expect the proposal to survive Democratic opposition.
"The labor unions are objecting vehemently. Both chambers and the governor's office are in Democratic hands and that's why it's not going anywhere," said Eddy, who is leaving office at the end of her term.
"They (unions) are not only important constituents, they're important campaign funders," she said. "This is the worst-kept secret in politics. We're not supposed to acknowledge it, but it's there."
Andrew Garber: 360-236-8266 or firstname.lastname@example.org