The Vermont Legislature is considering changes to the state pension fund to stabilize unfunded liabilities while assuring retirement benefits to state employees. That was a primary focus of Governor Phil Scott’s weekly briefing Tuesday.
Vermont Senate bill 286 is intended to restructure and help close nearly $5.8 billion in unfunded liability in the state pension fund.
Democratic Senate Pro Tem Becca Balint, speaking on WAMC’s Congressional Corner this week as part of her campaign for Congress, was optimistic that the Legislature and administration will reach agreement on the proposal.
“We are days away from having that work also passed by the House and hopefully getting the governor’s signature," Balint said. "I’m really hoping that the governor will not veto it because this was an agreement that was crafted over a year’s time. But if he does, we’re going to be ready.”
Republican Phil Scott said Tuesday over the five years he has served as governor, the state has spent more on its pension obligations than the previous 20 years combined. He added that true structural reform is needed but the administration’s recommendations were not included in the bill.
“This bill, though it makes some positive steps, doesn’t go far enough," Scott said. "It simply kicks the can down the road. I’m concerned that we’re putting a more than $200 million bandaid on this without fixing the underlying problems. Keep in mind the $200 million is over and above the roughly $400 million payment we've included in the budget. As an aside, five years ago when I first became governor that payment was just over $200 million. So in five years it’s doubled.”
Governor Scott called upon KPMG retired managing partner David Coates, a member of the 2010 state Design and Funding of Retirement and Retiree Health Benefits Plans for State Employees and Teachers Commission, to explain the administration’s plan to revamp the pension fund.
“I think it’s important that we understand what is the scope of this," Coates said. "When you round up its $5.8 billion. Now, unfunded liabilities: it’s long-term debt. When you look at the $5.8 billion on the state’s balance sheet it’s the largest thing there," said Coates. "So, S.286 the pension bill, what does it accomplish? Up front it looks pretty good because you’ve heard a lot of people talk about the $2 billion deduction from our unfunded liabilities. Well, when you break that down only $300 million of that is against our pensions. And that’s not very much in context.”
As for the overall $8 billion 2023 state budget proposal, Governor Scott says major differences remain between the legislature’s version and his January proposal.
“While I appreciate both the House and the Senate funding many shared priorities they’ve also proposed and focused on government systems," the governor said. "While the Senate version, again, is an improvement and has moved in the right direction it still doesn’t make the most of the unprecedented opportunity we have before us. Fortunately there’s still time to come together to make sure we are prioritizing long-term growth over short-term fixes with one-time money.”
