Here’s how politics worked in Raleigh last week.
The State Pension Fund and the State Retiree Health Care Fund are $60 billion in debt.
The problem has been around for years but no one dared tackle it until last week – when Republican Senators heard a bill in committee.
Then the politics started big time.
The next morning the first three words in the News and Observer’s article were: “Ending government pensions…”
Now, consider two facts:
Fact # 1: Under the Senate plan no current state employee’s pension will end or change one iota.
Fact #2: Every new state employee will receive a pension. The new pensions will be different from current pensions – but they’re generous. They’re comparable to the pensions offered by most major corporations.
But somehow in the News and Observer that got translated that into “ending government pensions.”
Worse, the newspaper also reported that state employees will no longer receive health care benefits when they retire. That sounded like hard-hearted Republicans meant to deny a sixty-six-year-old retiree going on Social Security health insurance. But, of course, that’s more political spin.
Right now, a state employee can retire after working for the state for 20 years, and the state will continue to pay for his health insurance. He could retire at fifty and get free health insurance for 15 years – until he applies for Medicare – then gets a free supplement.
The Senate plan is simple: While an employee works for the state he receives state health insurance. And when he no longer works for the state he no longer receives state health insurance. That’s exactly the way most businesses handle health insurance.
The News and Observer didn’t report any of that. And it wasn’t done: It also told its readers that “shutting down the [current] pension plan would cost $350 million.”
The State Treasurer’s actuary recommended that the state, to be fiscally responsible, should make a $350 million payment on the Pension Plans $60 billion unfunded liability. That’s not a payment to fund the new plan. It’s a payment on the old plan’s debt.
The News and Observer got the facts wrong.
Equally important: If we don’t switch to a new plan the old plans debt is going to continue to grow every year. So the new plan won’t cost the state money – like the News and Observer reported – it will save money.
For years the State Employees Union and the Teachers Union have lobbied – successfully – for lavish pensions and health care benefits. And the result is plain: A $60 billion debt. That bill will have to be paid. But by passing the Senate’s legislation we can stop piling up more debt.
That doesn’t suit the State Employees Union or the Teachers Union or the News and Observer. But they don’t pay the bills.
So where does that leave us?
When a legislator tells the unions “No” he’s got a fight on his hands. The day after the hearing the Teacher’s Union launched an email and my phones lit up. I listened to one angry teacher’s tirade then, when she stopped, I asked, You do know this bill won’t affect your pension?
She didn’t have a clue.
Which is one more example of how politics works in Raleigh.