Montana House OKs bills for state employee pay raises, pensions

2013-03-27T20:50:00Z 2013-03-27T20:59:30Z Montana House OKs bills for state employee pay raises, pensions missoulian.com

HELENA – On a bipartisan vote Wednesday, the Montana House endorsed a pay raise for state employees and a pair of bills to fix Montana’s financially ailing public pension funds.

The bills face a final vote before advancing to the Senate.

Thursday is the deadline for spending bills to move from one house to the other, while April 5 is the transmittal deadline for taxation bills.

The pay bill, House Bill 13, by Rep. Kathy Swanson, D-Anaconda, passed 69-31. The tally showed that 30 Republicans joined all 39 Democrats to vote for it, while 31 Republicans and no Democrats opposed it.

The bill is in much different shape than the original bill, which called for across-the-board raises in state workers’ base pay of 5 percent in each of the next two years.

That was the original deal negotiated last summer by then-Gov. Brian Schweitzer and three public employee unions and later endorsed by Gov. Steve Bullock.

Most employees have seen their base pay frozen over the past four years.

Supporters of the proposed raises couldn’t muster the support to get the twin 5 percent raises out of House Appropriations Committee. One reason was that Republicans found that more than half of the executive branch workers had received pay raises in fiscal 2012 under the separate broadband pay plan.

As the bill stands now, it appropriates a lump sum of $113.7 million for raises, which is $38.2 million, or 25 percent, less than the $151.9 million that Gov. Steve Bullock had budgeted. It directs executive branch officials to pay “particular attention to the lower pay bands and those who did not receive a base pay increase in the biennium beginning July 1, 2011.”

Money in the bill also covers raises for the legislative and judicial branches and the Montana university system.

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Although Swanson called the changes in the bill “disappointing,” she said, “It is time to act on it and show all involved that we are indeed acting in good faith.“

Rep. Steve Gibson, R-East Helena, who made the amendment in committee, said the changes are aimed at getting pay raises to those in the lowest pay rungs and to those who haven’t had pay hike.

Those decisions will be up to the Bullock administration, he said.

“I’m going to put my trust in this administration,” he said. “They are in a spot where they are going to trust you.“

Hypothetically, under the bill, a low-paid employee could get a 10 percent raise, he said, while someone making $100,000 could get a 1 percent hike.

He said the state workers whose base pay has been frozen don’t just live in Helena, but live in communities throughout the state.

“Some people say it’s too much money,” Gibson said. “Some people say it’s not enough. The Legislature does not negotiate. We appropriate.“

House Appropriations Chairman Duane Ankney, R-Colstrip, who had worked on the amendments with Gibson, said, “You can put your trust in the executive branch. He’s the one who sits down in negotiations.“

Ankney added, “This offer is good enough – I don’t think we’ll be hit with failure to negotiate in good faith. I feel good that the people that didn’t get raises are going to be compensated. This ain’t just a number that we grabbed out of the air. A lot of work went into it.“

Rep. Gordon Pierson, D-Deer Lodge, thanked Ankney and the others who worked on it, saying, “This is a great start to continue to reward the people who work day in and day out for us.”

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The House also approved a pair of bills from Bullock intended to provide financial fixes to Montana public pension systems, which have a combined potential shortfall of $4.3 billion. The financial problems arose after the 2008-09 recession when pension fund investments lost nearly one-fourth of their value.

HB377 by Rep. Tom Woods, D-Bozeman, targets the Teachers’ Retirement System. His bill passed 63-36.

The other measure, HB454, by Rep. Bill McChesney, D-Miles City, seeks to fix the Public Employees’ Retirement System. It won preliminary approval 64-36.

Both bills retain the existing “defined benefit” pension system in which retired public employees are guaranteed fixed monthly pensions based on a formula using the number of years they worked and the average of their top years’ salaries.

The House this week refused to take up a bill to switch all new public employees as of mid-2014 to a “defined contribution” pension system similar to a 401(k) system, which is common in the private sector.

The bills by Woods and McChesney increase the contribution rates for both employees and employers and rely on infusions of cash from natural resource funds.

Both bills would reduce the guaranteed annual benefit adjustment, or GABA, which is a cost-of-living adjustment for retirees.

Some retirees have argued that the GABA cuts are an unconstitutional reduction of guaranteed benefits they’ve earned.

Missoulian State Bureau reporter Charles S. Johnson can be reached at (406) 447-4066 or by email at chuck.johnson@lee.net.

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