November 21, 2011

Pension Reform Bait-and-Switch to Block Broader Reform

Justin Katz

I've placed the 5.5% privatization tax in the context of the General Assembly's history of opposing such money-saving measures and pondered the language of the newly minted statute.

My concern, in brief, is that there really isn't anything limiting the application of the 5.5% "assessment" to state privatization. The only limit mentioned is to the displacement of employees included in General Law 36-8, which establishes the pension system. In other words, it appears to apply to any government agency that participates in state pensions, whether state, school district, or municipal. Mayoral academies, for example, can opt out of the pension system and so may be threatened with the surcharge. The limiting factor will only be how aggressive the folks who write the resulting regulations wish to be.

Even if the law does wind up limited to employees of the state, reformers should fear its effects on others of their strategies for improving government, notably consolidation. Any function moved from the municipal to the state level will now become permanently "in house."

Frankly, this sort of legerdemain is bound to happen when opposition parties jump on a fast-rolling bandwagon like pension reform.

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Some other things that I don't understand about it is why do they want to cut down on contractors? If they're a problem, why does the state use them in the first place? Is the use of contractors inappropriate? Or does it save the state money? And if it is saving the state money, why did the Assembly just basically say "We don't want to save money anymore, we want to pay more!"

Second, if this was put in place to appease the labor folks, then why did they *still* vote against it even after getting what their concession?

How long will the legislature give it until some Rep or Senator asks, "Why are we charging ourselves 5.5% more to get work done? We can save 5.5% on every contract by eliminating that part of the law."

Posted by: Patrick at November 21, 2011 8:59 AM
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