Gov. Dannel Malloy's budget chief faced a barrage of tough questions Thursday from both sides of the political aisle. None of the lawmakers on the finance, revenue and bonding committee appeared pleased with Office of Policy and Management Secretary Benjamin Barnes.
Republicans have proposed 19 separate bills to eliminate the income tax from pension payments and social security benefits. The proposals come as the state battles a number of issues including a $1.7 billion budget deficit and an outmigration trend as people, particularly retirees, move to other states.
Gov. Dannel Malloy's budget chief told the appropriations committee Tuesday that, despite a pension agreement between the governor’s office and a group of state employee unions, Connecticut will face “a relatively brutal” increase in pension costs equal to 10 percent of the budget by 2023. The pension deal would essentially refinance the existing pension payments by extending them through 2046 to make up for a $16.5 billion funding shortfall.
One in five pension checks for retired Connecticut state employees are mailed out of state, according to October figures provided by the state comptroller’s office. Every month more than $25 million in pension payments goes out of state but a proposed bill in the General Assembly would impose a 30 percent “forwarding fee” on those funds.
As Gov. Dannel Malloy and the state legislature grapples with rising costs from unfunded pension liabilities, some Connecticut cities and towns have managed to tackle their own pension problems head on. Municipalities like Danbury, Norwalk, Stratford and South Windsor have switched from defined benefit retirement plans to 401(k) style plans and changing retiree healthcare packages to stem the long-term costs to the towns.
Welcome to the Connecticut Municipal Employee Retirement System (CMERS), a state-run pension plan for local public employees that’s a little like the Hotel California: Once you’re in, good luck getting out. This state restriction on towns in CMERS stands in the way of reforms that would make retirement benefits for municipal employees safer and more sustainable – and it should be repealed.