For teachers or other public sector employees across the country, 2011 has not had an auspicious start.
In Wisconsin battle lines are drawn between public sector workers and a tea party-supported Republican governor. Other mid-western states are picking up this fight, and Gov. Chris Christie in New Jersey is leading the charge in the East.
In Maine our own tea party guy has asked concessions of public sector employees on the pension front.
In the past week three headlines caught my eye: Bill Nemitz’s “A pointed budget message hits the mark.” Susan Cover’s page one headline lament from a long-time state employee in the March 3 Press Herald: “I am not the problem,” and Trip Gabriel’s headline in the March 3 New York Times: “Teachers Wonder Why the Heapings of Scorn.”
There is obviously plenty of emotion on the issue of public sector employees, their wages, pensions and bargaining rights. Let’s look at a few facts.
Nonpartisan national studies suggest that public sector workers have steadily improved wages and benefits over the past 30 years, and now are better off than the average private sector employee, although this gap is less pronounced at higher skill levels.
The report of the non-partisan group Envision Maine entitled “Reinventing Maine Government” reported that state workers’ average total compensation (pay and benefits) is $52,789, which is 18.8 percent higher than the average pay of private sector workers, citing U.S. Department of Commerce figures.
Much of this significant advantage comes from the public sector’s retirement benefits. In Maine, the state’s early and generous retirement is, according to Envision Maine, “one of the great perks of working for the government.”
Maine allows employees to retire at age 62 at relatively generous pay levels. Additionally, Maine covers full health insurance coverage for state employees and pays up to 45 percent of teachers’ health insurance.
According to a February 2010 study by the Pew Foundation, Maine is similar to many states in underfunding its generous retirement programs while expanding benefits and adding cost-of-living increases without considering their long-term impact.
After Gov. John McKernan borrowed from the fund in 1990 to balance the budget, and subsequent Legislatures were inconsistent in funding pension liabilities, legislation was passed in 1995 mandating that all state pension liabilities must be fully funded by 2028.
The impact of this legislation is to mandate significantly greater annual contributions. Expenditures next year will be more than $400 million, growing to $900 million by the end of this decade.
“Reinventing Maine Government” identifies Maine’s unfunded pension liabilities as one of three “Ticking Time Bombs” the state faces. The others are the aging of the state and health care costs.
Gov. LePage has proposed a reasonable and measured approach to these unfunded liabilities: cap the cost-of-living increases for current pensions at 2 percent, increase the state retirement age to 65, and ask state employees to pay slightly more of their current pay into the system.
The tone of the hearings in Augusta and the press reports they engendered suggest that the governor is making a full-scale assault on teachers and state employees — but the facts suggest this is not so.
Maine is not Wisconsin. We value our teachers and our state employees. The governor has proposed a sensible fix that will, over time, ensure the state has the resources to meet its obligations to state employees and teachers.
In spite of the headlines, there is a problem and state employees are part of it. Anyone who is testifying against the governor’s proposals should be asked: “OK, what would you do to ensure the future solvency of the retirement fund?”
This debate is not about, as Bill Nemitz’s featured school librarian suggests, giving tax breaks to the rich on the backs of state workers. That story makes a great headline, but fails the logic test.
The modest tax decreases in the governor’s budget will benefit almost all Mainers, and the estate tax provision cited in the Nemitz story is simply good policy to prevent the exodus of higher-income Maine taxpayers because of the current discrepancy between Maine and federal estate tax law.
The debate going on in Augusta about the governor’s budget is not about class warfare. It is not about underappreciating our teachers.
It is about taking a prudent approach to one of Maine’s “Ticking Time Bombs,” public pensions. LePage has put a responsible proposal on the table. If you do not agree with it, suggest a responsible alternative.
We cannot simply wish this problem away.
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