Democratic leaders urge end to pension scare tactics

Posted: March 08, 2011 | Appropriations and Financial Affairs, Senator Alfond

Senate and House Democratic leaders today urged an end to “crisis” rhetoric on state pensions and called for the governor to clarify how cuts to the teacher and retiree benefits will be spent. The statements were issued in response to another press conference held by State Treasurer Bruce Poliquin, who indicated that the cuts to benefits would be used to pay down the cost of the pension liability — a statement that is in direct conflict with testimony made by the governor’s Finance Commissioner Sawin Millet.
 
Millet told the Appropriations committee Friday that the cuts to retirees would be used to pay for other spending in the governor’s budget and tax cuts. 
 
‘We are seeing two different messages from the treasurer and the governor and we need to know the facts,” said Assistant Senate Democratic Leader Justin Alfond, D-Portland. “We also need to put a stop to the scare tactics that are being used to confuse the public. Lawmakers have been working to address the pension challenge in a bipartisan way for a long time now.”
 
According to the Maine Public Employee Retirement System reports, the market value of the pension fund’s assets was $10.3 billion as of the last fiscal year. Based on the numbers the state retirement system could continue to pay benefits for over 15 years at the 2010 cost level without making any additions to the fund. 
 
“There is no silver bullet solution to the pension challenge,”said House Democratic Leader Rep. Emily Cain of Orono. “Lawmakers have been studying the problems in a bipartisan way with the stakeholders and we will continue to do so as hearings proceed. The budget process is a marathon, not a sprint.”
 
A Pew Research report released in February 2010 says state pension plans in almost every state are underfunded. Maine, however, was determined to be a “strong performer” when addressing the liability for retiree pensions. The report said the state’s pension obligations were only 63 percent funded in 1997; but by 2008 were 80 percent covered prior to the market downturn. Current funding level ratio is 70.4 percent.