By Maine Governor Paul LePage
The Legislature’s Appropriations Committee began its long review of our budget proposal this week. And they got off to a fast start, reviewing the reforms we have proposed for Maine’s public employee retirement system.
Our pension reforms are an important piece of our budget. Here are some numbers.
52,529 is the number of state workers or teachers who are either in our retirement system or are within ten years of retirement age. These long-serving public servants are counting on our pension system to sustain their golden years. Few in this group qualify for social security and all have few years left to make other arrangements for their retirement.
$926 Million is the amount of money needed to meet our state pension obligation over the next two years if we do not enact reform. That is 15% of all the tax dollars that come into our general fund. Only about $200 million of this sum is for current expenses. All the rest goes to pay down our unfunded pension liabilities.
$1.5 Billion is the amount our state pension obligations will be ten years from now without reform. It would take one-in-every-four dollars of revenue to meet this expense, forcing future lawmakers to cast aside our defined pension benefit program.
Zero. That is how much money we can afford to remove from Maine’s private sector economy to payoff pension debt resulting from the bad assumptions and ignored promises of the past. And there are zero dollars to account for the fact that retirees live considerably longer lives today.
I need to be clear on this point. We need every penny possible in Maine’s private sector creating jobs, investment and opportunity to move our state forward. We cannot tax our way to prosperity. As long as I hold a veto pen, we are not even going to try.
My budget offers sensible reform to our retirement system that saves $524 million in past due payments now, cuts our total unfunded pension liability in half, and puts us on a sustainable path toward fully funding our retirement obligations as required in the Maine Constitution.
Our fix is not easy and is filled with shared sacrifice. Retirees are asked to accept COLA freezes and caps. Current state workers and teachers must contribute an additional 2% to their retirement and the newest hires will have to work longer. Our pension proposal also asks for continued sacrifice from taxpayers who will have to dig even deeper to bear the cost of retiring old debt for sixteen years to come.
The state workers and teachers who have come to Augusta this week have faithfully made their contributions and have passionately made the case to lawmakers that they are due their benefits.
And they are partly right. The promises made could never be honored. Maine has finite resources and there is no amount of obligation, wishing or avoidance that changes this hard economic fact. We need reforms now to save our pension system for our valued retirees and to make funds available for today’s priorities.
And, yes, one of today’s priorities has to be getting more money back into the hands of the private sector where it can be invested by job creators. Our budget cuts taxes, putting an average of $288 in the pocket of 439,000 Maine families. We also send the message that we are serious about lowering Maine’s tax burden and improving our business climate.
Maine lawmakers are being inundated with calls and emails from those who oppose reform. We need to match this effort and let legislators know that Maine people are expecting the change they voted for last November.
Be friendly, be informed and be heard sometime soon because we need your help.
The above content reflects the opinions of the author and not necessarily the policies of the National Governors Association.