CONCORD, NH — The state should live up to its promise and again pay a share of the retirement costs for municipal, school, and county employees, a Senate Committee was told Wednesday.
Giving public retirees of five years or more a one-time $500 grant to offset the cost of living increases had more qualified support as people testifying said a 1.5 percent cost-of-living-adjustment would be fairer and more equitable.
The Senate Executive Departments and Administration Committee heard the two bills, which were approved by the House, one over the objection of two committees.
House Bill 1417 would have the state pay 7.5 percent of the retirement premiums for municipal, school, and county employees at a cost of $28 million annually.
While the committee held a public hearing on the bill, Senate Majority Leader Jeb Bradley, R-Wolfeboro, introduced an amendment to another bill before the Senate to use $28 million of the state’s projected $300 million revenue surplus this fiscal year to pay the 7.5 percent of the retirement costs of municipalities, schools, and counties.
The money to help with retirement costs would only be for one year, while the Democrat sponsored bill — the prime sponsor was the late House Democratic Leader Renny Cushing of Hampton — would make the state’s contribution permanent.
Sen. Lou D’Allesandro, D-Manchester, said, “Today’s slapdash effort by Senate Republicans was not only a weaker version of the good work done by Representative Cushing but an abdication of the democratic process in the name of political gain.”
Supporters of the bill said it would be an opportunity for the state to once again begin to live up the promise it made to its political subdivisions when it established a unified state retirement system in 1967.
At that time the state paid 40 percent of the cost, soon reduced to 35 percent until the great recession when it was reduced and then eliminated
Rep. Michael O’Brien, D-Nashua, a retired firefighter and current city alderman, said the state gave no warning when it reduced its contribution from 35 percent to zero.
“That obligation of 35 percent went right to the property taxpayers of each community,” O’Brien said. “They have been bearing the burden over 11 years and it’s time to give property taxpayers some relief.”
But Rep. Ken Weyler, R-Kingston, called the bill dangerous and said it has the potential of expanding the state’s obligation beyond what is sustainable if cities and towns and counties continue to add employees.
He said the bill was the false promise of property tax relief, noting the state already sends property taxpayers $1.2 billion in state money.
“You need predictable increases (in budgeting),” Weyler said. “Adding employees’ contributions is unpredictable.”
The bill was backed by the New Hampshire Municipal Association.
Lebanon City Councilor Karen Loit Hill said the state walked away from its promise to the cities and towns, but the city and towns did not walk away from their promise to their employees.
“This bill will provide meaningful property-taxpayer relief to all the people of Lebanon and start restoring the (state’s) promise made long ago,” she said.
The committee did not make an immediate recommendation on the bill that will also have to go before Senate Finance.
Retiree Grant
House Bill 1535 originally would have provided a 1.5 percent cost-of-living increase in retirement benefits for retirees of at least five years and whose benefit is less than $30,000 a year.
Many people testifying on the bill, including many representatives of public labor unions, said something was better than nothing but they all preferred the cost of living raise and would like to see it apply to all retirees.
The House Finance Committee changed the bill from a cost-of-living increase to a $500 grant.
Karen Irwin, a current state employee, presented the committee with a proposal that would give all retirees after five years a 1.5 percent increase in their base, which she said would not cost much more than the grant to fewer retirees.
She proposed creating a special fund beginning with $19 million instead of the $12 million the grants would cost and said it would give everyone who has been retired over five years a 1.5 percent increase and would every year as new retirees reach their five year anniversary.
The pension system should be able to take a little of the high earnings they had last year, and give a little back to the membership, she said.
Retired Manchester firefighter and past retirement board of trustee member, Arthur Beaudry, said the current proposal for a grant would essentially prevent every retired firefighter and police officer from receiving the grant because their average benefit is over $30,000, and they do not receive Social Security benefits like other retirees do.
He noted the system once had a special account funded when investments earned more than anticipated, that paid cost of living increases for all retirees.
But over time, he said, the legislature moved $637 million from the special account into the retirement system holdings and since that time only one cost of living increase has been approved.
“That money was confiscated for no other reason than lowering employers contributions for retirees,” Beaudry said.
He noted the average pension from the system is $21,300 and public sector employees are paying more, but the benefits have not kept pace with inflation.
Gerard Fleury, who runs the Manchester pension system and worked for the state retirement system for 20 years, was critical of the proposal saying there were many things that needed to be fixed.
He noted there are many employees who work a short period of time, retire and have a small pension and would receive the grant. Fleury said, but long-time public employees who contributed to the system for a number of years will not.
“That is just unfair to me,” he said. “I am not opposed to this bill, but it is severely flawed and needs to be reworked significantly.”
Representatives for the State Employees Association NH and National Education Association NH made similar arguments.
“You need to take care of our citizens that took care of us,” said Richard Gulla, president of the SEA-NH. “It should be a COLA, and if not, it should include everyone.”
Marty Karlon of the retirement system said the grants would go to about 23,000 retirees.
The bill will have to go to Senate Finance after an initial vote by the Senate.
The committee did not make an immediate recommendation on the bill.
