Thursday, September 15, 2011

Governor going after state employees ...again.

[Note:  Yes, I know I've been a little slack in updating the blog. Chalk it up to selling a house (sort of), buying a house, sloth, an earthquake, a hurricane and other writing projects. I promise to be more diligent. Until I'm not.]

Virginia Governor Bob McDonnell announced this week that state employee retirement benefits might need to be cut, because the system has $18 billion in unfunded liabilities.

He's right about the unfunded liability. Over the next 75 years it does total $18 billion.

But that's not the state employees' fault.

McDonnell has done little to endear himself to state employees. Last year he pushed a measure to require them to pick up part of their own retirement costs.

That doesn't sound unreasonable on the face of it. Why shouldn't they pick up part of the cost? But the way McDonnell structured his proposal, it would have cut the take home pay of every state employee. The General Assembly intervened and gave state employees a pay raise sufficient to offset the retirement contribution. That was in line with the original deal which led to the state picking up the employees' contribution -- it was done in lieu of a raise.

The legislature showed much better common sense and a greater sense of justice than the governor on this issue.

It's odd that McDonnell, who doesn't have the reflexive anti-government instincts of a lot of Republicans -- former governors George Allen and Jim Gilmore for instance -- would be taking another swing at state employees.

Maybe McDonnell, recently chosen to lead the Republican Governor's Association, feels he need to do it to have some street cred with his peers. From Scott Walker in Wisconsin to Rick Scott in Florida to Chris Christie in New Jersey, it seems like wherever you have a new Republican governor these days, he's at war with his state employees.

But still, if the Virginia Retirement System is $18 billion short, that's serious isn't it?

Well, yes, it is.

But the question is, why is the retirement system short?

And the answer is that Virginia's political class -- of which Bob McDonnell is a lifetime member -- has treated the retirement system as a piggy bank and unofficial rainy day fund. Both Democrats and Republicans alike, in the governor's mansion and in the legislature, have felt free to stiff VRS when they ran short of cash for other priorities in the budget.

Until recently, tremendous investment performance by the VRS trust fund veiled the damage this was causing.

McDonnell himself signed off on the latest such travesty, when the state underpaid VRS by more than $600 million two years ago. McDonnell had the nerve to claim later that year that he'd "balanced" the budget without raising taxes. Sure. If I didn't make my mortgage payment, it would be pretty easy to "balance" my household budget as well. The mortgage company would probably take a dim view of that approach, however.

The Commonwealth is due to begin repaying VRS for that skipped payment in 2013. Conveniently, that's also McDonnell's last year in office.

Hmmm, repaying the money that was "withheld" from the fund. That's an idea. That seems fiscally prudent doesn't it?

Maybe the governor is right. Maybe we do need to consider cuts in VRS benefits -- maybe we do need to tell our state employees that the Commonwealth's promises aren't worth the paper they are printed on. Maybe we need to break the deal we've made with employees just as private companies across the country have. (Oh, so that's what Republicans mean when they say they want government to operate more like a business).

Yeah, maybe. Maybe we should do that right after the governor and the General Assembly return every dime that was due to VRS that hasn't been paid in over the past 50 years.

Maybe that would be the time to ask employees to sacrifice. Right after the state lives up to its obligations.

Cross posted at All Politics Is Local.

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