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Wednesday, April 30, 2008

House Committee Votes to Increase Pensions/Property Taxes

The House State Government Committee passed a Pension COLA bill - AP Story here - which would require a dramatic increase in spending (on top of the expected higher required contributions in future years) and higher state and local property taxes (read: unfunded mandate)

The estimated cost is $10.4 billion over 20 years ...The Public School Employees' Retirement System would need an estimated $348 million a year for 20 years under the bill, according to a preliminary analysis Baker provided. The cost would be funded by a state government subsidy and by local school taxes.

The higher pensions would cost the State Employees' Retirement System an estimated $174 million annually for 20 years. ...

"The question really isn't whether or not it's affordable," said Tim Allwein, the association's assistant executive director. "The question is whether or not it's going to raise taxes, and it certainly has the likelihood of doing that."

Here is Rick Dreyfuss's commentary on why Pension COLA's and reducing property taxes are mutually exclusive options. For a solution to the pension mess, read about a proposal to put all new employees - state, school district, local government - into a defined-contribution plan.

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