Sigh. This space takes enough potshots at the Globe, so they deserve credit when its due. Their editorial this AM pretty articulately states my reasons for opposing this bill. Its a cynical hodge-podge of small bore initiatives that ignores the big issue — health insurance for municipalities.
In particular, one of the bill’s worst features is its extension of the pension funding schedule by 10 years:
Most public-employee pension systems don’t have enough money stashed away for the benefits that they’ve promised, and under current law they have until 2030 to catch up. The municipal relief bill would extend the deadline for a full 10 years.
There’s a superficial logic to this change; pension funds have suffered deep losses, and sticking to the existing schedule will require much higher annual payments than once anticipated. But if the Legislature intends to let communities postpone the inevitable, it should at least insist on further reforms. After all, the state has too many pension systems; many municipal employees retire relatively young; the rates of return that most of the state’s pension funds are projecting may not be realistic. Far from fixing these flaws, the municipal relief bill would make the shortfall worse by allowing cities and towns to grant larger cost-of-living increases to pensioners.
Keep in mind that no one is going to roll back the funding schedule once its been extended.
There’s also another dimension to this issue. Almost all of the unfunded liability is due to the overhang from the bad old days when we funded pensions on a pay-as-you-go basis. Yet, we are still doing exactly the same thing for retiree healthcare, where the current unfunded liability is $15 billion and climbing.
The unspoken understanding has always been that once the pension liability gets paid off, we could repurpose that money to pay off the healthcare liability. That possibility once seemed to be about a decade or so off, now it looks like it might be two decades or more.