Florida Battle Shows the State’s Pension Cut Challenge -
Bloomberg
By Michael C. Bender - Mar 8, 2012
A court order forcing Florida (STOFL1) to forgo $1 billion it planned
to take from state workers to shore up its budget is the latest sign of the
difficulty of reducing government-backed retirement benefits.
Of 41 U.S.
states that made significant pension changes in 2010 and 2011, at least 13 have
faced court challenges, according to the National Conference of State Legislatures.
Gov. Rick Scott as grand marshal of the annual
Springtime Tallahassee parade ignoring catcalls
and picket signs protesting his plans to cut the state workforce in Florida.
Gov. Rick Scott as grand marshal of the annual Springtime Tallahassee parade ignoring catcalls and picket signs
protesting his plans to cut the state workforce in Florida. Photographer:
Bill Cotterell/Tallahassee Democrat/AP
“It can be very difficult,” said Ron Snell, a senior fellow
at the organization who has studied pensions. “There are many obstacles in the
way of policy makers.”
States such as Florida (STOFL1), whose $152 billion retirement
fund is the third-largest of any state, increased employee contributions and
eliminated cost-of-living-adjustments to free up tax dollars. With 29 states
facing a total of $47 billion in budget shortfalls next year, according to the Center on Budget and Policy Priorities, orders to
repay workers may create new obstacles to solvency.
At the same time, some pensions are ailing. Investment
losses left states and municipalities with $3.6 trillion in unfunded
obligations, according to a 2010 study by Joshua
Rauh of Northwestern University and Robert Novy-Marx of the University
of Rochester. The U.S. Government
Accountability Office said that report
failed to account for future contributions and that its “projected exhaustion
dates are thus not realistic estimates.”
‘Unconstitutional Taking’
State pensions in 2010 had on average only 74.6 percent of
the assets they needed to cover promised benefits, according to a Bloomberg
ranking. Florida had 84 percent.
This week, the state appealed Leon County
Circuit Judge Jackie Fulford’s decision that blocked
Republican Governor Rick Scott’s plan to buoy the budget. The changes
to promised benefits violated collective-bargaining rights and were an
“unconstitutional taking of private property,” the judge ruled.
The changes were intended to save $1 billion a year by
requiring workers to contribute 3 percent of their pay and eliminating cost of
living adjustments for those retiring after the law took effect in August.
The state’s appeal put a hold on Fulford’s
order to repay workers, and lawmakers continue to work on their $70 billion
budget for fiscal 2013, a spending package that anticipates savings from
Scott’s plan. It is scheduled for a final vote tomorrow, the last day of the
annual legislative session.
Forging Ahead
The judge’s decision “is not going to affect this year’s
budget,” said Representative Will Weatherford, a Wesley Chapel Republican. “We
feel very confident that we’ll win later on down the road in court.”
Republican Senator J.D. Alexander, his chamber’s budget
chairman, said courts can’t make the Legislature spend money and suggested
lawmakers should ignore Fulford.
“I do not believe any court has the authority to dictate how
the Legislature spends its money,” Alexander said.
Andy Ford, president of the Florida Education
Association, the state’s largest teachers union and a plaintiff in the lawsuit,
said lawmakers “have made their choices.”
“They have decided in this state over and over again to
provide tax relief to big corporations, the people who put contributions into
their campaigns, and it needs to stop,” he said. “They need to fund the
services of the state of Florida.”
Breaking a Promise
States have run into legal trouble by changing promised
benefits, said Snell of the NCSL.
“That’s the crux of it in many of these issues,” he said.
In Arizona (STOAZ1), more
than 200,000 teachers and other public employees are in line for a $277 refund,
according to the Tucson Citizen, after
a Maricopa County judge ruled last month that the
Legislature’s decision to increase existing employees’ payments into the system
was unconstitutional.
In New Hampshire (STONH1), Merrimack County Superior Court Judge Richard
McNamara in January rejected an increase in employee contributions, saying it
broke a constitutional guarantee.
“It requires employees, who have already met the requisite
service and age requirements, to pay additional amounts -- which may be an
amount reserved for other expenses, like mortgages, housing and food -- without
receiving additional benefit,” McNamara wrote.
Confederate Gold
Meanwhile, judges threw out lawsuits in Colorado (STOCO1) and Minnesota,
ruling pensions may alter some post-retirement terms.
Florida’s law requires
workers to contribute to their pensions for the first time since 1974.
Otherwise, government would have to cut services for
“vulnerable people across the state,” said Senator Don Gaetz,
a Republican from Niceville.
“We went down into the basement of the old Capitol and dug
for Confederate gold, but we couldn’t find any,” Gaetz
said.
“That money would have to come in the form of reductions in
funding for the critical services for the people of Florida,” he said. “And that creates a real
problem for the Legislature as we are ending the session.”
To contact the reporter on this story: Michael C. Bender in Tallahassee at mbender10@bloomberg.net
http://www.bloomberg.com/news/2012-03-08/billion-dollar-florida-pension-battle-shows-challenge-of-cutting-benefits.html
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Scott Walker’s Wisconsin Voter ID Law Violates Constitution,
Judge Rules
Andrew Harris and Seth Stern - Mar 13, 2012 12:01 AM ET
Texas and Wisconsin
officials were barred from enforcing laws requiring voters to produce a government-issued photo identification before casting
ballots.
The U.S. Justice
Department yesterday told Texas officials the state failed to show
that the statute signed into law by Governor Rick
Perry last year won’t have a discriminatory effect on Latino voters
while a Wisconsin state court judge held that an ID law enacted by fellow
Republican Governor Scott Walker last year, unconstitutionally
burdens the rights of eligible citizens.
The measures had been adopted to combat potential voter
fraud.
“Voter fraud is no more poisonous to our democracy than
voter suppression,” Dane County,
Wisconsin Circuit Judge Richard Niess said in his ruling yesterday barring enforcement of
that state’s law. “Indeed they are two heads on the same monster.”
Signed by Walker in May, Wisconsin’s statute required voters to present
government-issued photographic proof of identity such as a driver’s license, U.S. passport
or an armed forces or college ID.
Under the Texas law signed by Perry in the same month,
voters arriving at the polls without one of seven acceptable forms of photo IDs
issued by the state or federal government, including concealed carry handgun
permits, would be given a provisional ballot, according to the Texas Secretary
of State’s website.
Approved ID
Those ballots would count only if voters bring an approved
ID to the registrar’s office within six days of the election. The law exempts
mail-in ballots and voters with significant disabilities or religious
objections to being photographed.
Both states’ statutes were challenged on grounds they
disproportionately affected poor and minority voters.
The Justice Department in December blocked a similar measure
in South Carolina.
Texas and South Carolina are among 16 states or portions of
states that must obtain permission from the Justice Department or a federal
court in Washington before redrawing their district lines
or changing election procedures because of a history of voting rights
violations.
The federal Voting Rights Act requires Texas to prove its law wouldn’t interfere
with minorities’ ability to vote.
Hispanic registered voters there are 47 percent to 120
percent more likely to lack the required identification than non-Hispanic
voters, the Justice Department said in its letter. Texas has 12.9 million registered voters of
whom 2.81 million are Hispanic.
‘Most Favorable’
“Even using the data most favorable to the state, Hispanics
disproportionately lack either a driver’s license or a personal identification
card,” Thomas Perez, head of the Justice Department’s
civil rights division, said in the letter to Keith Ingram, the director of
elections for the Texas Secretary of State.
The Justice Department’s Texas decision isn’t final. That state and South Carolina have filed suit in federal court in Washington seeking
permission to enforce their photo ID requirements.
“Their denial is yet another example of the Obama administration’s continuing and pervasive federal
overreach,” Perry said in a statement responding to the Justice Department
notification.
Seeking Reversal
Wisconsin Attorney General J.B. Van Hollen
said he would seek reversal of Niess’s decision to
invalidate his state’s law.
“Wisconsin’s voter ID law is consistent with the
constitution and I will appeal this decision,” he said in an e- mailed
statement.
“We are confident the state will prevail in its plan to
implement photo ID,” Cullen Werwie, a spokesman for Walker, said in an e-mailed
statement.
Werwie
likened the measure to requirements to present a photo ID before obtaining cold
medicine, public assistance or a public library card.
The League of Women Voters, which filed one of four suits
challenging the Wisconsin measure, in its own
press statement disagreed.
“Voting is not like cashing a check or getting on an
airplane,” state President Melanie Ramey said in the statement. “Those
activities are not protected by the constitution.”
The case is League of Women Voters of Wisconsin
v. Walker, 11-cv-4669, Dane
County, Wisconsin, Circuit Court (Madison).
To contact the reporters on this story: Andrew Harris in Chicago at aharris16@bloomberg.net;
Seth Stern in Washington
at sstern14@bloomberg.net
To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net;
Steven Komarow at skomarow1@bloomberg.net
http://www.bloomberg.com/news/2012-03-12/wisconsin-voter-identification-law-is-blocked-by-second-state-court-judge.html