Hick says no more taxpayer money to bail out PERA. What happens now?

Colorado Gov. John Hickenlooper’s new budget blueprint takes direct issue with Colorado PERA’s proposed plan that would share the pain for the latest pension bailout among taxpayers, retirees, and current PERA members.

Hickenlooper wants taxpayers left out of that mix.

Here’s how The Denver Post lays it out:

Rejecting the Colorado Public Employees’ Retirement Association’s plan to increase government contributions to shore up the fund would save the state $54 million a year, according to PERA projections.

But it injects a new wrinkle into what was already set up to be a bitter fight over PERA’s future, with the pension fund facing its second fiscal crisis this decade. The Democratic governor’s opposition to increasing taxpayer contributions mirrors that of many Republicans and is likely to encounter resistance from public employee unions and Democratic lawmakers as the 2018 session approaches.

Instead, Hickenlooper proposes increasing employee contributions by 2 percentage points starting in 2019 — a year earlier than the PERA board had recommended. That would provide some relief for current employees, whose contributions would have increased more under the board plan.

It also calls for retiree cost-of-living raises to be capped at 1.25 percent, down from the 2 percent they receive annually now. That’s an additional cut of 0.25 percentage points from the board’s proposal.

This creates some fascinating political dynamics. Here’s our take:

  • It signals to PERA that it can’t count on its traditional allies to push through a fix that’s to its liking. The employer (taxpayer) contribution piece of the PERA plan has just become piece a much harder political sell.
  • If PERA (and its bill sponsors) insist on pushing forward with the increase in taxpayer contributions, despite Hickenlooper’s opposition, expect a heated political battle. And its likely PERA will push forward, given the lack of other funding options. This puts pressure on PERA to engage in some meaningful horse-trading, perhaps opening up to governance changes, restructured pension plans for new entrants, and even a  meaningful defined benefit/defined contribution choice for members.
  • Democratic legislators could well feel emboldened to take an independent path, bucking PERA’s mighty lobbying force.
  • A Denver Metro Chamber of Commerce task force that has been studying PERA for the past several months is increasingly unlikely to give its blessing to the PERA proposal in anything close to its current form. That had been something of an open question up until now.

We’ll attend and report on tonight’s final stop of “PERA Tour 2” in Denver. These latest developments mean it should be a lively session.

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