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State retirement changes disputed

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By The Staff

JAY MILLER

Syndicated Columnist

SANTA FE -- The 1.5 percent cut in public employee take home pay isn't sitting well with many of those affected.

In this year's regular session of the Legislature, a bill was passed and signed to reduce the government's contribution to public employee retirement systems and transfer that to employees.

One retirement system covers all state and local employees and another covers employees of public schools, colleges and universities. Unions representing a large portion of employees in both those systems have filed suit to block that transfer.

The first pay day of this fiscal year already has passed for employees of the state with no action by the state district court to enjoin the state from making the transfer. That would require a preliminary injunction until the case can be heard.

It is likely the court will want to carefully consider arguments in the case before it even makes a temporary decision. The case seems complicated, involving many public bodies and constitutional issues.

The unions allege the state is constitutionally prohibited from using funds for any purpose other than for what the retirement law designates, such as the purpose of budget balancing.

Among other constitutional violations, the unions claim the pay assessment against public employees is unequal treatment since private sector employees are not affected.

In case the court action doesn't work, the American Federation of Teachers-New Mexico has started a petition drive in Albuquerque and several other communities aimed at influencing Gov. Bill Richardson and lawmakers to overturn the transfer.

Legislative Finance Committee Chairman Lucky Varela and Vice Chairman John Arthur Smith issued statements saying they regret the court action because they thought they were doing public employees a favor by not instituting furloughs, layoffs or reductions in force. They said those were the only alternatives to the 1.5 percent cut in take home pay.

Union representatives said they suggested many other money saving measures to the governor and 2009 Legislature but they all fell on deaf ears.

Among the sources of money to balance the state budget was elimination or serious restriction of double-dippers, who return to work after retirement and collect full pay plus retirement pension and don't have to continue contributing to the retirement fund.

That was estimated to save the state $5 million a year plus give a boost to the retirement fund. The Legislature passed such a bill but Gov. Richardson vetoed it.

Another suggestion was to drastically cut the number of governor-appointed staff which has inflated the cost of senior management in state government.

By far, the biggest savings suggested was to institute a concept known as combined reporting, in which large interstate corporations are prevented from hiding their New Mexico profits in other states that charge lower corporate taxes.

The New Mexico Taxation and Revenue Department is reported to estimate that this would generate $70 million more per year during a slump and more like $100 million once the economy rebounds. The state picks up $40 million a year from the 1.5 percent assessment on public employees.

Needless to say, the big companies use an army of accountants, lawyers and lobbyists to retain their advantageous position at the expense of locally-owned businesses.

A special legislative session is anticipated sometime this fall when the effect of stimulus money can better be judged. Some of the private sector unions say they will be lobbying for their brothers and sisters in the public sector on this issue.

But prospects don't look very bright. Legislative finance leaders seem determined to make public employees feel the pain of the economy too -- beyond no pay hikes for nearly all..

At least one of the two retirement boards already advised the Legislature last January that the cut in government contributions would violate the state constitution. But lawmakers proceeded anyway. Look for a lively special session.

(e-mail) insidethecapitol@hotmail.com

The 1.5 percent cut in public employee take home pay isn't sitting well with many of those affected.

   In this year's regular session of the Legislature, a bill was passed and signed to reduce the government's contribution to public employee retirement systems and transfer that to employees.

   One retirement system covers all state and local employees and another covers employees of public schools, colleges and universities. Unions representing a large portion of employees in both those systems have filed suit to block that transfer.

   The first pay day of this fiscal year already has passed for employees of the state with no action by the state district court to enjoin the state from making the transfer. That would require a preliminary injunction until the case can be heard.

   It is likely the court will want to carefully consider arguments in the case before it even makes a temporary decision. The case seems complicated, involving many public bodies and constitutional issues.

   The unions allege the state is constitutionally prohibited from using funds for any purpose other than for what the retirement law designates, such as the purpose of budget balancing.

   Among other constitutional violations, the unions claim the pay assessment against public employees is unequal treatment since private sector employees are not affected.

   In case the court action doesn't work, the American Federation of Teachers-New Mexico has started a petition drive in Albuquerque and several other communities aimed at influencing Gov. Bill Richardson and lawmakers to overturn the transfer.

   Legislative Finance Committee Chairman Lucky Varela and Vice Chairman John Arthur Smith issued statements saying they regret the court action because they thought they were doing public employees a favor by not instituting furloughs, layoffs or reductions in force. They said those were the only alternatives to the 1.5 percent cut in take home pay.

   Union representatives said they suggested many other money saving measures to the governor and 2009 Legislature but they all fell on deaf ears.

   Among the sources of money to balance the state budget was elimination or serious restriction of double-dippers, who return to work after retirement and collect full pay plus retirement pension and don't have to continue contributing to the retirement fund.

   That was estimated to save the state $5 million a year plus give a boost to the retirement fund. The Legislature passed such a bill but Gov. Richardson vetoed it.

   Another suggestion was to drastically cut the number of governor-appointed staff which has inflated the cost of senior management in state government.

   By far, the biggest savings suggested was to institute a concept known as combined reporting, in which large interstate corporations are prevented from hiding their New Mexico profits in other states that charge lower corporate taxes.

   The New Mexico Taxation and Revenue Department is reported to estimate that this would generate $70 million more per year during a slump and more like $100 million once the economy rebounds. The state picks up $40 million a year from the 1.5 percent assessment on public employees.

   Needless to say, the big companies use an army of accountants, lawyers and lobbyists to retain their advantageous position at the expense of locally-owned businesses.

   A special legislative session is anticipated sometime this fall when the effect of stimulus money can better be judged. Some of the private sector unions say they will be lobbying for their brothers and sisters in the public sector on this issue.

   But prospects don't look very bright. Legislative finance leaders seem determined to make public employees feel the pain of the economy too -- beyond no pay hikes for nearly all..

   At least one of the two retirement boards already advised the Legislature last January that the cut in government contributions would violate the state constitution. But lawmakers proceeded anyway. Look for a lively special session.

(e-mail) insidethecapitol@hotmail.com