LEGISLATIVE UPDATE

Recession Stalls Activity - Focus on Defending Benefits

NOVEMBER 2009: Plummeting tax revenues, at both the state and local levels, make for a difficult 2009-2010 Legislation Session.

Despite raising over $900 million in new taxes, the Commonwealth is still facing a multi-billion dollar deficit and has had to make significant cuts in the new budget. The result is not simply a reduction in state-run programs, but also a 20% cut to local aid.

A local aid reduction, combined with lost property and excise taxes and fee revenue, brings the real danger of cuts being made to local retiree health insurance benefits (see Somerville article pg. 7). While pension benefits cannot be reduced, retiree healthcare benefits can be changed and costs to retirees increased.

"The biggest threat retirees face right now is in the area of health insurance. Healthcare is a big ticket item and always a target for people looking to cut the budget," explained Association President Ralph White. "We have worked very hard over the years to establish good benefit packages for retirees. Right now we must defend what our members have earned."

At the state level (for state retirees and employees), the Group Insurance Commission (GIC) is responsible for the design and management of the state's health insurance plans. The Commission sets copayments and deductibles (for all GIC enrollees), but it is the state Legislature, which sets the premium contribution levels for state retirees and active employees.

Hearings Continue

Despite the tough economic times, Association lobbyists continue to work closely with the Legislature to build support on a number of proposals of importance to public retirees.

The Joint Committee on Public Service, chaired by Representative Robert Spellane (D-Worcester) and Senator Thomas McGee (D-Lynn), has held nearly a dozen public hearings on a number of issues affecting public pensions, civil service, public retiree health insurance and other issues. The Committee will continue to hold hearings through November on the 900-plus bills now under review.

With the exception of our bill that exempts noncontributory pensions from state taxation (pending before Revenue Committee), all Association bills are now before the Public Service Committee. As members may recall, the Association filed 19 separate proposals for the 2009-2010 session, which runs until the first week of January, 2011.

Given that most of the bills contained within our Legislative Package will cost millions of dollars to implement, the likelihood of new or enhanced benefits passing in 2009 is remote. However, certain Association bills, such as H2403 (post retirement service), S1217 (municipal retiree enrollment in GIC dental plan), and H2401 (disability reexaminations) do not require any additional appropriation, therefore could be viewed favorably.

"There is no question, this is shaping up to be a very tough session. I know that members want action on a number of important bills, but the reality is that there is no funding source for new benefits," said Association Legislative Liaison Shawn Duhamel." However, there are bills that have no cost and would help the state to save money. But we are not giving up on anything that we filed. Some things are just going to take more time than others."

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