Post-Retirement benefits for newly hired municipal employees in Wisconsin would virtually end, under new legislation making its way through committees in the Wisconsin State Senate and Assembly.
AB219 has already been passed out of the Assembly Committee on Urban Affairs by a partisan 6 (R) to 3 (D) vote, and is in the Assembly Rules Committee – meaning it could be calendared at any time.
SB240 has had its first public hearing in Leah Vukmir’s Senate Committee on Health, and Republicans control that committee by a 3 to 2 margin. State Senator Leah Vukmir (R – 5th) is the ALEC co-chair for the Committee on Health and Human services, and State Senator Mary Lazich (R-28th) is also a member of that ALEC committee. State Senator Terry Moulton (R-23rd) is also known to be a member of ALEC.
The current bills have their origins in ALEC, as found in an ALEC_statement on_State_and_Local_Government_Pension_and_OPEB_Plans from the Center for Media and Democracy’s “ALEC Exposed” documents. The ALEC statement of policy on post-retirement benefits clearly aligns with the language found in the bill authored by Vukmir, and heard in a Senate Committee dominated by ALEC members.
The bill would make post-retirement benefits virtually unaffordable to Wisconsin municipalities, as it requires local governments to amortize funds (have retirement benefits fully funded into future years) far into the future for new hires, putting an enormous fiscal burden on already stressed local governments. Currently, these benefits are funded on a pay-as-you-go basis, and have been solvent for decades. Senator Vukmir’s office characterized this legislation as another “tool” to enable local governments to manage their fiscal challenges.
Curt Witynski gave testimony on behalf of the Wisconsin League of Municipalities, registered against the bill. The League is a non-partisan group representing municipalities across the state, and across political lines. Mr. Witynski’s statement to the committee characterizes the fiscal stress created by this bill:
“For example, if Beloit were to fully fund its post-employment benefits for police and fire employees, the cost would be $6.7 million, instead of the city’s current $2 million pay-as you-go-cost. While the bill applies to newly hired employees only, eventually it will apply to all employees. Given the recent increase in retirements and the age of our workforce, this may happen sooner than anticipated. To give committee members a sense of the magnitude of the problem, if Eau Claire were to fully fund its post-retirement benefits for all employees, it would have to set aside $48 million. Eau Claire could not afford to comply.”
And the long term effects:
“Municipalities will be forced to drop post-employment health coverage for new employees. This will be difficult if impossible to accomplish for police and fire employees, which retain full collective bargaining rights even after the changes made by Act 10. Communities will need to bargain the issue and it is unlikely that police and fire unions will give up the benefit without receiving something in exchange from the municipality. Even if municipalities eliminate the post-retirement health benefits for new non-public safety employees, communities will still be required to create a large reserve to cover the cost of post-retirement health benefits for new police and fire employees.”
As ALEC Model Legislation goes, more bad governance for Wisconsin. The end effect of this legislation could be to force municipalities into privatizing services, to save money to fund emergency services’ post-retirement benefits. The GOP of “less government” has again introduced a bill that is centralized government with less local control. The benefactors of this legislation will be the private service companies awaiting a fiscal crisis in Wisconsin municipalities. These companies bought and paid for this legislation, and the people of Wisconsin will be the losers.
Lost jobs, lost wages, lost benefits, lost public services with full public accountability. More reason for an overwhelming recall of Scott Walker, and the emergence of a New Progressivism in Wisconsin, and the nation.