Wednesday, April 14, 2010

A Fig Leaf for Maryland’s Fiscal Folly

Once again, the General Assembly has hidden behind a fig leaf by consigning the issue of pension and health benefit liabilities to the Public Employees’ and Retirees’ Benefit Sustainability Commission. Senate Bill 141 passed during the 2010 session charges the Commission with making recommendations as to “all aspects of State funded benefits and pensions provided to State and public education employees and retirees.”

In light of past experience, the General Assembly knows that such a Commission will certainly delay, or even prevent, any solutions. This Commission is a huge victory for proponents of the status quo.

A recap of the recent history of commissions relating to public employee benefits will demonstrate why those opposed to changing the status quo have little to fear.

During the 2005 session, the General Assembly created a Task Force to Study Retiree Health Care Funding Options. This Task Force completed its work and issued a report in November 2005. The primary recommendation of the Task Force was to create a second Commission to study the topic further. During the 2006 session, the General Assembly showing its timidity in dealing with multi- billion dollar promises of health benefits for retirees created the Blue Ribbon Commission to Study Retiree Health Care Funding Options – the Blue Ribbon part was meant to distinguish it from its predecessor of the same name.

The law creating the 2006 Blue Ribbon Commission required a final report by December 31, 2008, allowing two and a half years of analysis and deliberation. The Commission did not hold its first meeting until August 2, 2007, fifteen months after it was created. After squandering more than a full year of the time prescribed to deliver recommendations, the Blue Ribbon Commission was granted a one year extension to December 2009 to make a final report. Despite the additional year granted for the final report, the Blue Ribbon Commission was unable to comply with the law.

Instead, the Blue Ribbon Commission once again needed an extension and the General Assembly granted it with little opposition. House Bill 771 and Senate Bill 444 passed by the General Assembly during the 2010 session – the same one at which the Sustainability Commission was created - extends the time for a final report by the Blue Ribbon Commission to December 2011, delaying the final report for three years from the originally scheduled due date and five years from the creation of the Blue Ribbon Commission.

This history provides little comfort that anything will result from the Sustainability Commission, except more delay. Two years ago I detailed the extent of the then-existing unfunded pension and health benefits liability problem in a commentary in the Gazette – and the problem has only grown worse while the politicians have dithered.

Perhaps what the General Assembly is hoping for is the return of a booming economy to eliminate the need for any action. Or perhaps, the General Assembly hopes to use the escalating costs of these obligations as support for tax increases after the election.

Whatever the hopes of the General Assembly, this much is certain: the increasing liabilities for public employee pension and health benefits are not issues that it wishes to address.