Florida Battle Shows the State’s Pension Cut Challenge - Bloomberg

 

By Michael C. Bender - Mar 8, 2012

A court order forcing Florida (STOFL1) to forgo $1 billion it planned to take from state workers to shore up its budget is the latest sign of the difficulty of reducing government-backed retirement benefits.

Of 41 U.S. states that made significant pension changes in 2010 and 2011, at least 13 have faced court challenges, according to the National Conference of State Legislatures.

Gov. Rick Scott as grand marshal of the annual Springtime Tallahassee parade ignoring catcalls and picket signs protesting his plans to cut the state workforce in Florida.

Gov. Rick Scott as grand marshal of the annual Springtime Tallahassee parade ignoring catcalls and picket signs protesting his plans to cut the state workforce in Florida. Photographer: Bill Cotterell/Tallahassee Democrat/AP

“It can be very difficult,” said Ron Snell, a senior fellow at the organization who has studied pensions. “There are many obstacles in the way of policy makers.”

States such as Florida (STOFL1), whose $152 billion retirement fund is the third-largest of any state, increased employee contributions and eliminated cost-of-living-adjustments to free up tax dollars. With 29 states facing a total of $47 billion in budget shortfalls next year, according to the Center on Budget and Policy Priorities, orders to repay workers may create new obstacles to solvency.

At the same time, some pensions are ailing. Investment losses left states and municipalities with $3.6 trillion in unfunded obligations, according to a 2010 study by Joshua Rauh of Northwestern University and Robert Novy-Marx of the University of Rochester. The U.S. Government Accountability Office said that report failed to account for future contributions and that its “projected exhaustion dates are thus not realistic estimates.”

‘Unconstitutional Taking’

State pensions in 2010 had on average only 74.6 percent of the assets they needed to cover promised benefits, according to a Bloomberg ranking. Florida had 84 percent.

This week, the state appealed Leon County Circuit Judge Jackie Fulford’s decision that blocked Republican Governor Rick Scott’s plan to buoy the budget. The changes to promised benefits violated collective-bargaining rights and were an “unconstitutional taking of private property,” the judge ruled.

The changes were intended to save $1 billion a year by requiring workers to contribute 3 percent of their pay and eliminating cost of living adjustments for those retiring after the law took effect in August.

The state’s appeal put a hold on Fulford’s order to repay workers, and lawmakers continue to work on their $70 billion budget for fiscal 2013, a spending package that anticipates savings from Scott’s plan. It is scheduled for a final vote tomorrow, the last day of the annual legislative session.

Forging Ahead

The judge’s decision “is not going to affect this year’s budget,” said Representative Will Weatherford, a Wesley Chapel Republican. “We feel very confident that we’ll win later on down the road in court.”

Republican Senator J.D. Alexander, his chamber’s budget chairman, said courts can’t make the Legislature spend money and suggested lawmakers should ignore Fulford.

“I do not believe any court has the authority to dictate how the Legislature spends its money,” Alexander said.

Andy Ford, president of the Florida Education Association, the state’s largest teachers union and a plaintiff in the lawsuit, said lawmakers “have made their choices.”

“They have decided in this state over and over again to provide tax relief to big corporations, the people who put contributions into their campaigns, and it needs to stop,” he said. “They need to fund the services of the state of Florida.”

Breaking a Promise

States have run into legal trouble by changing promised benefits, said Snell of the NCSL.

“That’s the crux of it in many of these issues,” he said.

In Arizona (STOAZ1), more than 200,000 teachers and other public employees are in line for a $277 refund, according to the Tucson Citizen, after a Maricopa County judge ruled last month that the Legislature’s decision to increase existing employees’ payments into the system was unconstitutional.

In New Hampshire (STONH1), Merrimack County Superior Court Judge Richard McNamara in January rejected an increase in employee contributions, saying it broke a constitutional guarantee.

“It requires employees, who have already met the requisite service and age requirements, to pay additional amounts -- which may be an amount reserved for other expenses, like mortgages, housing and food -- without receiving additional benefit,” McNamara wrote.

Confederate Gold

Meanwhile, judges threw out lawsuits in Colorado (STOCO1) and Minnesota, ruling pensions may alter some post-retirement terms.

Florida’s law requires workers to contribute to their pensions for the first time since 1974.

Otherwise, government would have to cut services for “vulnerable people across the state,” said Senator Don Gaetz, a Republican from Niceville.

“We went down into the basement of the old Capitol and dug for Confederate gold, but we couldn’t find any,” Gaetz said.

“That money would have to come in the form of reductions in funding for the critical services for the people of Florida,” he said. “And that creates a real problem for the Legislature as we are ending the session.”

To contact the reporter on this story: Michael C. Bender in Tallahassee at mbender10@bloomberg.net

http://www.bloomberg.com/news/2012-03-08/billion-dollar-florida-pension-battle-shows-challenge-of-cutting-benefits.html

 

 

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Scott Walker’s Wisconsin Voter ID Law Violates Constitution, Judge Rules

Andrew Harris and Seth Stern - Mar 13, 2012 12:01 AM ET

Texas and Wisconsin officials were barred from enforcing laws requiring voters to produce a government-issued photo identification before casting ballots.

The U.S. Justice Department yesterday told Texas officials the state failed to show that the statute signed into law by Governor Rick Perry last year won’t have a discriminatory effect on Latino voters while a Wisconsin state court judge held that an ID law enacted by fellow Republican Governor Scott Walker last year, unconstitutionally burdens the rights of eligible citizens.

The measures had been adopted to combat potential voter fraud.

“Voter fraud is no more poisonous to our democracy than voter suppression,” Dane County, Wisconsin Circuit Judge Richard Niess said in his ruling yesterday barring enforcement of that state’s law. “Indeed they are two heads on the same monster.”

Signed by Walker in May, Wisconsin’s statute required voters to present government-issued photographic proof of identity such as a driver’s license, U.S. passport or an armed forces or college ID.

Under the Texas law signed by Perry in the same month, voters arriving at the polls without one of seven acceptable forms of photo IDs issued by the state or federal government, including concealed carry handgun permits, would be given a provisional ballot, according to the Texas Secretary of State’s website.

Approved ID

Those ballots would count only if voters bring an approved ID to the registrar’s office within six days of the election. The law exempts mail-in ballots and voters with significant disabilities or religious objections to being photographed.

Both states’ statutes were challenged on grounds they disproportionately affected poor and minority voters.

The Justice Department in December blocked a similar measure in South Carolina.

Texas and South Carolina are among 16 states or portions of states that must obtain permission from the Justice Department or a federal court in Washington before redrawing their district lines or changing election procedures because of a history of voting rights violations.

The federal Voting Rights Act requires Texas to prove its law wouldn’t interfere with minorities’ ability to vote.

Hispanic registered voters there are 47 percent to 120 percent more likely to lack the required identification than non-Hispanic voters, the Justice Department said in its letter. Texas has 12.9 million registered voters of whom 2.81 million are Hispanic.

‘Most Favorable’

“Even using the data most favorable to the state, Hispanics disproportionately lack either a driver’s license or a personal identification card,” Thomas Perez, head of the Justice Department’s civil rights division, said in the letter to Keith Ingram, the director of elections for the Texas Secretary of State.

The Justice Department’s Texas decision isn’t final. That state and South Carolina have filed suit in federal court in Washington seeking permission to enforce their photo ID requirements.

“Their denial is yet another example of the Obama administration’s continuing and pervasive federal overreach,” Perry said in a statement responding to the Justice Department notification.

Seeking Reversal

Wisconsin Attorney General J.B. Van Hollen said he would seek reversal of Niess’s decision to invalidate his state’s law.

“Wisconsin’s voter ID law is consistent with the constitution and I will appeal this decision,” he said in an e- mailed statement.

“We are confident the state will prevail in its plan to implement photo ID,” Cullen Werwie, a spokesman for Walker, said in an e-mailed statement.

Werwie likened the measure to requirements to present a photo ID before obtaining cold medicine, public assistance or a public library card.

The League of Women Voters, which filed one of four suits challenging the Wisconsin measure, in its own press statement disagreed.

“Voting is not like cashing a check or getting on an airplane,” state President Melanie Ramey said in the statement. “Those activities are not protected by the constitution.”

The case is League of Women Voters of Wisconsin v. Walker, 11-cv-4669, Dane County, Wisconsin, Circuit Court (Madison).

To contact the reporters on this story: Andrew Harris in Chicago at aharris16@bloomberg.net; Seth Stern in Washington at sstern14@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net; Steven Komarow at skomarow1@bloomberg.net

http://www.bloomberg.com/news/2012-03-12/wisconsin-voter-identification-law-is-blocked-by-second-state-court-judge.html