In Senate budget committee, disagreement on health and retirement funding

A lot of ground was covered quickly Wednesday in the first committee meeting on the N.C. Senate’s proposed budget.

The budget wasn’t seen by most Senators, staffers or reporters before it was released just before midnight last night. That led to plenty of questions in the Appropriations/Base Budget committee Wednesday morning – particularly from the Democratic minority, who had little to no input in its creation.

Many of those questions came from Senators Gladys Robinson (D-Guilford) and Angela Bryant (D-Nash). They revolved around what they felt was missing from the budget: a cost of living increase for state retirees and health care benefit eligibility for new state employees, which would disappear in July of 2018 under the current budget proposal.

Bryant said she worries about how the state’s ability to be competitive in hiring and successful in retaining employees under those conditions. People going into government work already know there won’t be a lot of salary increases, Bryant said – eliminating benefits and failing to provide cost of living adjustments for retirees could make attracting the best employees even harder.

A sheriff from one of the counties Bryant represents recently told her he had 40 vacancies in a correctional facility there, she said, and was having trouble filling them.

He was saying one of their marketing points, given the danger and the physicality involved – the physical level one would need to maintain – one of the things they were tying to use for a young person is that you can come and work this job 30 years and retire with health benefits.”

“I just want us to be aware we will be losing – we already are losing – competitive edge,” Bryant said.

Last month Sgt. Meggan Lee Callahan, a corrections officer at the Bertie Correctional Institution, was killed by an inmate. She was 29.

State employee advocates organized a memorial fund and have pointed to Callahan’s death as indicative of the difficult and dangerous work state employees are asked to do even as the General Assembly denies them substantive raises and cuts benefits. Under those conditions, Democratic lawmakers argue, a shortage of quality applicants for positions such as Callahan’s will continue.

Sen. Harry Brown (R-Onslow) said the General Assembly has taken steps to increase pay for correctional facility officers, but on the larger question of slashing and eliminating benefits he said there is no easy answer.

Current state workers won’t be affected, Brown said – but cutting benefits to workers coming on after July of 2018 is necessary to control costs.

“The unfunded liability on our health care plan is in the $40- $50 billion range and rising every day,” Brown said. “That liability will continue to grow. If we don’t do something to manage this liability, then you put every state worker that’s employed today in harm’s way as to whether you can fund this liability.”

“Sometimes you can do nothing and create a problem,” Brown said. “We can think of many cities in that situation today – I could name a couple of them if you want me to.”

“If we’re not proactive on this issue, the state of North Carolina could be in a similar situation.”

Sen. Andrew Brock (R-Davie) said the austerity on cost of living increases and benefits for state employees is necessary to battle back from poor management before Republicans took over the General Assembly.

“I think we have to remember also prior to the change in 2011 in the leadership of the General Assembly, for 12 years the pension fund was not fully funded,” Brock said. “We ate our seed corn for 12 years, right when Baby Boomers were about to retire.”

“If we look at the performance of our fund last year – in which we paid  over 600 million in fees – our return was only .8 percent,” Brock said. “That system will go broke if we don’t make those changes now. We’re doing our level best to make sure the pension fund is the best in the nation and will stay solvent for the upcoming retirees.”

But critics charge that the senate’s spending plan falls short, balancing the budget on the backs of employees and retirees. That makes little sense, Democratic lawmakers and employee advocates say, when the Senate’s budget would also swell cash reserves to historic levels while slashing revenues through dramatic tax cuts.

“We’ve managed to get these historic reserves through denying employees raises and cutting benefits,” said Ardis Watkins, government relations director with the State Employees Association of North Carolina. “That’s not something we should really be proud of.”

While the SEANC is disappointed with the Senate spending plan, Watkins said they’d still like to see passage of legislation like House Bill 540 and House Bill 497.

HB 540, introduced by Rep. Chris Malone (R-Wake) would have given all state employees a $2,400 raise. HB 497, introduced by Rep. Jonathan Jordan (R-Ashe) would have provided state retirees a 2 percent cost of living adjustment.

“Two percent still isn’t enough,” Watkins said. “The average state pension is $20,000 a year, which is not enough to live on. But a two percent increase might help some retirees buy one more prescription each month.”

Both bills have the support of more than one-third of the Republicans in the House, Watkins said, and would pass if they could get a vote. But neither made crossover this time around.

The first of two floor votes on the Senate’s proposed budgets is scheduled for Thursday. Once passed, the plan will head to the N.C. House, whose members say they would like to see more modest tax cuts and more revenue preserved in the final budget.

Senate President Pro Tempore Phil Berger said Tuesday he hopes work on the budget will be completed by mid June at the latest.

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