The budget proposes to break a contract between the state and workers—that’s legally unconstitutional


March 5, 2011
Rep. Mark Bryant and Sen Troy Jackson unite with unions. Photo by Ramona du Houx

On March 3, 2011 citizens for and against Gov. Paul LePage’s budget converged on the State House. At a morning rally about 70 LePage supporters turned up. At a noon rally more than 400 union members and concerned citizens protested the proposed budget.

Maine State Employee Association President Bruce Hodsdon said, “We won’t stand for a budget that attacks working Maine families.”

The protesters said LePage is breaking longstanding contractual obligations to state workers.

“Every time they pull this, every time they try to roll over onto the workers of this state, who’s going to be here?” union organizer Mike Sylvester shouted to the crowd that braved 15 degree weather with a chilly wind. Workers and concerned citizens shouted back, “We are!”

• The changes would require retirees to pay a portion of their health care premiums based on their benefit level, and require state workers to be employed for at least 10 years, to qualify for health benefits after they retire.

• The most controversial proposal would require employees who retire after Jan. 1, 2012, to pay 100 percent of their health care premiums until they turn 65.

Will Towers, a correctional officer said that would mean he would have to pay $800 a month until he turns 65 despite having already spent more than two decades working for the state. Under the proposed budget the retirement age would be raised to 65.

“I don’t think it’s right,” said Towers. “I can’t imagine doing what I do at 65.”

Brenda Kaler spent 36 years in state administrative services. She has not received a cost-of-living adjustment, since retiring four years ago. LePage’s budget proposes has a three-year freeze in the cost-of-living adjustment and a 2 percent cap after that. Kaler said her monthly retirement check is $1,380, which totals $16,560 a year.

“I think that is a modest pension to say the least, especially considering the fact that I am ineligible for Social Security because I am a state retiree,” said Kaler. “Promises were made in exchange for a lifetime of work by Maine’s public workers, teachers and retirees. The governor is asking our state legislators to throw the state of Maine’s promises out the window.”

Legally the governor should not be able to do that. In Part X of the budget, LePage proposes to repeal the provisions of state law that made solemn contractual commitments to members of the State Employee and Teacher Retirement System related to health insurance and retirement benefits.

• Maine law recognizes certain pension rules for state workers and teachers as a solemn contractual agreement.

• Maine’s Constitution, and the U.S. Constitution, offer protections for contracts and limits the ability of the Legislature to change the obligations of a contract.

The Constitution says this contract must be honored. The language in the budget seeks to over ride constitutional restrictions.

Other speakers said the governor was taking money from state workers in order to give tax breaks to the wealthy. LePage has proposed increasing from $1 million to $2 million the exemption from estate taxes.

“It is wrong to take another 2 percent of my pay to give tax breaks to the multi-millionaires of Maine,” said Tamra Keaton, from Caribou.

In the afternoon the Appropriations Committee heard several hours of testimony from over 40 people on proposed changes to state employees’ health care benefits.

It was an emotional scene. Some told about how the proposed cuts could put families at risk forcing them into poverty— and onto welfare.

Retired State legislator, Rep. Patricia Jones testified before the committee.

“I know some women that if these proposals become law would be forced into poverty. They won’t be able to support their families. This is our social security,” said Jones. “The budget can and should be balanced differently. The pension fund is solid, and revenue forecasts are good. The state is doing better financially coming out of the recession than previously thought. It’s clear that this budget is focused on dismantling unions by breaking solemn contracts.”

As of December 31, 2010 the market value of the pension fund’s assets were $10.3 billion— enough to pay for 15 years worth of benefits without another penny added to the fund.

LaPage has said state’s pension finances are in crisis.

“It’s not a crisis,” said Rep. David Webster, who serves and has served on the Appropriations Committee for six years.

A Pew Research report released in February 2010 says state pension plans in almost every state are underfunded. Maine, however, was determined to be a “strong performer” when addressing the liability for retiree pensions. The report said the state’s pension obligations were only funded 63 percent in 1997; but by 2008 were covered 80 percent prior to the market downturn. The current funding level ratio is at 70.4 percent.