October 22, 2011 Rutgers Labor Education Center, New Brunswick, NJ 1
1. Federal Legislation taking aim at State and Local Government Employee Pensions 2. Governmental Accounting Standards Board (GASB) Pension Recommendations 3. Joint Committee on Deficit Reduction/Super Committee Social Security, Medicare and Medicaid Cuts Possible 4. Federal Jobs Legislation; Aid for teachers and 1 st responders can prevent cuts to other Public Sector services 5. Access to the Region s Core (ARC) Tunnel Project Gov. Christie Saying no to Federally Funded Jobs 2
1. Overview Instead of a thoughtful response to State budget crisis that were caused by the worst financial collapse since the Great Depression, opportunist governors across the country, including here in New Jersey, are pinning the blame for their treasury shortfalls at the feet of dedicated public servants. Federal lawmakers in the 112th Congress are piling on. 2. Congressional Attacks on Public Sector Workers a) Nunes/Issa/Burr Bill Aims to Destroy Traditional State Worker Pensions - In February, Reps. Devin Nunes, (R-CA) and Darrell Issa (R-CA) introduced the so-called Public Employee Pension Transparency Act (HR 567). A companion bill, S. 347, was introduced in the Senate by Sen. Richard Burr (R-NC). The legislation will force States and Local governments to change the metric used in determining their unfunded liabilities from the current return on investments rate, which is around 8%, to a Treasury rate, which is 4%-5%. This forced accounting gimmick to the lower Treasury rate will distort or artificially create an appearance of unfunded liabilities. Governments who fail to properly report to the Treasury Department will be denied the ability to issue federally subsidized tax-exempt, tax-credit or taxable bonds. - Continued - 3
The Nunes/Issa/Burr legislation is designed to lead to the eventual forced transition of State worker defined pension monies to Wall Street controlled 401(k) accounts. a) Senator Mark Kirk (R-IL) Proposal to Deny Federal Aid to States including already approved federal stimulus money. IFPTE Legislative Action See IFPTE 2011 Legislative Brief, Federal Lawmakers Taking Aim at Public Sector Pensions 4
1. Overview GASB creates accounting and financial reporting standards for State and Local governments, including government pension funds. GASB is not a government entity it is a part of the Financial Accounting Foundation (FAF) and its recommendations are recognized and adopted by State and Local governments. GASB has recommended changes to State and Local government pension fund longterm liabilities calculations. 2. GASB Recommendations on Reporting Future Liabilities to State and Local Pension Funds Among other things, the GASB recommendation is similar to the Issa/Nunes and Burr bills in Congress (HR 567, S 347) that changes the metric used in determining their unfunded liabilities from the current return on investments rate, which is around 8%, to a Treasury rate, which is 4%-5%, or a blended rate of the two. The GASB proposal serves as an end-run around Congress in implementing the most damaging aspects of the so-called Public Employee Pension Transparency Act (HR 567, S 347). IFPTE Legislative Action: See October 11 th and 12 th IFPTE Letter to GASB, Hill Lawmakers 5
1. Overview Government workers at all levels have become a convenient scapegoat for the budget ills facing our nation. Dire Economic Circumstances is the convenient excuse used to gut public sector pay, benefits, budgets, jobs, etc Like the Christie Administration and some in the NJ Legislature, federal lawmakers are also taking aim at State workers. 2. Joint Committee on Deficit Reduction aka, The Super Committee Created by the Congressional Republicans and the Obama Administration earlier this year as a compromise to get approval to increase the US debt ceiling. Made up of twelve Hill lawmakers 6 Senators and 6 Representatives - Deadline for finding the deficit reductions is November 23 rd. The Super Committee is tasked with finding at least $1.2 trillion in deficit reduction over the next ten years (current U.S. deficit stands at $14 trillion). Absent an agreement, sequestration will immediately occur with the cuts automatically taking effect - $600 billion from Defense and $600 billion from the rest of the federal budget. - Continued - 6
3. Potential Super Committee cuts that will Impact State Workers and State Resources Social Security Social Security is the single most important social program in the history of our nation, should not see any cuts, including an increase in the retirement age - the benefit should actually be increased. Medicare Like Social Security, this is a program that is critically important to our nation s seniors, and disabled. IFPTE rejects calls to eliminate Medicare altogether, as we saw in the Ryan budget proposal. Medicaid In addition to the cruel reality of stripping insurance coverage from our most vulnerable citizens, including children, the disabled and seniors, cutting Medicaid will have a dramatic impact on our State governments. IFPTE is well aware that state treasuries are stretched to the breaking point because of decreased revenue and a higher demand for government services. If the Super Committee were to sacrifice Medicaid it would only get worse for State and Local government workers. IFPTE Legislative Action: See September 1 st IFPTE Letter to Super Committee Members 7
1. President Obama s Jobs Package: The American Jobs Act $447 billion bill that will put people back to work, including teachers laid off from state budget cuts, first responders, and constructions workers rebuilding our roads and bridges, and schools. Help the long term unemployed, by helping them support their families while they look for work and reforming the system to better connect them to real jobs; On September 9 th Moody s Mark Zandi released a report stating that The plan would add 2 percentage points to GDP growth next year, add 1.9 million jobs, and cut the unemployment rate by a percentage point. On Tuesday, October 4 th, House Majority Leader, Congressman Eric Cantor of Virginia said that he would not schedule a vote on the package. Will not add a dime to the deficit and is fully paid for through a balanced deficit reduction plan that includes closing corporate tax loopholes and asking the wealthiest Americans to pay their fair share. 2. Senate Jobs Package(s) Senate Majority Leader, Harry Reid, will schedule votes on the President s job package by breaking the bill up into 4 pieces (some revised). The first piece is targeted toward State and Local government jobs by providing $35B in grants to the Public Sector to hire teachers and 1 st responders. Yesterday, October 21 st, the Senate failed to garner the 60 votes necessary to prevent a filibuster of the pass the Public Sector jobs bill (See President Obama Statement). A recent Gallup poll found that 75% of Americans support spending federal dollars to keep teachers and 1 st responders employed. IFPTE Legislative Action: See September 9 th IFPTE Statement from President Junemann regarding President Obama s American Jobs Act 8
Overview: Governor Christie cancelled New Jersey s commitment to the ARC Tunnel Project on October 27 th 2010. This despite the fact that the ARC tunnel project would have created 6,000 construction-related jobs a year and close to 45,000 permanent jobs once completed. $600 million had already been spent, mostly on design and planning work. US Department of Transportation Sued New Jersey for the Federal Money Spent on ARC: Transportation Secretary, Ray LaHood, and the Obama Administration demanded back the $271 million of federal money spent on the project. On September 30 th of this year the DOT, and the Christie Administration, with the help of Senators Lautenberg and Menendez, reached an agreement for New Jersey to reimburse the Federal government $95 million. $51 million of that represents all of the New Starts money allocated to the ARC project, allowing the DOT to allocate those monies to other States. The rest of the money is 50% of what was given to NJ out of the American Recovery and Reinvestment Act (ARRA) ie, the Stimulus bill. Lastly, under the terms of the settlement, the State of NJ will be required to spend $128 million on other transit projects approved by the United States DOT. Cost to New Jersey Taxpayers in Dollars and Jobs? Up to 6,000 immediate jobs, 45,000 long term jobs and $223 million. 9
October 22, 2011 Rutgers Labor Education Center, New Brunswick, NJ 10