By Dustin Hurst ǀ Watchdog.org
HELENA —Montana’s multiple pension funds are $3.9 billion short of the cash they’ll need if they intend to keep their promises to retired state workers. But the two leading gubernatorial candidates aren’t saying much about it.
Could be they’re simply too busy to notice.
Democratic Attorney General Steve Bullock and former GOP U.S. Rep. Rick Hill are outbidding one another to craft the most compelling tax break for the state’s voters.
Both candidates say they’ll fund the tax cuts from a two-year operating surplus that could top $500 million next year.
Less than a week after winning the Democratic gubernatorial primary, Bullock released detailed plans to give homeowners a one-time $400 property tax rebate. Bullock’s proposal is nearly identical to something Gov. Brian Schweitzer did in 2007. The proposal would cost about $100 million in one-time payments.
Hill and other Republicans call that vote-buying and “table scraps.”
Yet, Hill and the GOP are looking at long-term property tax cuts that would cost even more. Hill hasn’t offered a definitive plan, but says such permanent tax relief is necessary to spur the economy.
Failure to address the pension liability likely would force a hike in taxes and lead to cuts in services. The Missoulian reported that failure to fix the state’s pension system could cost Montana government entities an extra $116 million annually, including $33.1 million from state agencies, $26 million from local governments and community colleges, $44.9 million from school districts and $11.9 million from the university system
The pension gap also is unconstitutional. The Montana Constitution, in Article 8, Section 15, says that state pension plans must be funded “on an actuarily sound basis.”
Bullock wouldn’t commit to Schweitzer’s pension reform proposal, though both are Democrats. A campaign spokesman said the candidate would review it closely.
Hill, on the hand, told a Helena newspaper that he might scrap the entire system and build a different one for new state employees. His new program would be a “defined contribution” system in which the state contributes a specific amount to employee retirement programs, but unlike the current system it doesn’t guarantee a specific retirement benefit.
But Hill didn’t mention that large-scale reform in an interview Friday at the state GOP Convention in Missoula. In the lobby of the Hilton Garden Inn, the convention’s home for three days, Hill said that he wants to examine increasing state worker productivity as a means for closing the multi-billion dollar pension gap.
Hill said that if Montana could return to 2004 employment levels, the state could fill the pension gap and fund pay raises proposed by Schweitzer’s administration. He admitted that was unlikely.
“We’re thinking big ball, not little ball,” Hill said of his plans to provide “game-changing” solutions for Montana’s problems.
Outgoing House Speaker Mike Milburn, R-Cascasde, acts as a Hill surrogate and supports the former congressman’s plans to spur the economy through long-term tax relief as a solution to economic woes.
Milburn also recognizes that large-scale reform of the state’s pension program is needed if there’s any hope of salvaging other public services.
“We either need to fix it for the long-term, or we have to start putting money into it,” Milburn told Watchdog.org at the convention.
“We need to get that under control.”