Pension Tension: Vermont's Underfunded Retirement Obligations

If you're looking for a sleeper issue for 2019, here's a nominee: public-sector pensions. It may not be sexy, but it's a big deal. Vermont faces a mountain of pension obligations, thanks to chronic underfunding of the state employees' and teachers' funds from the early 1990s to the mid-2000s. For those keeping score, it started when Democrat Howard Dean was governor and continued through the first half of Republican Jim Douglas' administration.

In 2006, Douglas and the Democratic legislature agreed to start fully funding the pensions again. Ever since, officials have been trying to close the gap created by the years of investing too little.

The issue became contentious in the closing days of the 2018 legislative session during the fight over what to do with $34 million in unanticipated revenue. Gov. Phil Scott wanted to hold property taxes at last year's levels. Democrats wanted to invest in the state pension funds. A last-minute compromise split the pot between tax relief and pension paydown.

There may be a similar dispute this year. Since July 1, according to Administration Secretary Susanne Young, state revenues have exceeded projections by $30 million. If that trend continues, there will be a nice pot of money to fight over.

Read more: https://www.sevendaysvt.com/vermont/pension-tension-vermonts-underfunded-retirement-obligations/Content?oid=24284143