Governor: Removing Legislative Raises Just a First Step to Fixing Bill
GOVERNOR SAYS EVEN WITHOUT LEGISLATIVE RAISES,BILL PUTS RETIREMENT SYSTEM IN FURTHER JEOPARDY
Governor Mark Sanford today asked the S.C. House Ways and Means Committee to slow down and revisit a bill that would not only grant backdoor pay increases for legislators, but would add significantly to the long-term debt of the retirement system.
Yesterday, the House sent the bill back to committee after having passed it with a voice vote on Tuesday. The governor applauded the House for recommitting the bill, and has urged them to remove the provision that doubles increases to legislators' pensions.
The deeper issue over the long run is that the rest of the bill seeks to promote a false image of stability when it comes to the state's woefully under funded retirement system, and at the same time adds $2.6 billion to the state's long-term retirement debt.
The bill seeks to cover that shortfall by simply changing the state's assumed rate of return on retirement system investments - a smoke-and-mirrors move that does nothing to truly address the debt. In fact, the new assumed rate of return in the bill would be 11 percent higher than the national median for public funds, 33 percent higher than Georgia's retirement system, and 43 percent higher than North Carolina's retirement system.
"While we certainly appreciate the House's willingness to revisit the issue of legislative pay raises, we believe even without that provision this bill is fatally flawed in the way it glosses over just how serious our problems are," Gov. Sanford said. "If fixing this problem was as simple as changing a few numbers, it would have been solved a long time ago. We believe that as a state, we ought to be able to cover real liabilities with real assets. Instead, this bill is long on rosy predictions but short on real solutions. We don't know if any of those assumptions will come true, but what we do know is that in the meantime, this bill will most definitely increase our state's unfunded political promises to the tune of $2.6 billion. I'm not willing to stake our retirees' benefits and our taxpayers' futures on the hope that this bill's predictions come true, and I'd urge the House not to either."
When all retirement benefits are figured in, South Carolina's retirement system is under funded by $20 billion - and when traditionally granted cost of living adjustments are included, it jumps to $27 billion.