Retired public employees who have been trying to survive on insufficient pension payments may soon see relief after members of Maine’s Labor and Housing committee earlier this month issued a unanimous report recommending an increase to the cost-of-living adjustment. Inflation coupled with drastic cuts made a decade ago to state worker and teacher pensions are pushing more retirees closer to poverty.
As Beacon previously reported, former Gov. Paul LePage and the Republican majority in 2011 significantly slashed public employee pensions to pay for income tax breaks mostly benefiting the wealthy and corporations.
That plan froze cost-of-living (COLA) adjustments on pensions for three years and reduced the maximum COLA from 4% to 3%. Additionally, that 3% COLA boost was limited to only the first $20,000 of benefits the retirees receive. (The cap has since been adjusted to about $24,000).
The cuts have made state employees incredibly disadvantaged in retirement. Those who received pensions don’t pay into Social Security, meaning they are entirely dependent on their pensions when they retire. COLA is currently 8.7% for Social Security benefits, compared to 3% for Maine’s public employees.
In a unanimous report to the legislature’s budget-writing committee, Democrats and Republicans on the Labor and Housing Committee recommended action to address that issue. The committee put forward two possible policy prescriptions that could help lower retirees’ expenses.
LD 112, sponsored by Rep. Jan Dodge (D-Belfast), a retired music teacher, would require the state to pay 60% of former teachers’ health premiums. LD 111, put forward by Rep. Dan Shagoury (D-Hallowell), would similarly require the state to cover the cost of Medicare Part B for former teachers and public employees.
Those bills are considered narrower fixes to the problem, with the committee acknowledging in its report that the measures are not “all-inclusive solutions” but will “help alleviate the pain that retirees have been feeling” since the changes made by LePage in 2011.
A more expansive bill, LD 70, sponsored by Dodge, would eliminate the $24,000 cap on the portion of benefit subject to COLA to instead cover the entire benefit received. However, the Labor and Housing Committee said the bill would cost nearly $1.2 billion and noted that the Maine Constitution does not allow for the creation of new benefits unless they’re immediately and fully funded.
Still, given the state’s projected revenue surpluses of $282.8 million for fiscal year 2023 and $488.6 million for 2024 and 2025, retired public workers and their advocates say lawmakers need to do what they can this budget cycle to help fill the hole dug by LePage and Republicans a decade ago.
The Labor and Housing Committee agreed that action to address the issue is needed, and lawmakers on the panel expressed “frustration and disappointment that the proposed [Mills administration] budget does not address retiree pension cost-of-living adjustments.”
Labor advocates reacted positively to the committee’s recommendation, with the AFL-CIO praising Democrats and Republicans on the committee for “coming to a bipartisan agreement to support public employees.”
Members of the committee were also excited by the unanimous report.
“Grateful to my colleagues in the Labor and Housing Committee for coming together on this issue,” Rep. Amy Roeder (D-Bangor), the House chair of the committee, said. “While our committee members may not always see eye to eye on policy, we are committed to thoughtful, respectful dialogue around policy. Love that this was a point of agreement.”