April 4, 2011
Annapolis budget writers took the weekend off and came back to work Monday ready to make deals on the state’s spending plan and pension reform.
Progress was made on the thorny issue of pensions: State workers will see a hybrid plan that melds elements from the House and Senate passed versions of the reform package. Figures were not immediately available on how much will be saved by the latest overhaul.
House Appropriation member John Bohanan called the result a “good compromise.”
And Senate Budget and Taxation Committee Chairman Ed Kasemeyer said the state workers’ pension plan is “fundamentally preserved.”
The conference committee didn’t vote on any changes to the budget that relate to the proposed sales tax on alcohol.
The Senate has passed a bill to elevate the sales tax on beer, wine and liquor by one percent a year for the next three years. The House hasn’t yet voted on the proposal, but rumors are already flying that the full tax will be implemented in a single year.
The group is going to reconvene at 4 p.m.
(Pension dorks: See the changes after the jump)
The new pension and health care plan looks like this:
* Prescription drug costs will be capped at $1,500 per year ($2,000 for a couple). The cap will *not* increase with inflation, as Senators had initially wanted.
* Cost of living increases are guaranteed at one percent a year as long as inflation rises by one percent. In years where the fund meets or exceeds the investment return target of 7.75 percent, employees would have a 2.5 percent COLA.
* The multiplier would dip to 1.5 for new employees. Current employees would keep their 1.8 multiplier. All would pay 7 percent of their pay into the system (up from 5 percent). A very similar plan was offered by Gov. Martin O’Malley and both chambers approved it. However, the state workers and teachers unions exerted pressure to allow new employees to have the 1.8 multiplier. Several have indicated that the issue will likely be revisited when the economy rebounds.
* Retirement age: The conferees adopted a “Rule of 90.” It would apply to those who want to retire under the age of 65, and goes like this: Your years of service plus your age must add up to 90 in order to start getting a check. The Senate had favored a “Rule of 92.”