SCARBOROUGH – I would like to make a few facts clear regarding the budget issues of pay and benefits for public employees in Maine.

A private sector employee pays 6.2 percent of wages into Social Security, and employers match this amount. Teachers and state employees already pay 7.65 percent of their salary into the retirement system, an amount that is 23 percent higher than workers under Social Security.

The state of Maine pays only 5.5 percent, a full 11 percent lower than private employers. Under the proposed budget, the state payment would be approximately 3.9 percent, a little more than half of what private sector employers pay into Social Security.

State employees would pay 9.65 percent of their salary into the retirement fund, an incredible 56 percent more than workers pay into the Social Security system.

This increased contribution rate translates into a tax increase of 26 percent when you consider the current amount of 7.65 percent versus the proposed rate of 9.65 percent

The defining question of this whole debate is, will all this extra income and savings from state employees, teachers and retirees go directly into the pension fund?

The answer is no. It will be used to increase the exemption for the death tax on estates from $1 million to $2 million. It will be used to lower the top income tax rate from 8.5 percent to 7.95 percent, as well as pay for other things.

We are being told that these extra taxes, COLA freezes and caps from public employees are needed to ensure the financial stability of the retirement fund.

Yet, Sawin Millett, Maine’s finance commissioner, confirmed in recent testimony the extra money collected from state employees and retirees would not be going into the Maine State Retirement Fund. This is just plain wrong.

Moody’s, the most respected independent rating company in the country, currently rates Maine’s credit worthiness at Aa2. That means Maine has a very strong capacity to meet its fiscal commitments.

Promises were made to retirees regarding the value of their pensions. Retirees planned their finances on this information. State employees and teachers do not receive Social Security benefits upon retirement. The state does not offer matching 401(k) plans like most large employers do. The state pension is all most retirees have to live on.

Maine state retirees receive an average of about $19,000 a year. Let’s not forget that public employees and retirees are also taxpaying citizens of Maine. They have played by the rules and made their contributions to the retirement system with every paycheck. Finding themselves under attack now is unfair and unwarranted.

Millett recently stated that these savings from state employees, teachers and retirees are the “linchpin” to the entire budget.

Translation: We want to balance the entire state budget on the backs of state employees, teachers and retirees. We have been told that this is a “shared pain,” but looking around it is hard to find anyone else that will be sharing the pain with public employees and retirees.

Unfortunately, this proposal has come from groups that appear to believe the best public employee is the worst one.

It is a self-fulfilling prophecy that if you treat employees so poorly, fail to keep promises, raise their taxes and cut benefits, we will have a class of state workers and teachers that are less than competent and therefore feeding into their beliefs and agenda.

The budget proposal calls for more emphasis on education in Maine. However, the ability to hire and retain excellent teachers will not happen if this budget proposal is passed.

We cannot tell teachers to give us your best, we will pay you less for doing so, and then once you retire we will break our promises to you.

Currently, the Unfunded Actuarial Liability, or UAL, has now improved to between $70 and $80 in current assets being held for every $100 in long-term liabilities.

The Maine Employees Retirement System estimates the UAL is close to 80 percent funded. This places the Maine retirement system in a good position and one that is much better than most states.

The pension debt in Maine is neither a new problem nor a crisis. The demand for these extreme changes is based upon erroneous information, scare tactics and highly political budget analysis.

The facts should not be overlooked in this budget debate.

– Special to the Press Herald

 

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