AUGUSTA — Maine’s unfunded state pension liability isn’t exactly a hot button issue, but its growing impact on the state budget is making it an issue in the governor’s race.

The retirement system administers pensions for thousands of former state employees and teachers. Its cost in the two-year budget that starts July 1, 2011 will be more than $900 million – almost a third more than during the current budget.

Those costs will continue to rise in years to follow until 2028 – the year the state is constitutionally obliged to square the books on the liability. State Rep. Meredith Strang Burgess, R-Cumberland, forecasts “a permanent budget mess” and “a train wreck waiting to happen.”

“It should be an issue and we want to make it an issue” in the gubernatorial campaign, said Maine Republican Chairman Charles Webster, adding that his party’s candidate, Paul LePage, “is the only candidate who’s going to address it.”

Democratic candidate Libby Mitchell says it’s already come up and will continue to do so as the campaign goes on. Independent Eliot Cutler calls it a “ticking time bomb” that’s worthy grist for campaign give-and-take.

The unfunded liability that had been tabbed at $3.1 billion suddenly yawned to $4.4 billion amid the world financial collapse of 2008-09. To retire the liability, the state has to make up $8.9 billion in payments in the years ahead up through fiscal 2028, said Grant Pennoyer, director of the Legislature’s Office of Fiscal and Program Review. Roughly 80 percent of the total must come out of state revenues, he noted.

Maine is not alone in having to pick up the pieces of underfunded and recession-ravaged pension systems. It is one of 14 states that don’t include workers in their state pension programs in the Social Security System. Now, the idea of restructuring Maine’s pension system so it’s based on Social Security is being bandied about.

A study submitted to Maine lawmakers earlier this year looks at a system which would affect new state employees and teachers hired after Dec. 31, 2010. Once phased in, Social Security would cover part of state retirees’ benefits and the state pension would pick up the rest. Private companies often have similarly mixed benefit packages.

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