THE GREAT COLORADO PENSION HEIST OF 2010: DIAGNOSIS, “LEGISLATIVE SCHIZOPHRENIA.”
If two contradictory positions peacefully coexist in the mind of an individual that person is schizophrenic, but is it possible for an entire organization to exhibit schizophrenia? Be the judge.
The Colorado General Assembly has recently endorsed the following two public policy positions:
#1 - “Colorado is in a fiscal crisis, Colorado PERA pension contracts must be breached!”
#2 - “Colorado is not in a fiscal crisis, we are free to grant $100 million in property tax relief!”
How is it that this glaring inconsistency is readily apparent to me, but cannot force its way into the minds of our state legislators?
In 2000, Colorado voters amended Article X of the Colorado Constitution to allow the General Assembly, at its discretion, to exempt up to $100,000 of the value of a qualifying senior’s home from property taxation. To qualify for the tax relief, a senior must be 65 years old or older, and must have lived in his/her home for a decade or more. If tax relief is granted by the General Assembly, the state is required to reimburse Colorado local governments for any resulting loss of property tax revenue.
Tax relief under this 2000 constitutional amendment is optional. The General Assembly is not compelled to return state revenues to taxpayers while it is in breach of its contractual pension obligations. Providing property tax relief may be laudable; however, it is a discretionary allocation of state resources. Meeting one’s contractual and moral obligations (for example, honoring pension contracts that were earned over a thirty year period) is not discretionary.
The General Assembly may be schizophrenic, but it is not ignorant of its pension obligations. Every year Colorado PERA pension administrators hire an actuary to determine the amount of money that must be contributed to the PERA pension in order that it remain financially sound. This figure, (the “annual required contribution”) is routinely provided to the Legislature, and has been routinely ignored by the Legislature. The figure has grown to exceed a cumulative $3 billion.
New heights of absurdity are reached when one learns that the Colorado General Assembly provides funding to pensions that ARE NOT its legal obligation, while simultaneously ignoring pension debts that ARE its legal obligation. Over the last two decades the Colorado General Assembly has pumped more than half a billion dollars into pension obligations that are not its responsibility, those of local governments (old local government fire and police pension obligations). Much of this money was sent to the local government pension plans in years during which the General Assembly ignored its own PERA annual required contributions.
In the coming years, judges may legitimately ask “Why should the state of Colorado be permitted to breach its contractual pension obligations in years that it has provided discretionary tax relief, ignored its annual required contributions, or directed state resources to pension obligations that are not its own?”
How can the Colorado Attorney General argue with a straight face that it is “actuarially necessary” for Colorado to breach its pension contracts, when the state is giving back tax revenue, ignoring its annual required contributions, and voluntarily paying pension obligations for other governmental entities?
While states across the nation are enacting prospective, legal, moral pension reforms, the Colorado Legislature has adopted a retroactive pension reform bill (SB 10-001). While states across the nation are reducing their unfunded pension liabilities (albeit slowly) the Colorado General Assembly is attempting to claw back deferred pension compensation that was earned over the past thirty years.
The Colorado General Assembly distills the political preferences of all Coloradans. Our character is reflected in their actions, by observing the Legislature we know ourselves better.
So, who are we? The verdict is ugly. Collectively, through our elected representatives, it appears that we will commit fraud when it is financially opportune. We will construct elaborate rationalizations for outright theft. We will abandon our contractual obligations when convenient. We will be distinguished by our moral laxity.
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