After undermining, maligning and insulting retired teachers and teachers for the past three years, with nine months to go before the next gubernatorial election, Governor Malloy has had an epiphany and is now offering retired teachers a “tax break.”
Malloy’s proposal plan would reduce the state income tax on teacher’s pension by 25% in Fiscal Year 2015 (the year after the election) and by an additional 25% in Fiscal Year 2016.
While Malloy failed to explain that the state of Connecticut is already facing a $1 billion deficit in each of those two fiscal years he did say that reducing the tax on teacher pensions was “a matter of basic fairness” and he added, “I’ve been wanting to do this for years.”
Governor Malloy wanted to do this for years?
How about some truth:
The unfunded liability of the Teacher Retirement Board Pension Fund has increased to $11.1 billion. According to the latest Connecticut State Teachers’ Retirement System actuarial report, “The unfunded actuarial accrued liability increased from $9.066 billion to $11.127 billion” over the two year period from 2010 to 2012.
The State of Connecticut’s failure to properly fund the teacher’s retirement fund and the state employee retirement fund has left Connecticut taxpayers with an obligation that require higher than necessary taxes over the next two decades.
In addition to the underfunding of the Teacher’s Retirement Board Pension Fund, the teachers’ retirement health insurance fund is $3 billion short of what is needed.
As many retired teachers know, Connecticut state law requires that every year the state contribute 33 percent of the cost of health care premiums into the teachers’ retirement health insurance fund.
However in 2012, in an incredibly irresponsible fiscal maneuver, Governor Malloy actually proposed dropping the state contribution to NOTHING!
After retired teaches and their advocates spoke up and fought back the legislature increased the contribution rate to 25 percent. Although the amount we better than what Malloy had initially proposed it still translated to a cut that further undermined the fiscal health of the retired teachers’ health insurance fund.
But what many retired teaches and other missed was that in that same year Governor Malloy managed to push through another proposal.
Malloy’s 2012 state budget also changed the way the state handles the federal subsidy that the Teachers Retirement Board receives for providing prescription drug coverage for Medicare retirees.
Under Malloy’s plan the State of Connecticut started using those federal funds to OFF-SET the required contribution that the state makes to the Teachers Retirement Board health fund.
In other words, as a direct result of Malloy’s plan, the state of Connecticut is now using the federal contribution that the state gets for teachers on Medicare to further REDUCE what the state provides to the retired teachers health fund.
In this way Malloy is undermining the long-term fiscal stability of the Teachers Retirement Board health fund even more.
While the state of Connecticut’s decision to drop the required contribution to the health fund from 33 percent to 25 percent was “only temporary,’ the maneuver on the federal subsidy the TRB receives for providing prescription drug coverage for Medicare retirees was permanent.
It appears that Governor Malloy and his political handlers think retired teachers will overlook his utter failure to provide for Connecticut’s retired teachers and will vote for him because he dangles a tax break in front of their faces now that it is an election year.
For more about these proposals see PA 12-104, § 21 (the language that temporarily overrides the statute to reduce the state’s share to 25% and increase the share paid by the retired teachers’ health insurance premium account to 42% for FY 13) and PA 12-1, June 12 Special Session (JSS), (the language that permanently defines the federal subsidy TRB receives for providing drug coverage for TRB retirees under Medicare Part D be used to offset the state’s share of the TRB plan premium cost.)
For more about Malloy’s attempt to win over retired teachers read: CT Newsjunkie