Tweaks to retirement plan underscore flawed process

Posted: Wednesday, May 25, 2005

Rebecca Braun

It seems hard to believe that something as arcane as public retirement could bring the entire budget process to a halt and drag the Alaska Legislature through the longest special session since 1996.

Senate Republicans in March unveiled a plan to get rid of traditional pension plans for public employees and teachers, and establish instead individual retirement accounts that each employee receives as a lump-sum at the end of his or her service. They said the current retirement system is $6 billion in the red, and the new plan will "stop the bleeding."

Democrats and a cadre of House Republicans disagreed about the severity of the problem and, more importantly, with the Senate's drastic remedy. Alaska would be setting a new precedent, says House Minority Leader Ethan Berkowitz, who called it a fight to "stop a domino from cascading into the rest of the country. ... This is nothing more than flat-out union busting."

National labor unions threatened to withhold support for drilling in the Arctic National Wildlife Refuge if the Alaska Legislature approved the plan. Senate President Ben Stevens volleyed back with a letter from the White House lauding the Alaska Senate's efforts and drawing parallels between the Senate plan and Bush's plan to privatize social security.

But style is as much the cause of the bitterness as substance. When the Senate introduced the retirement bill, it immediately put the House on the defensive by taking a priority House bill hostage: They slapped a contingency clause on the House's $70 million increase to K-12 education, saying if the House doesn't approve the Senate's retirement bill, the education money gets cut by $38 million.

Thus the May special session was writ in March.

"Put yourself in the shoes of the House," mused Rep. Mike Hawker, a Republican, last week. "Having a House priority - getting early education funding - held hostage to something we clearly did not have the votes to support, that's not the foundation for a good working relationship."

In contrast to the driven, unified and politically ruthless Senate leadership, the current House leadership is weaker and more democratic. This reflects both the leaders and the more diverse 27-member House majority caucus, which House Speaker John Harris has delicately described as "fluid."

The standoff on the retirement plan finally broke Monday night when the House, with no votes to spare, approved the fourth version of the Senate's bill. Fence-sitting Republicans like Rep. Jim Elkins, Carl Gatto and Speaker Harris, who voted against earlier versions, will no doubt claim that their holding out led to a compromise that's more fair for workers.

And it's true: The House's negotiations did mitigate what was a drastic Senate bill - in the original bill, the family of a police officer killed on the job would get no death and disability benefits, for example. The final compromise added death and disability benefits, increased health benefits and increased the employer's contributions to individuals' retirement accounts.

But the House never questioned the basic premise of the Senate plan, the elimination of pensions. Instead, it tweaked this or that, buying votes - with a two percent boost for teachers here and a one percent boost for health accounts there - until the necessary 21 votes were secured.

So now the bill is a 120-page patchwork quilt, the real impact of which no one knows, since lawmakers handily ignored a state law requiring analysis of the long-term and short-term costs to the state and effect on the state's retirement funds of any changes to the retirement system.

Shortly before the House voted on the bill Monday night, I asked a legislator what he thought of the latest compromise. He told me he thought with the latest tweaks he could vote for it, but he wouldn't mind if it failed. He asked what I thought. Weary of the whole business, I abandoned my neutrality and told him I think the bill is too much of a mess to evaluate with any clarity, and the whole process should start from the beginning next year.

Whether the end product is as bad as its detractors claim, the process that created it was: Taking a finished product a few ideologues declared "must-pass" legislation, and backing out the most egregious provisions until enough people are exhausted enough to call it good is no way to make long-lasting and far-reaching policy changes.

• Rebecca Braun of Juneau is co-editor of the Alaska Budget Report. Her e-mail address is rbraun@alaska.com.



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