Neb. lawmakers override veto on retirement bill

Nebraska lawmakers override governor's veto of public-employee retirement bill

Associated Press

LINCOLN, Neb. (AP) -- Nebraska lawmakers on Tuesday overrode Gov. Dave Heineman's veto of a public-employee retirement bill, holding in place a deal that was struck to shore up the retirement plans of teachers, judges and state patrol troopers.

The 32-1 vote came one day after Heineman, a Republican, criticized the measure as an unfair increase for state taxpayers. Supporters of the bill argued that failing to pass it would only postpone tough decisions on the state's unfunded, $2.2 billion pension liability.

The bill holds a nearly 10 percent contribution rate for teachers, reduces benefits for new hires, and increases the state's contribution from 1 to 2 percent.

In his veto message, Heineman criticized the proposal to increase the state's contribution. He said the increase would cost the state an estimated $20 million a year — an amount that would grow over time — in addition to the roughly $20 million that the state already pays.

Heineman also took issue with assumptions that the investments would see 8 percent annual returns, saying those estimates were unrealistic. He called for a study so lawmakers and the public can better understand the system's liabilities, and make changes next year.

Heineman's budget recommendations did not include a solution to the projected shortfalls in the school, judges' and troopers' retirement plans. The bill's sponsor, Sen. Jeremy Nordquist of Omaha, said past governors have worked to address state-pension shortfalls.

Nordquist said the bill was an attempt to move forward with the state's 30-year pension obligation. Nordquist said the state would end up paying more in future years if lawmakers failed to take action.

"It's time for us to step up and address this in a comprehensive manner," he said.

Heineman has said he supports a short-term fix within the legislation, which would change employee contributions from a specific dollar amount to a percentage of their overall pay. As employee salaries increase, the amount contributed to retirement would increase in tandem.

Sen. Greg Adams of York, a retired teacher who receives a pension, said the bill is a "double-edged sword" for the state. Adams said he was concerned about whether the system was sustainable over the long term.

"I don't want school boards and taxpayers to constantly be in a bind over this," Adams said. But "it's here, like it or not, and we have obligations."

Sen. John Harms of Scottsbluff, a member of the budget-writing Appropriations Committee, said failure to advance the bill would force lawmakers to fulfill their immediate obligation by tapping the state's general fund or rainy-day account. Such a move would require lawmakers to pull $98 million for the next two-year budget, wiping out all other bills that cost money.

"We need to fund this," Harms said. "Then, if you want to study other ways we might try to deal with this, then fine."

Sen. Bob Krist of Omaha introduced a resolution Tuesday to study all state retirement plans, including those for the state, counties, schools, the state patrol and judges.

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The bill is LB553.

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