House should pass Senate rebate bill

The American Press

<p class="p1">The state Senate has taken action that the House should consider as an excellent way to raise funds to deal with a $650 million shortfall in the state budget proposed for the 2018-19 fiscal year, which begins July 1. Senators approved a bill making a temporary 20 percent reduction in three tax rebates permanent.</p><p class="p3">Lawmakers approved the partial rebate reduction in 2015 and 2016, but it is expiring June 30. Sen. Jay Luneau, D-Alexandria, in Senate Bill 493 makes those reductions to the Quality Jobs, Enterprise Zone and Comparative Salaries programs. The reductions would raise $96.5 million over the next four years.</p><p class="p3">Two obstacles stand in the way of the legislation becoming law. The business community that benefits is opposed to the bill, and it has to clear the heavily anti-tax House Ways and Means Committee.</p><p class="p3">“These are some of the most lucrative programs of any state in the United States,” Luneau said. “We give away a lot of money to these folks, so when we have an opportunity to throttle them back a little bit … we ought to take advantage of that.”</p><p class="p3">The Advocate said the state expects to collect $15.6 billion in taxes in 2018, but various tax breaks will keep about $7 billion of that out of the state treasury.</p><p class="p3">Legislators are reviewing the breaks protected by state law with an eye toward eliminating those that are outdated or no longer productive. That is definitely preferable to raising taxes, but every time lawmakers try to end dedicated funding many of those who benefit manage to derail the effort. It happened again this week.</p><p class="p3">Luneau said his immediate concern is getting his bill out of the House and Ways Means Committee. He said few tax measures have made it out of the committee; a comment that some committee members insist is inaccurate.</p><p class="p3">Tax measures can’t be considered during regular legislative sessions. However, The Advocate said the state constitution is silent on tax rebates and Luneau’s bill got the OK from Senate attorneys.</p><p class="p3">The House has been reluctant to approve tax measures, but this is one that has merit and the state Department of Economic Development doesn’t oppose the idea. Getting it approved could open the door to end other tax rebates that won’t seriously hamper industrial inducement efforts.</p>

This editorial was written by a member of the American Press Editorial Board. Its content reflects the opinion of the Board, whose members include <strong>Crystal Stevenson</strong>,<strong> John Guidroz</strong>, <strong>Emily Fontenot</strong>, retired editor <strong>Jim Beam</strong> and retired writer <strong>Mike Jones</strong>.

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      393037ca-3052-11e8-80b7-f3dcf3ebfed72018-03-25T17:30:00Znews/state,newsRevamped hybrid retirement plan proposed for rank-and-file state workersfocusing on lasersLOUISIANA STATE EMPLOYEES’ RETIREMENT SYSTEMJohn GuidrozCalcasieu Parish Government and Cameron Parish Reporterhttps://www.americanpress.com/content/tncms/avatars/7/a3/7a4/7a37a4a0-3a63-11e7-927b-9ba95362f7b9.0fc7b7e12d3b2e55cd1cef3a44ac29dd.png
    1. LASERS Online
    LASERS – La. Empl. Retirement System

    Revamping the pension plans for future rank-and-file state workers will better serve the needs of younger employees and lower the state’s debt risk, according to officials with the Louisiana State Employees’ Retirement System.

    The Senate Retirement Committee, chaired by Sen. Barrow Peacock, R-Bossier City, is expected to consider Senate Bill 14 on Monday. The legislation, authored by Peacock, is a hybrid retirement plan that would apply to rank-and-file state employees hired on or after Jan. 1, 2020. The monthly pension check wouldn’t make up as much of a portion as the current retirement plan does. A 401(k)-type investment account would be added to the new plan.

    {{tncms-inline content="&amp;lt;p&amp;gt;&amp;lt;strong&amp;gt;According to a study released by the Pew Research Center, only 5 percent of state workers will work long enough to get their full benefit under the existing plan. Another 70 percent will only receive a refund of their retirement contributions because they didn’t work for the state long enough to receive their benefit.&amp;lt;/strong&amp;gt;&amp;lt;/p&amp;gt;" id="2f54ae4f-2e85-447c-bbcf-a8bd14c89e1f" style-type="quote" title="Pull Quote" type="relcontent"}}

    Cindy Rougeou, LASERS executive director, said the existing retirement plan for state workers has been whittled away since 2006. It calls for an 8 percent employee contribution, with workers having to be age 60 or 62 to get full benefits.

    “It’s less of a benefit, less eligibilities and you work longer,” she said.

    Under the hybrid plan, employees would contribute 4 percent of their pay to the defined benefit component and 4 percent to the defined contribution. The contributions would go into an account and be invested, with the employee’s direction.

    The age to receive full guaranteed benefits would increase to 65.

    The current retirement plan, Rougeou said, isn’t fair for the younger employees that “tend to move around a lot.” According to a study released by the Pew Research Center, only 5 percent of state workers will work long enough to get their full benefit under the existing plan. Another 70 percent will only receive a refund of their retirement contributions because they didn’t work for the state long enough to receive their benefit.

    “What good is that,” Rougeou asked. “That’s not acceptable. That’s broken to me.”

    Rank-and-file state workers make up about 90 percent of the state’s retirement system, Rougeou said.

    State employees can get more from the defined contribution component the longer they work. The scale includes 50 percent after at least two years of employment; 75 percent after three years; and 100 percent after four years.

    Rougeou said younger employees want more of a say in their investments.

    “I’m trying to have both a recruitment and retention tool,” she said.

    The proposed plan would also reduce the risk of future debt for state employee pension plans, known as Unfunded Accrued Liability. LASERS has a debt of just under $7 billion.

    Rougeou said LASERS has seen a “knee-jerk reaction” from some state lawmakers and a national group that outright oppose hybrid plans. She said hybrid plans got a bad reputation after former Gov. Bobby Jindal’s administration pushed a cash-balance pension plan that called for defined contributions with no guaranteed benefits. The state Supreme Court later ruled it unconstitutional.

    “That is the biggest obstacle,” Rougeou said of getting the plan through the Legislature.

    Rougeou said the fear of hybrid retirement plans is unnecessary.

    “As long as you’re providing a sound retirement and this (401(k)) is added on top of that, you’re doing something better for your members than what they have now,” she said. “That’s what I’m trying to achieve here.”

    Rougeou said more than a dozen states

    {{tncms-inline content="&amp;lt;p&amp;gt;&amp;lt;strong&amp;gt;Rank-and-file state workers make up about 90 percent of the state’s retirement system.&amp;lt;/strong&amp;gt;&amp;lt;/p&amp;gt;" id="dc96189e-27b4-4ddb-a3d4-6b330f78c34c" style-type="quote" title="Pull Quote2" type="relcontent"}}

    already have hybrid pension plans for state employees.

    The downside, Rougeou said, is that the state will see a roughly 1 percent cost increase over the next 25 to 30 years. But she said that will be offset because of “at least a 40 percent reduction in risk of future debt to the state.” The employee is taking the risk of investment decisions with the 401(k)-type component of the plan.

    The hybrid plan would not apply to judges or state workers in hazardous duty positions. State employees hired between Jan. 1, 2006 and Dec. 31, 2019 could join the plan for future service and keep their current retirement eligibility.

    www.lasersonline.org/lasers-proposes-new-retirement-plan

    <strong>According to a study released by the Pew Research Center, only 5 percent of state workers will work long enough to get their full benefit under the existing plan. Another 70 percent will only receive a refund of their retirement contributions because they didn’t work for the state long enough to receive their benefit.</strong>

    <strong>Rank-and-file state workers make up about 90 percent of the state’s retirement system.</strong>

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