Legislative plans to require state employees to contribute to their own pension plans are too timid, Gov. Rick Scott said Tuesday, prompting some lawmakers to say the governor’s ideas are politically implausible and could hurt efforts to bring the system to full funding.
Scott’s remarks, at the unveiling of a business-backed group to support pension reform, was another sign of significant differences between Scott’s budget and the spending plan for the coming fiscal year being considered by lawmakers. Scott’s plans to cut property and corporate income taxes are not in either the House or Senate plan, though lawmakers have not ruled out considering the cuts in negotiations that could begin this week.
“I don’t think they go far enough,” Scott said of the legislative plans.
The major sticking points between Scott and the Legislature are whether to push new employees into a defined-contribution plan, like a 401(k), and the contribution rates for employees.
Scott’s initial plan included a 5 percent contribution; the House has a 3 percent requirement; and the Senate’s blueprint would impose a graduated contribution, ranging from 2 percent on the first $25,000 of income to 6 percent on income above $50,000.
Asked about those proposals, Scott dismissed them out of hand.
“It ought to be a flat rate of 5 percent,” he said.
Scott spoke about his differences with legislative leaders’ plans at the unveiling of Floridians for Sustainable Pensions, a coalition including the James Madison Institute, the Florida Chamber of Commerce, Associated Industries of Florida, Florida TaxWatch, the National Federation for Independent Businesses, Americans for Tax Reform, Americans for Prosperity and FreedomWorks.
The groups’ proposal puts additional lobbying muscle behind Scott’s plan as critical negotiations on the budget begins. Some members of the group said they would leave the contribution rate to the Legislature, but wanted the other key element of Scott’s proposal implemented.
“We believe that, fundamentally, we need a defined contribution plan as opposed to a defined benefit,” said Mark Wilson, president and CEO of the Florida Chamber.
But state employee groups knocked the gathering for not having any representatives of state workers on hand — highlighting, they said, the corporate orientation of the proposals.
Monica Capabianco, a school guidance counselor who showed up at the press conference, said Scott was exaggerating the risks to the pension plan and looking to balance the budget on the backs of state employees. She also said employees could face greater risk with 401(k)s.
“The Florida Retirement System is much sounder,” she said. “You’re not at the mercy of the stock market.”
Meanwhile, lawmakers quickly pushed back against Scott’s criticisms, saying they had spent significant time studying the proposal and hearing from constituents.
“I think that between the House and the Senate, you see us going as far as the people want us to go,” said Rep. Ritch Workman, R-Melbourne, who spearheaded the House pension bill.
Workman said the state should wait until the Florida Retirement System is funded at 100 percent and has a small surplus before it puts new employees into a defined-contribution plan, diverting their contributions away from the FRS. Workman said he believed the House plan would have the pension plan fully funded in about 36 months.
“At that point, we can look at a defined contribution plan,” he said. “But as long as that liability’s out there, we can’t.”
Senate Budget Chairman J.D. Alexander, R-Lake Wales, also sounded skeptical about the prospect of making wide-ranging changes to the Senate’s plan, which was essentially cobbled together on the floor last week through a series of amendments.
“We need to be careful that we are fair and equitable with folks,” Alexander said. “I think our proposals are good proposals.”
“The governor can bring issues as he see fit,” Alexander added, “but that doesn’t mean we’ll act beyond where we are.”
By Brandon Larrabee
The News Service of Florida
