The Louisiana legislature began its regular 2016 legislative session this month. This follows an earlier emergency special session called by the governor to address Louisiana’s severe budget crisis. As Louisiana continues to grapple with a long-term budget nightmare, some misguided legislators have called for harmful cuts to public pensions.
As in Kansas and Oklahoma, Louisiana is experiencing a budget crisis due to damaging right-wing tax policy. Former governor Bobby Jindal put his presidential ambitions ahead of his state’s best interests and refused to budge on his ideological tax agenda. As a result, the state has laid off tens of thousands of public employees, cut funding to universities, and cobbled together any loose change it can find in order to avoid doing one thing- raising taxes. Louisiana is projected to have a $2 billion deficit when the new fiscal year begins on July 1st. Without an increase in revenue, it’s hard to see how Louisiana can overcome this giant hole in its budget. The state legislature took the first steps toward resolving its budget crisis during the special session, but more work needs to be done.
Unfortunately, some legislators are using the budget crisis as an excuse to attack public pensions. Rep. Barry Ivey has introduced HB 65, which would move new state employees into a 401(k)-hybrid system. Starting July 1, 2018, new state employees would be forced to split their contributions between a 401(k)-style system and their pension: for every dollar that goes into the traditional defined benefit pension, a dollar would go into a defined contribution 401(k)-style plan. Therefore, only half the amount would be going into the traditional pension- a real loss of retirement security for those new public employees. Republican legislators in Pennsylvania introduced similar 401(k)-hybrid legislation last year and it was found to have devastating consequences. Under that proposal, new employees would have received retirement benefits as much as 23 percent lower than current employees. Additionally, the cost to taxpayers would have more than doubled.
Last year the Louisiana legislature passed a bill giving a cost of living increase to Louisiana’s retirees. Since public employees in Louisiana don’t participate in Social Security, their pension is their only source of retirement income. Then-governor Jindal, still in the midst of his failed presidential campaign, vetoed that legislation. It has been reintroduced this year though, giving the Louisiana legislature the opportunity to strengthen retirement security in the Bayou State rather than to gut it.