Thurston County’s many thousands of government workers may hope the state Supreme Court rules favorably in two cases involving their pension plans. But an unlikely victory now could mean a more serious long-term loss for state workers and a whopping $10 billion burden heaped on state taxpayers over the next 25 years.
The two consolidated cases revolve around two provisional retirement benefits granted to public employees during boom years that were later terminated by the state Legislature. In both enhancements, lawmakers explicitly included language giving them the right of repeal.
One granted an automatic 3 percent per year increase to pensioners in older plans, regardless of the inflation rate. It was added in 1995 and repealed in 2011 as the Great Recession forced lawmakers into desperate spending cuts.
The second enhancement, called gain sharing, increased benefits when investment returns were high, but never decreased them again as investment returns dropped. It was added during the 1998-dot-com boom and repealed in 2007, before the recession began.
It’s difficult to see a victory for the unions. In both instances, the Legislature included this language, “The Legislature reserves the right to amend or repeal this chapter in the future and no member or beneficiary has a contractual right to receive this postretirement adjustment not granted prior to that amendment or repeal.”
The unions argued its members have a contractual right to the two enhancements, and lower courts in Thurston and King counties agreed.
But the Supreme Court must strike down those rulings, because it cannot ignore lawmakers’ clear intent expressed in the statutes’ wording. Doing so would “invade core legislative powers,” according to Attorney General Bob Ferguson.
An improbable decision for the unions might not be so sweet for public employees. Forcing the state to pay hundreds of millions in the next few years could thwart future gains for K-12 education, putting both the court and the Washington Education Association in an awkward position.
The unions have suggested the state raise taxes to fund the liability. That’s a solution bound to be unpopular in the Legislature and even less so among voters.
A victory for state workers could also build momentum among lawmakers to change the public pension system to a defined contribution plan, in which employees fund their own retirement. That idea surfaced briefly during the last session. In California, support is growing for reducing unearned pension benefits via constitutional amendment.
Neither of those scenarios will appeal to public workers, but they are realities in the private sector.
The court should avoid inflicting harm on taxpayers and abide lawmakers’ intent. Considering what might ensue in the alternative, a ruling for the state might be a win for everyone.