Public employee unions sue New Mexico over higher required contributions (excerpts)
Lawmakers say requiring workers to contribute more to retirement plans was less painful than layoffs
The New Mexican — 6/15/2009
Members of four public employee unions Monday sued the state for increasing the amount they must contribute to their own pensions and reducing the public's share of the cost.
A provision approved by the Legislature this year and signed by Gov. Bill Richardson calls for the government employees to boost payroll contributions by 1.5 percent of their salaries and reduces the government's contribution by the same amount for the next two years.
The lawsuit, filed in state District Court in Albuquerque, challenges the constitutionality of the temporary move, which critics have called "a pickpocket" and a "pay raid." The plan is supposed to save the state about $42 million a year, lawmakers have said, and is seen as a way to help state government keep from deficit spending.
The change, which applies to workers covered under the Public Employees Retirement Association and the Educational Retirement Board, is slated to start July 1. The lawsuit aims to block it from taking effect.
The measure affects employees who earn $20,000 or more a year. An employee who makes $40,000 a year would see about $20 less in his or her paycheck each pay period. About 57,000 employees, including teachers, are represented by the unions.
The lawsuit claims the state constitution states that no fund "may be used, diverted ... encumbered or appropriated for any other purpose" than to benefit the plans' members.
The state may modify the retirement plans only to enhance or preserve the actuarial soundness of the affected trust fund or retirement plan, the suit says.
State Rep. Lucky Varela, D-Santa Fe, regretted the court action but said the change in pension contributions was the least painful way to balance the state budget. "We sure didn't want to have people laid off to have reductions in force, and that was the other option, to terminate people," he said. "We felt this was the most practical way of coming up with $42 million a year and be able to balance the budget."
State Sen. John Arthur Smith, D-Deming, who chairs the Senate Finance Committee, said other options were layoffs, furloughs or reduced vacation days, but by increasing the pension contributions, at least employees would still see that money when they retire. "All New Mexicans are going to have to share in the pain," he said, "and that includes state employees."
