New State Budget Proposal

Filed in Delaware by on March 24, 2011

The General Assembly released a plan for state benefits yesterday. The News Journal has the story:

A consensus proposal to rein in state employee retirement and health care benefits that would save Delaware $128 million over the next five years emerged in the General Assembly on Wednesday.

But the savings would be nearly wiped out by a proposed 2 percent raise for state employees that could cost about $120 million over four years, starting June 30, 2012.

While in the short term, the gain appears to be offset by the pay raise, in an interview Gov. Jack Markell emphasized the pension changes alone would save the state an estimated $327 million over the next 15 years.

They have the usual sniping from the opposition plus a bonus Selander zinger.

House Minority Leader Greg Lavelle, R-Sharpley, said the proposal goes against Markell’s stated goal of saving $100 million over the next five years.

“I didn’t know that zero was the goal,” Lavelle said.

“If Greg Lavelle thinks that state employees don’t deserve a pay raise for the next several years, I guess that’s his prerogative,” Markell spokesman Brian Selander said. “We don’t agree with him.”

The changes include increasing the state workers contribution to their healthcare to 5% of pay from 3%, increasing the period until a new employee is fully vested and also decreasing benefits for pre-Medicare retirees. A lot of the proposal has to do with decreasing incentives for early retirement and raising the retirement age.

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Comments (10)

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  1. Auntie Dem says:

    Rep Lavelle continues the Republican Class Warfare, but that’s no surprise.

    Gov. Markell spoke to the Pike Creek area Democrats last night. He explained that state employees haven’t seen a raise in three years. In case you haven’t noticed, those three years have seen food and energy costs rise — a lot.

    The Governor explained that the proposed raise is still a wish and only happens if the state manages to find sufficient funds after more cuts in other areas. The crucial matter is to stop piling up future liabilities for pensions and healthcare that will eventually bankrupt us. This proposal is forward leaning and will be tough for the GA; but, it recognizes that you can’t keep writing checks on future revenues. If it passes it will ensure Delaware can meet its obligations down the road. Unlike the Class Warfare plan, it is smart and fair.

  2. Jason330 says:

    “The Governor explained that the proposed raise is still a wish and only happens if the state manages to find sufficient funds after more cuts in other areas.”

    DEFAC has already produced this year’s rabbit. Too bad raising taxes is outlawed in the Delaware Constitution or something.

    “This proposal is forward leaning and will be tough for the GA; but, it recognizes that you can’t keep writing checks on future revenues.”

    Are we expecting the rapture? Since when has a AAA bond rating not allowed that there will be future tax payers?

  3. Dana Garrett says:

    “Increasing the period until a new employee is fully vested….” Need to see the details on this one. I can see it as providing opportunity for abuse. A continuim of employees could easily work for several years and be dumped shortly before they become vested. The state gets the benefit of a cycle of experienced employees as well as the savings from not allowing many of them become vested. The implied deal that the employee can expect a pension for several years of service could become effectively meaningless for many except a token and select few.

  4. Geezer says:

    Dana: You’ve been in the private sector too long. :) That’s the kind of trick they excel at.

  5. Another Mike says:

    Was there nothing about the spouses who receive free health care for life because both work for the state?

  6. Auntie Dem says:

    Another Mike,

    Those who receive this benefit are “grandfathered” but no more will be added to the rolls. I’ve always had a problem with the nepotism in our government and it will be good to see this benefit go away.

  7. Dana Garrett says:

    You may be right, Geezer. Come to think of it, that is a private sector trick.

  8. jason330 says:

    Markell has caught a huge break by being governor at the height of the Republican’s teabag-staphylococcus infection.

    He gets to be viewed as the good guy in the room while comforting the comfortable and afflicting the afflicted.

  9. Steve Newton says:

    Another Mike and Auntie Dem,

    I am still trying to figure out exactly how you reach your conclusions about the spousal benefit for health insurance. When I was hired by the State, the deal was that the State would pay 50% of the premium of any health plan I chose, including family plans. When my fiancee was later hired, the State said it would pay 50% of her health care premium for any plan she chose. When we got married, gee, 50% plus 50% equals 100% of one plan, and the State is not forking out even an extra penny above what it was liable to fork out before we were married.

    The change if it did not grandfather existing employees would actually penalize married couples by charging them a higher percentage of their premiums than single workers pay.

    I have no problem, if the State reduces the share of the premium to, say 45%, that it then tells couples, “OK, now we only pay 90% because 45 + 45 =90.”

    Yes, if both spouses work for the State for 25 years there is a comparative benefit in retirement health care, but when I asked the State Pension Office about this, they told me that only about 30% of the married couples who qualify for the current “state share” benefit ever make it to collect the retirement benefit.

    You can try to spin the argument that this is nepotism because a few legislators got their spouses on the payroll, but the reality is that the overwhelming majority of folks who qualify are teachers, secretaries, and mid-level administrative people, many of whom got married because they met their future spouses on the job rather than contrived to hire them to featherbed a payroll.