By Todd Smith | The Caledonian Record
For the past 20 or so years, we’ve made a biannual effort to inform readers about Vermont’s unfunded pension crisis.
The state has overpromised and underfunded the pension funds for teachers and state workers for so long that taxpayers now carry a $5.8 billion unfunded liability. Those are promises the state made to public-sector employees that it doesn’t have the money to pay for. The debt rose about $600 million this past year, alone.
Lawmakers have willfully ignored the problem for decades. It was easier to get away with it 20 years ago when only a few responsible voices — David Coates, Tom Pelham, John McClaughry, Art Woolf, Geoffrey Norman (foremost among them) — could be heard sounding the alarm.
The number of voices grew in proportion to the size of the liability. In the past couple of years, as we’ve long warned, the problem became an existential crisis — consuming double-digit allocations just to service the debt and crowding out other substantial government services.
Now it’s impossible to ignore by even the most obtuse lawmaker.
So we were guardedly hopeful when, earlier this year, House leaders followed the lead of State Treasurer Beth Pearce and promulgated a plan to address the man-made disaster. It’s one thing to have a negative balance sheet. It’s quite another when there’s no money to fund compost-pile police because the money is going to interest on debt.
Basically, the plan is what we’ve long insisted it had to be. That’s not because we’re financial geniuses, but because it’s the only choice if the state wants to avoid bankruptcy. It calls for higher contributions from beneficiaries, smaller and later payouts, and a move from defined benefits (pension) to defined contribution (401K) plans.
Then the public sector unions went stark-raving-mad and House Speaker Jill Krowinski, D-Burlington, crumbled like the Red Sox in 2021. Rather than use any of the 12,000 existing studies on the topic, Krowinski said the legislature would have to study the topic, providing a useful study in political cowardice.
Of course, Krowinski’s conundrum is that of all liberals who owe their single-party monopoly to patronage predicated on extravagant promises to unions and public workers. The financial solution to the pension crisis is obvious. The real problem is finding leadership in Montpelier.
Todd M. Smith is the publisher of the Caledonian Record, where this editorial first appeared. He lives in St. Johnsbury.