THE MOST difficult feat in all of American politics might be stabilizing a troubled public pension fund. All of the benefits accrue in the future; the necessary pain gets experienced in the here and now, often by both taxpayers and well-organized public employees with a strong, not unjustified, sense of entitlement. So it’s worth noting the news from Rhode Island, where one very determined elected official, Gov. Gina Raimondo (D), has announced an out-of-court settlement with almost 59,000 current and retired state and local employees that will enable the state to realize nearly $4 billion worth of long-term savings. Workers had challenged the reform package — enacted in 2011 at the initiation of Ms. Raimondo in her previous job as state treasurer — as a violation of the state constitution. They gave up the suit in the face of long odds, in return for which Ms. Raimondo wisely offered modest concessions.
Closer to home, in Maryland, however, the cause of pension reform is moving in reverse. Maryland’s pension predicament is not quite as dire as that of Rhode Island. Still, the state has only two-thirds of the funds necessary to meet its long-term obligations, well short of the widely accepted benchmark of 80 percent. And the modest reforms enacted under Gov. Martin O’Malley (D) in 2011, which were designed to achieve that goal by 2023, are at risk of unraveling. In particular, the General Assembly has repeatedly broken the reform plan’s promise of $300 million per year in supplemental funding for the pensions. Last year, lawmakers slashed that to $150 million, and this year are set on $75 million; they want to use the money to supply current state workers a 2 percent pay increase.
Never mind that this maneuver boosts the long-term costs of the pension system by $2.5 billion. Whereas Ms. Raimondo understood that funding for public services her party holds dear would be crowded out by spiraling pension costs, the Democrats who dominate the General Assembly in Annapolis prefer the path of least political resistance: cater to the short-run demands of their unionized public-employee allies.
What of Maryland’s new Republican governor, Larry Hogan, who ran on a promise of fiscal conservatism? To his credit, he submitted a budget that would eliminate the state’s structural deficit; and with regard to pensions, he would have added $150 million to the pot, far less than the $300 million goal, but at least not a reduction from last year. Once the General Assembly cut that in half, though, and embedded the change in a difficult-to-reverse legislative vehicle, Mr. Hogan moved on to other priorities. His $45 million supplemental budget, released Thursday, includes such items as a $7.4 million business tax break — but not a single extra dollar for the pension fund.
No doubt there’s still much negotiating to be done in the current assembly session’s final days, and, consequently, still a chance that more money for pensions will be found. For now, though, it looks very much like short-term thinking will prevail on a bipartisan basis in Maryland.