SANTA FE, N.M. (AP) - The New Mexico Senate on Wednesday approved a proposal aimed at shoring up New Mexico’s overextended pension fund for about 110,000 state and local government workers and retirees.
In a 25-15 vote with some moderate Democrats opposing the measure, senators voted to send the bill to the Democrat-dominated House. The effort is backed by Democratic Gov. Michelle Lujan Grisham.
The bill from Democratic state Sen. George Munoz, D- Gallup, responds to concerns about $6.6 billion in unfunded liabilities that are weighing down the credit rating of the state and its largest city and driving up borrowing costs.
Munoz said legislators have avoided dealing with the pension underfunding for years and now must do so to keep promises to retired state workers and that “our current employees have to be respected, too.”
Managers of the $16 billion fund overseen by the Public Employees Retirement Association, known as PERA, have said an economic downturn could severely undermine the fund’s long-term solvency and ability to meet retirement obligations.
Core provisions of the bill were outlined by a policy task force appointed by the governor to address pension solvency issues. That commission looked for reforms that could fully fund the pension fund within 25 years.
At legislative hearings, retired public employees have voiced divided opinions about the reform plan and whether it is necessary. The bill as currently written would phase in new pension contributions equal to 4% of pay, divided equally between employees and taxpayers.
The second major solvency measure would link future cost of living increases to investment returns, with a 0.5% minimum annual increase. Current automatic annual cost of living adjustments are as high as 2.5% for some retirees.
State police, adult corrections officers and low-income public employees are exempted from the changes to pension contributions.
The increases are delayed until 2023 for local government employees. The cost-of-living changes do not apply to current retirees age 75 and over.
Member of the pension fund include about 57,000 current public employees and 41,000 retirees receiving benefits.
Sen. John Sapien, D-Corrales, was among the group of moderate Democrats that raised questions about whether the proposal would fulfill its promises. He said the benefits still outweighed the inputs. “I think it hurts our retirees with promises that won’t be achieved,” he said.
Lujan Grisham praised the state Senate for approving the bill.
“A stable and solvent PERA matters to all New Mexico taxpayers,” she said in a statement. “We must make changes now.”
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This version corrects that current cost of living adjustments are as high as 2.5%, not 3%.
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