Some Choose to Ignore, Deny Problem

Published June 1, 2007

The amounts of money involved and the potential reaction to the tax consequences of having to fund government retiree health care and other post-employment benefits in addition to pensions are so great that some government officials are looking for ways to avoid dealing with them.

Texas state Sen. Robert Duncan (R-Lubbock) has introduced legislation saying Texas will not conform to GASB 45. A March 20 story in the Austin American-Statesman quotes Duncan as saying, “What I don’t want to see … is our state or local governments having to drastically change or eliminate post-employment benefits such as health insurance.”

California Gov. Arnold Schwarzenegger (R) last December created a Public Employee Post-Employment Benefits Commission to study the issue and make recommendations. Battle lines were staked out at the commission’s meeting in March.

Marcia Fritz, representing the California Foundation for Fiscal Responsibility, told the commission, “This is a crisis. We have a liability and we need to stop it from getting worse.”

Willie Pelote, representing the American Federation of State, County, and Municipal Employees, disagreed. “There is no crisis,” he said.

David Denholm

For more information …

“Senator says retirees may lose benefits,” Austin American-Statesman, March 20,