Virginia municipalities and school boards are in an uproar over a pension reform bill that they say would cost cities millions and take money out of public employees’ paychecks.
But the state lawmaker who helped push the pension reforms through the General Assembly just two weeks ago said the cities are simply trying to avoid paying their workers more.
In dispute is legislation that requires teachers and local government employees to send 5 percent of their paycheck to the Virginia Retirement System to help fund their pensions. In return, employers must give their employees a 5 percent raise.
For the past 25 years, local governments have typically offered to pay employees’ pension contributions directly rather than pay the workers more. But Sen. John Watkins, R-Powhatan, the bill’s sponsor, said that this system denies employees additional Social Security benefits that would have come with a raise.
“[Local governments] don’t want to have to pay what they’re supposed to be paying,” he said.
Changing the system, Watkins said, also would help offset a $26 billion deficit in the state pension fund.
Local officials, however, argue that paying workers more would only cost cities and their workers more in taxes.
The Virginia Municipal League, the Virginia Association of Counties, the Virginia Association of School Superintendents and the Virginia School Boards Association are calling on Gov. Bob McDonnell to alter Watkins’ bill to make the 5 percent pay increase optional, giving localities that face their own budget woes greater flexibility.
The pension change could cost Northern Virginia communities millions. Alexandria estimates that a 5 percent pay increase would cost $6 million. It would cost Fairfax $15 million over five years just for its teachers.
“It’s an inappropriate role for the state to be telling counties across Virginia what they ought to set their salaries at,” said Fairfax Supervisor Jeff McKay, who heads the county board’s legislative committee. “The state, who can’t hold up their requirement on VRS, is just going to the local government ATM.”
McDonnell spokesman Jeff Caldwell said the governor is reviewing local governments’ request, though he noted the governor supports pension reforms in general.
“[The governor] has been very supportive of and has actively pursued comprehensive VRS reform over the past two years,” Caldwell said in a statement. “[He] looks forward to reviewing this landmark legislation once he receives it.”
