NC House rejects plan to give retirees a permanent pension raise, citing cost

The N.C. House shot down an attempt to provide state retirees with a permanent pension increase, citing concerns about the increasing costs of the state’s retirement system.

State retirees would get a 1.6 percent, one-time cost-of-living bonus in their pensions under the House budget, but wouldn’t receive one under the Senate budget plan.

During Thursday’s budget debate, Rep. Mickey Michaux, a Durham Democrat, proposed an amendment that would instead provide retirees a permanent 2 percent cost-of-living increase. The proposal would cover the $88.6 million cost in the coming fiscal year by using salary money the state saves as a result of employee turnover.

“There’s some folks around here, even right now, living on just a single source of income, who gave their working lives to this state,” Michaux said. “I hope you would give these people what they are really due.”

Rep. David Lewis, a Dunn Republican, said Michaux’s proposal would add more than $700 million to the state’s pension liability over time. “I want very much to be able to say we can support a 2 percent COLA,” he said. “I’ve got to take the fiscal responsibility to make sure that the fund that funds their retirement is able to remain intact and remain strong. I’m told that there’s $60 billion worth of liability that the retirement plan already has.”

Lewis called for the House to table the amendment. The House then voted 63-53 to back Lewis and effectively kill the proposal.

Retiree groups have been lobbying for the 2 percent increase, arguing that the state’s pension plan hasn’t kept pace with inflation and that makes it increasingly difficult for them to pay their bills. The state has about 300,000 retirees in its pension system.

Since 2009, pensions have increased just 2 percent – a 1 percent cost-of-living adjustment in 2011 and another 1 percent in 2013. Last year, the final budget included a one-time COLA of 1.6 percent, but that extra pay applied for a single year.

This story was originally published June 1, 2017 at 9:57 PM with the headline "NC House rejects plan to give retirees a permanent pension raise, citing cost."