Lamenting the uneasy budgetary situation facing the state, Colorado lawmakers rejected a proposed bill Friday that would have increased annual payments to the Public Employees’ Retirement Association in times of inflation.
“I think it’s a good concept. I don’t see how we can afford it this year,” Rep. Rick Taggart told fellow lawmakers on the Pension Review Commission. The Grand Junction Republican is part of the group that writes the state budget each year.
The commission meeting came after a recent analysis suggested that PERA, the retirement program for hundreds of thousands of current and former government workers, may be short billions of dollars by 2048 — when the fund is supposed to be fully funded.
PERA officials told lawmakers that they’d internally discussed two options, including the state making a $2 billion lump-sum payment (a recommendation from the outside group that conducted the analysis). Alternatively, the state could increase its annual $225 million payment to PERA based on inflation.
The first ask — a $2 billion payment from the legislature to PERA — was a long shot, given the state’s uncertain fiscal picture next year. That was acknowledged by PERA officials Friday.
But Andrew Roth, the fund’s executive director and CEO, told lawmakers that pegging the state’s annual payment to inflation “feels feasible.” Annual increases would be incremental, he said, and would ensure the state’s annual contribution to the fund wouldn’t lose strength in times of high inflation.
Still, when presented with a draft bill Friday — a week after state economists predicted the legislature would grapple with a tight budget — legislators balked.
Increasing the annual payment based on inflation would cost the state $6 million, $12.7 million and $18 million annually over the next three years, respectively, and lawmakers worried about shouldering that cost.
“I will say this: Based on the budget information — the $900 million hole that we’re looking at (in the state budget) — it is going to be very hard to pass this bill,” acknowledged Sen. Chris Kolker, a Centennial Democrat who had backed the inflation change.
Legislators later voted 9-0 to reject the proposal.
Sen. Chris Hansen, a Denver Democrat and the commission’s chair, said a big lump-sum payment was a tall order, and he said an inflation change was part of broader PERA negotiations from several years ago.
He wondered whether PERA should take a riskier approach in its investment portfolio, which could mean greater potential returns. (The Colorado Sun reported Friday that PERA’s board recently voted to invest $900 million more in private equity.)
The commission did advance two other bill drafts Friday. One would require PERA to conduct a specific audit and study every three years, with the audit back-checked by the state auditor’s office. The other would create a $700 refundable income tax credit for PERA retirees.
Both now go to a final legislative committee meeting for approval; assuming they both win it, they’ll advance to the full legislature for introduction when it returns in January.
Updated at 3:35 p.m.: This story was updated to reflect that a $2 billion lump-sum payment was recommended by an outside group, not PERA.
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