Time to modernize state employee pensions

February 22, 2010

Legislators in Annapolis have generously spent money we don't have on projects and programs that help them win re-election but leave future generations of Marylanders to pay the bills. Maryland is facing $8.4 billion in projected budget shortfalls over the next four years. It is time to pause, take an honest look at the situation and make hard choices.

As a small business owner for nearly 25 years, I have worked hard during boom and bust years. I know what it is like not to get a paycheck and the pain of not having available work for employees. Many proposals and plans need to be discussed -- no one solution will solve all of our problems, but two that have recently been made deserve attention.

A proposal in the General Assembly by Del. Bill Frank and Sen. Andy Harris would save taxpayers approximately $750,000 a year by transitioning lawmakers to 401k-style retirement plans instead of their current pensions. Delegate Frank's proposal was not voted on, and Senator Harris' was defeated.

Second, as outlined in Jay Hancock's article ("Pensions: Pay now or pay dearly later on," Feb. 21), legislators need to look at modernizing the entire public pension system. The state system is currently facing an actuarial deficit of $32 billion, a deficit that cannot be made up solely with an improvement in the stock market. I fully support keeping the commitments the state has made with past and current state employees, but changes must be made in order to preserve those commitments. By moving to a phased-in defined contribution plan, like a 401k, we can begin to get our state back on a better financial course.

These proposals are good for taxpayers and good for government. State employees are hard working and essential to our government and private sector. By establishing pension system similar to a 401K, retirement benefits will be guaranteed and not dependent on the state's ability to pay for those obligations.

Annapolis' political leaders should not come after taxpayers with billion dollar tax increases; we need to change the way Annapolis does our business. Modernizing the retirement plans of elected officials and state employees are important steps toward keeping Maryland from financial collapse while helping hard working Maryland families keep more of their hard earned dollars.

Kevin Carney, Towson

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