A budget watchdog group is in support of the governor’s Fiscal Year 2014 budget. The Civic Federation says the 2014 budget does what it’s supposed to do: Fully pay pension contributions while not spending more than the state takes in. “It balances the revenues available with the expenditures that are known by the state,” said Laurence Msall, president of the Civic Federation, a non-partisan budget watchdog group.
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“It anticipates and calls for pension reform but they make the full pension contribution this year that they would have to, not rely on the legislature’s action.” But Msall says the measure is only a stopgap if lawmakers can’t agree on public pension reforms. “This is at best a stopgap budget, one that really hinges, and the future hinges on the state’s ability to address its $100 billion unfunded pension liability,” Msall said.
The budget also pays down a backlog of bills owed to state vendors. Under the governor’s budget, $800 million of $6.8 billion owed would be paid. Msall warns that unpaid bills will become more burdensome when a partial rollback of an income tax increase goes into effect in 2015, but he notes it took years to get into the current financial mess and it will take years to get out of it.
Lawmakers are considering a number of pension reform options but Msall says S.B. 1 would make the most impact. Any pension reform bill passed is likely to be challenged in court but passing a bill would likely cause bond rating agencies to stop any future downgrades of the state.