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Governor affirms priorities for compensation package

Idaho Gov. C.L. "Butch" Otter
One of the biggest frustrations during my six years in Congress was the way in which the federal government danced around the fact that it promises far more than it can deliver.

Whether it's making the promised Payments in Lieu of Taxes (PILT) to our rural counties or paying an aging populations Social Security benefits, the bottom line is that the government's fast-growing unfunded liability already is burdening future generations of our citizens.

However, many folks don't realize that Idaho faces a similar shortfall in paying for benefits that future state retirees would receive under existing programs. At the same time, our state government work force is getting older, and we are at a competitive disadvantage in attracting younger workers.

The question is whether we have the wisdom and political will to do something about both issues before it's too late. I know we have the wisdom, and we must find the political will.

I recently asked the Legislature to make our total compensation package for state employees more attractive by approving a 5-percent increase in pay subject to individual performance and the discretion of managers. The increase is badly needed to bring state salaries closer to those for comparable jobs in the private sector.

To better reflect economic realities and the kind of balance between pay and benefits that private employers increasingly provide, and to make state government more accountable and responsible, I also recommended gradually increasing the share of health-care costs for which employees are responsible from the current 22 percent to about 30 percent over the next five years.

In addition, I asked the Legislature to consider addressing an estimated $442 million in what the accountants call accrued and future liabilities for non-pension post-employment benefits for our state workforce. That is the amount state government has promised its employees for retiree health-care coverage.

The $442 million liability could be reduced to about $126 million by:

  • Eliminating state retiree health-care coverage ONLY for those who are eligible for Medicare.
  • Setting the state contribution toward health-care coverage of state retirees under 65 at $155 per month.
  • Requiring that employees under 65 must retire directly from state service to be eligible for retiree health-care service coverage.
  • If those changes aren't made, the state's liability for what future Idaho taxpayers like our children and grandchildren will owe will climb to more than $800 million by 2016. I will not impose that burden on the next generation.

Here are a few facts to chew on:

  • The average age of state employees is 47.
  • The average age of newly hired state employees is 37.
  • Almost one-third of our state employees will be eligible for retirement in the next 10 years.
  • Retirees 65 and over will be able to get comparable supplemental benefits privately for less than they are paying now through the state.

Our goal is to attract some of the best, most capable young people to public service, to meet the legitimate needs of taxpayers and our growing population, and to have the wherewithal to keep the promises we make to those employees as they near retirement.

Let me make it clear that I am not recommending any changes in Public Employee Retirement System of Idaho (PERSI) benefits, which continue to be more generous than most in the private sector.

I am committed to properly compensating Idaho's valued state employees, to ensuring Idaho taxpayers get the best, most responsive state government possible for their tax dollars, and to ensuring that we are financially able to keep the promises we make.

Published 2-8-8