Pension cut proposal is Ohio budget sticking point

COLUMBUS, Ohio - A proposal by Gov. Ted Strickland to cut the amount Ohio contributes to a pension fund for government employees has emerged as a major sticking point in budget negotiations, as lawmakers worked Saturday to meet an impending budget deadline.

The governor's proposal has strained the traditional alliance between Democrats and government employee unions, who have found an unlikely ally in Republican lawmakers who say the proposal is foolish.

Strickland has suggested that lawmakers cut the state's contribution to the Ohio Public Employees Retirement System from 14 percent to 8 percent over the next two years to shave $256 million off the state's $3.2 billion budget gap. To offset the drop in state contributions, the governor wants to reimburse the pension fund, which has assets of $60 billion and serves about 936,000 members and retirees, over a 10-year period.

The suggestion was part of a package containing cuts and a proposal to put slot machines at horse racing tracks that Strickland gave to lawmakers paring down the roughly $54 billion spending plan. The governor and lawmakers are trying to finish the budget by the start of the new fiscal year on Wednesday, but passing a temporary budget to give negotiators more time was still a distinct possibility Saturday.

Joining a horde of other constituencies upset by Strickland's proposed cuts, public employee unions said the decrease in pension contributions would jeopardize retirements and health care coverage for government workers across the state.

"Proposals such as the one before us that reduce retirement security, jobs and spendable income serve only to further the recession, erode the middle class and must be opposed," Ohio AFL-CIO Chief of Staff Tim Burga said in a statement this week.

The governor is not insisting on his proposal, and negotiators were exploring ways to minimize the impact of the budget on public employees.

"This was all part of the framework to serve as a starting point for conversations, not an ending point," said Strickland spokeswoman Amanda Wurst. "Our conversation with (the pension fund) and the Legislature will continue."

Some Republicans have taken up the unions' cause because public employees are part of their constituencies, and because they view the plan to postpone pension contributions until future years as irresponsible. They have also said that a new governor and Legislature will have to make that decision in future years, so Strickland can't make the promise to reimburse the fund.

"It's putting us even deeper in the hole, not only in the next biennium but over many years to come," said state Sen. Jimmy Stewart, a Republican from Albany whose district contains a large number of state college and university employees. "It's irresponsible."

Negotiations over the proposed pension cut are particularly tricky because of the state's extremely tight revenue situation. Lawmakers are already struggling over where to make additional spending cuts while causing the least amount of pain, an effort made more complicated by a disagreement over whether to allow race tracks to install slot machines.

That sticking point was the thorniest unresolved item in negotiations, with the GOP-controlled Senate insisting that Strickland could authorize the machines using his executive authority. The Senate doesn't want to approve slots without first submitting the plan to voters, who in 2006 voted against a plan to put the machines at race tracks.

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