HELENA – The Montana House on Thursday backed proposed pension fixes from both sides of the aisle — and delayed a final decision on which way to go.
The GOP-led chamber endorsed a plan favored by many Republicans that ends the pension system for new employees, replacing it with something like a 401(k) savings plan, and reduces benefits for current employees who would retain a pension. House Bill 338 advanced Thursday with a 63-37 initial vote.
Supporters of that measure said it will eventually bring certainty to the cost of retirement systems. But opponents argued it comes with a larger near-term cost because the state will have to more quickly backfill pension plans for existing employees if new employees aren’t also contributing to the plan.
The proposal would cost the state nearly $200 million over the next two years.
“It is a solid solution that the taxpayers can understand and support,” said the sponsor, Rep. Keith Regier, of Kalispell.
The House also backed two bills sought by Democratic Gov. Steve Bullock that fix the current state and local public pension systems by asking both employees and employers to pay more. Employees would also have to give up some benefits. House Bill 377 was endorsed 67-33, and House Bill 454 was endorsed 64-36.
Supporters said the proposals are a balanced approach to the problem because they ask both sides to pitch in and would ensure the state’s valued pension system would be solvent.
Opponents argued the cost of fixing the system would be hundreds of millions of dollars over time. They said the fix doesn’t eradicate risk for taxpayers who would have to forever guarantee the solvency of the pension plans.
It will cost the state about $70 million over the next two years.
“This truly is the middle ground we need to reach,” said Rep. Tom Woods, D-Bozeman. “The longer we wait, the more difficult it will be to fix this problem.”
All of the measures were re-referred to the House Appropriations Committee after the vote. The panel will weigh the bills against other spending requests.