House Pensions Committee recommends 1 percent COLA bump for state retirees
Posted May 12, 2015
Raleigh, N.C. — Days before the chamber's budget writers are due to roll out a roughly $21.5 billion spending plan, the House Pensions Committees has recommended that retired state employees get a 1 percent cost-of-living increase this summer.
Both the Office of the State Treasurer and the board that oversees the pension system recommended a 1 percent increase, in part because it would require no extra investment by the state. Returns on the pension fund's investments are strong enough that the budget could lower the state contribution to the retirement system by $7 million over the next year and still afford the COLA.
The increase would affect those in the legislative retirement system as well as retired educators and state workers. Those groups have had two 1 percent COLA increases since 2010 – in 2012 and in 2014 – according members of the committee.
Rep. Mickey Michaux, D-Durham, argued the committee ought to have stuck with a 2 percent COLA increase proposed when House Bill 759 was first filed. That would require the state to bump up its funding of the pension system by $32 million per year.
That idea met with objections from Republican lawmakers, who noted that it would be the House Appropriations Committee that would have to find the money to pay for an expanded benefit.
"I'm just wondering how they're going to react if this committee is down here spending their money," Rep. John Blust, R-Guilford, said.
Michaux's amendment was beat back on a voice vote.
In reality, the Appropriations Committee will be able to set the cost of living adjustment itself. The COLA bill is unlikely to pass as a standalone measure but functions as a policy recommendation to those crafting the state budget.
House lawmakers expect to pass their version of the budget before Memorial Day. It would then be the Senate's turn to draft a plan. The new fiscal year starts on July 1.