SANTA FE – The New Mexico House on Monday approved a proposal aimed at shoring up New Mexico’s overextended pension fund for about 110,000 state and local government workers and retirees.
House members voted 40-28 to send the bill back to the Democrat-controlled Senate. The Senate passed a similar measure but must reexamine the proposal after it was amended.
Democratic Gov. Michelle Lujan Grisham backs the effort.
Supporters said the bill seeks to address concerns about $6.6 billion in unfunded liabilities that are weighing down the credit rating of the state and its largest city and driving up borrowing costs.
Rep. Phelps Anderson, R-Roswell, said changes were needed because people are living a lot longer. “People rely on these pensions and we have a duty to fund them,” Anderson said.
But Rep. Antonio “Moe” Maestas, D-Albuquerque, expressed doubt on why lawmakers needed to act on the state’s pension system when there “was not compelling” reason to get it at 100% solvency.
“We don’t need to go there. We are not a private company,” Maestas said. “The crash of ‘08 has wrecked us psychologically.”
Maestas said state lawmakers are unnecessarily preparing for massive economic changes that may not come.
The vote came as House member faced pressure to approve the measure from the Koch Institute-funded Stand Together. The group promised “to hold lawmakers accountable” if the proposal failed.
Core provisions of the bill were outlined by a policy task force appointed by the governor to address pension solvency issues. That commission looked for reforms that could fully fund the pension fund within 25 years.
At legislative hearings, retired public employees have voiced divided opinions about the reform plan and whether it is necessary. The proposal would phase in new pension contributions equal to 4% of pay, divided equally between employees and taxpayers.
The second significant solvency measure would link future cost of living increases to investment returns, with a 0.5% minimum annual increase. The current automatic annual cost of living adjustments are as high as 2.5% for some retirees.
State police, adult corrections officers and low-income public employees are exempted from the changes to pension contributions.
The increases are delayed until 2023 for local government employees. The cost-of-living changes do not apply to current retirees age 75 and over.
Members of the pension fund include about 57,000 current public employees and 41,000 retirees receiving benefits.