WASHINGTON — A Republican senator who introduced a bill that would prohibit state and local governments from issuing tax-exempt bonds unless they filed annual pension disclosures with the Treasury Department has joined the Senate Finance Committee’s pension subcommittee.
The appointment Wednesday of Sen. Richard Burr from North Carolina was made by the Republican Conference and Senate Minority Leader Mitch McConnell, R-Ky. The move puts Burr on the committee with key jurisdiction over the pension bill, a counterpart to legislation introduced by Rep. Devin Nunes, R-Calif., in the House.
Burr replaces former Sen. John Ensign, R-Nev., who left Congress recently while facing an ethics investigation stemming from his affair with a campaign aide. Burr also sits on the Health, Education, Labor and Pensions Committee, which he said in a release Wednesday will complement his new seat on the Finance Committee.
The Burr and Nunes bills — S. 347 and HR 567 — are identical. They would bar state and local governments from issuing tax-exempt, tax-credit, or direct-pay bonds unless they disclose annual information about their pension plans with the U.S. Treasury.
The governments would have to disclose their expected contributions to the plans, unfunded liabilities, assumptions underlying valuations, returns for the plan year and five previous years, and plans for eliminating unfunded liabilities. The governments could value their unfunded pension liabilities any way they chose, but would have to include in their annual reports or in separate reports valuations based on Treasuries.
Burr and Nunes contend that since state and local governments are obligated to make pension payments to retiree members of their plans, they should value their pension liabilities using a rate that would be so low there would be little risk they could earn that rate of return on investments. The Treasury bond rate would be 4% to 5% and much lower than the 7% to 8% market rate that almost all state and local governments currently use, sources have said.
