Three Republican Senators have introduced a companion bill to the one Rep. Devin Nunes, R-Calif., offered in the House last week that would prohibit state and local governments from issuing tax-exempt and other municipal bonds unless they file annual pension reports containing certain information with the Treasury Department.
The identical Public Employee Pension Transparency Act, which also would bar the federal government from participating in any pension-related bailouts, is sponsored by Sens. Richard Burr from North Carolina, John Thune from South Dakota and Tom Coburn from Oklahoma. Burr and Thune are members of the Senate Finance Committee. Coburn is a member of the Senate Banking Committee.
In a release, the three said 10 states are projected to run out of pension funds by 2030 and the vast majority of states will have exhausted their pension funds by 2030.
The bill would require state and local governments to report their pension methodologies and assumptions. They would have to report their pension liabilities using a uniform accounting standard that provides realistic rates of return and that ties their assets to fair market valuations.
“For too long, taxpayers and government employees have been denied information about how badly government worker pension plans are underfunded,” Burr said. “My bill would simply shed some light on these enormous liabilities. This information is only for the purpose of public disclosure; it does not tread on the rights of states and local governments to fund and control their own pension plans.”
Coburn said, “Shielding taxpayers from funding bailouts and providing the tools necessary for transparent reporting are two ways to protect the health of pension funds that will benefit both taxpayers and public employees alike.”
But representatives of states and localities said the bill is unnecessary, misguided, and ignores the fact that almost every state has made modest to broad pension reforms over the past five years. They also said it is ironic that members of this gridlocked Congress, which has not been able to pass a budget, develop tax reform proposals, or significantly reduce the deficit, are telling state and local governments what to do.
“You have members of a dysfunctional legislature telling state and local governments they need to get with the program. That is misguided,” said Michael Bird, senior federal affairs counsel at the National Conference of State Legislatures. “They need to protect the U.S. economy first. We’re balancing our budgets and we’re reforming our pension systems and we’re doing all of this on a bipartisan basis.”
‘If any of these Senators had consulted reports that we and other organizations have put together, they would see that pension reform has been a top priority for five years and remains one,” Bird said. “We’ve recognized the problems and we’ve worked to fix them. No one should be fearing at this point in time that there’s going to be a pension collapse. No one’s going to run out of money. No one has asked for a bailout.”
“State laws and constitutions, local ordinances and state and local regulations provide more than enough authority to make essential reforms to public pension systems” and public pension information is already publicly available, he said.