During a recent interview with WTOP radio, Maryland Gov. Martin O'Malley, a Democrat, harshly criticized New Jersey Gov. Chris Christie, a Republican, for wanting to switch state employees to 401(k)-style retirement plans and increasing the years of service required to retire with full benefits. Christie says such changes are essential to reduce New Jersey's $53 billion unfunded pension fund liability. Christie, O'Malley charged, "delights in being abusive towards public employees." O'Malley refuses to back away from Maryland's traditional defined benefit public employee pension system even though it is currently $19 billion in the red and just 64 percent funded. That makes the pension system O'Malley defends the lowest rated in the country, based on AAA ratings. Instead, O'Malley wants teachers and state workers to pay a little more now (or accept lower future benefits) so he can use the expected $120 million in savings to reduce a $1.4 billion state budget deficit now instead of shoring up their retirement fund.
O'Malley's hollow promise to start reinvesting all of the savings back into the pension fund -- but not until 2014, when he leaves office -- highlights the cynical shell game he is playing. State employees should be outraged that O'Malley will take 87 cents of every extra dollar they pay to plug a budget gap caused by his own extravagant spending while doing absolutely nothing to fix a pension system that state House Minority Leader Anthony O'Donnell correctly warns will soon bankrupt the state. O'Malley is simply throwing state employees' retirement plan under the bus.
A economic consultant hired by the General Assembly advised Maryland to adopt a 401(k) system like Christie is doing in New Jersey to avoid a pension meltdown that will take Maryland taxpayers down with it. But O'Malley will have none of it. Instead, he continues to make the same promises that the state could not honor before. "I am not proposing pension and benefit reforms just to be tight-fisted," Christie told New Jersey legislators last month. "I am proposing pension reform for the police officers who have served -- and contributed -- for years but who may find nothing when they retire a decade from now."
Christie is offering public employees a brutally honest solution to an enormous financial problem that, left unaddressed, will destroy their own retirement plans while crippling their state. O'Malley, on the other hand, is doing exactly the same thing that got Maryland into its current predicament: get elected by overpromising retirement benefits the state cannot afford and then leave the whole mess to the next administration. Who's being abusive to public employees now?