Bergstein offers new plan for resolving state pension crisis

By Scott Benjamin

GREENWICH – State Senate candidate Alexandra Bergstein (D-36) says the biggest issue facing Connecticut is resolving an unfunded pension obligation for its state employees that accounts “for one-fifth” of the state’s “annual economic output.”

Bergstein, a Greenwich resident running in a district that includes her hometown as well as parts of Stamford and New Canaan, recently co-authored a column in Bloomberg with W. Gordon Hamlin, the founder and president of Pro Bono Public Pensions, which called for Connecticut to adopt a shared-risk program with its state employees on their pension benefits.

According to the March 1 report from the state Commission on Fiscal Stability and Economic Competitiveness those pensions are only 29 percent funded following decades of neglect.

State Comptroller Kevin Lembo (D-Guilford) has credited departing Gov. Dannel Malloy (D-Stamford), who took office in 2011, with being the first governor in a generation to adequately fund the state employee pensions annually.

Nick Perna, the retired Webster Bank economist from Ridgefield, told CT Mirror last year that, “If we didn’t have the obstacle (of current and future projected deficits) we could do better with jobs, we’d have a faster-growing population, we could invest in updated infrastructure.”

Bergstein said the next governor and General Assembly “should assemble a task force shortly after taking office next January, get the actuarial data and move forward.”

“The current conditions aren’t sustainable,” Bergstein said in an interview. “The plan that I have presented is the only one with fair and secure outcomes. It will ensure economic security and take the politics out of the system.”

In the column, Bergstein, who faces 10-year Republican incumbent Scott Frantz of Greenwich in the November 6 election, and Hamlin call on Connecticut to develop a system similar to the one that New Brunswick, Canada has had since 2012.

“Instead of promising a full generous pension, the government guarantees only a ‘base’ level of benefits and pays ancillary benefits if circumstances allow,” they stated. “Regular stress tests determine what the government can afford. If it falls short, it can increase required contributions or reduce benefits within a narrow agreed upon band. If performance improves, the changes are reversed, in an agreed-upon order.”

“To be sure, concessions must be made,” Bergstein and Hamlin wrote. “Workers must agree to terms that are more in line with programs such as Social Security. This can entail, for example, calculating benefits using average career earnings (excluding overtime) rather than the last several years, capping payments are a reasonable amount, and in some cases extending the retirement age.”

“Politicians, for their part, must relinquish the power to make generous promises that requires funding only after they’ve left office,” Bergstein and Hamlin added. “Once the terms are set, professionals do the managing.”

“I appreciate Alex’s effort, but it ignores the reality of the contract agreements,” said Larry Dorman, the public affairs coordinator for the American Federation of State, County and Municipal Employees Council 4, which represents about 15,000 Connecticut state workers.

“It’s creating what could be a dangerous solution,” he added.

The state employee collective bargaining units reached an agreement with the state last year that according to a Segal Consulting, which was retained by the state Office of Policy & Management, will save taxpayers $24 billion over 20 years.

Under the agreement that the General Assembly narrowly ratified in July of last year, there will be no layoffs until at least July 1, 2021 and the pensions and other fringe benefits have been extended until 2027.

Dorman said the state employees already had made significant steps toward a solution through paying a larger share of their pensions and other concessions. In fact, he said they have made concessions four times in 14 years – 2003, 2009, 2011 and 2017.

He said over the recent years the state employees have accepted “six hard-wage freezes” and paid more for their health care coverage

“They have done this for the good of the state,” said Dorman. “No one else – not insurance executives or hedge fund traders – have done that. There should be a broader discussion on how to raise more revenue, not hurting the working class by eliminating jobs or reducing their benefits when they have been making concessions on their wages, health care and pensions.”

Bergstein countered that all Connecticut residents have made concessions, since taxes increased in 2011 and 2017 to help resolve budget shortfalls.

“There is no security for the state employees with a pension system that is only 29 percent funded,” she added.

Bergstein said her approach is the most realistic solution.

“Ripping up contracts would risk costly litigation,” Bergstein and Hamlin wrote in their column.

The New York Times has reported that then-Rhode Island Democratic Gov. Lincoln Chafee signed a bipartisan pension benefits cut in 2014 that was partly developed by Democrat Gina Raimondo, who was then the state treasurer and succeeded him as governor.

Raimondo reformed a pension system that was only 48 percent funded by suspending increases for current retirees and placing part of the defined benefit package for the current workers into a 401-K plan, according to The New York Times.

That legislation was challenged in court and a settlement was reached in 2015 after Raimondo became governor, the newspaper reported.

Regarding another potential option, Bergstein and Hamlin stated, “Requiring employees to move their own contributions, as in a 401(k) plan won’t work. It could only apply to new workers, and – even if it could get existing workers to change their contracts – the state would have to borrow the money to cover what it owes them (at least $34 billion.)”

Another issue near the top of Bergstein’s platform is rebuilding a crumbling transportation infrastructure that Malloy has said has prompted some prospective companies to instead locate in New York’s Westchester County or in northern New Jersey.

“You have to monetize your highways,” said Bergstein regarding her support for tolls. She said that there are estimates that 40 percent of the traffic on Interstate-95 in Connecticut is from out of state.

She said that the $10 million study that Malloy got approved by the state Bond Commission recently isn’t needed, since legislators already have enough information to make the right decision.

“You shouldn’t be against tolls because they don’t poll well,” she said, noting that 42 states have tolls.

A Quinnipiac University poll taken earlier this month reported that statewide 53 percent of voters oppose tolls and 40 percent support them.

“I understand that there are people who don’t want to pay $500 more a year to get to work,” Bergstein said. “But if a better highway system brings more companies to Connecticut, then that will make your property values even higher.”

“Per person it’s probably about 10 cents a mile,” she added. Bergstein said that Connecticut residents should get an E-Z pass discount.

Connecticut abolished its tolls in the mid-1980s due to safety concerns. However, Bergstein said that is no longer an issue as the tolls would be recorded through a transponder and there would no lines of vehicles at the booths as was the case under the former system.

A 2015 study by a committee chaired by former state Rep. Cameron Staples (D-New Haven) recommended $100 billion in improvements over 30 years. The state Commission on Fiscal Stability and Economic Competitiveness recommended earlier this year that tolls be installed.

Regarding other components of the Fiscal Stability commission’s report, Bergstein said she supports lowering the top income tax rate from 6.99 percent to 5.75 percent and also backs abolishing the estate and gift taxes.

She said she is against increasing the sales tax from 6.35 to 7.25 percent.

Bergstein said that she supports establishing a $15 an hour minimum wage by 2022.

“For a full-time worker, that is not enough to support themselves,” she explained.

Regarding economic development, Bergstein, an attorney who is working toward a doctorate degree in Environmental Studies at Yale, said that Stamford, Connecticut’s third largest city, has “made an impressive transformation” from a decade ago when just before the recession it ranked fourth in the world in financial services.

She said financial services and hedge funds will continue to be a significant part of the district’s economy, but she also is enthused that Pitney Bowes has remained in Stamford after considering other options, Henkel – a consumer foods company – brought its North American operations there last year and Indeed, the world’s largest employment service, has a headquarters in the city and is increasing its work force.

Stamford’s Harbor Point transit-oriented mixed-use district reportedly is one of the largest redevelopment areas in the United States.

Additionally, NBC Sports has expanded its operations in Stamford over the recent years and there has been growth in other television production companies in the state Senate district.

Five of Connecticut’s 17 Fortune 500 companies are either in Stamford or Greenwich.

The Greenwich Time reported that Bergstein did a walking tour of the Greenwich Avenue business district with U.S. Rep. Jim Himes (D-4) of Greenwich in June, as he commended her work on gender equity issues and providing healthy athletic fields for the town’s youth.

Frantz is the Senate co-chairman of the General Assembly’s Finance, Revenue and Bond Committee and serves on the 10-member state Bond Commission.

Bergstein’s mother, Mary Mochary, served as mayor of Montclair, N.J. in the early 1980s and was the Republican U.S. Senate nominee against former New York Knicks forward Bill Bradley, the Democratic incumbent, in the 1984 election.

Stephen Fuzesi Jr. of Greenwich, a Democratic State Central Committee member, wrote in the Hartford Courant earlier this year that Greenwich is emerging as a Democratic factor.

Among his points, former Democratic President Barack Obama and former Democratic presidential nominee Hillary Rodham Clinton have prevailed recently in the town of about 62,000 people, which has long been considered a Republican stronghold.

Bergstein said she has campaigned door-to-door, recruited volunteers and plans to have 100 living room conversations before the November 6 election in which she discusses issues at homes with small groups of voters of various affiliations.

“They’re not fund-raisers,” she said. “These are conversations from neighbor to neighbor. We’re getting a lot of valuable feedback.”