Statewide unions whose members include city, school and state workers in Rio Arriba County filed a lawsuit in Albuquerque Monday to halt implementation of a 1.5 percent pay cut for public employees.
The cut was passed during the 2009 state legislative session, and it would transfer a portion of each worker’s retirement contribution from the employer to the individual employee. Barring a court order, the change will go into effect July 1 and last for two years, affecting most workers covered by the Public Employees Retirement Association (PERA) and the Educational Retirement Board (ERB). The change does not affect employees making $20,000 or less.
“What this amounts to is a wage tax on just state employees and their families,” Northern New Mexico College union president Tim Crone said. “We were singled out as an entity to try to make up some of the slack (in the budget).”
The bill carrying the change was part of a package of measures designed to balance the state’s 2009-10 budget in the face of falling revenues. Employees’ unions offered alternate measures, including repealing the state’s 2003 tax cuts.
“They have lots of alternatives but this is what they did,” Crone said. “I think it was, in a sense, a slap in the face.”
Plaintiffs in the lawsuit include the New Mexico chapters of the American Federation of Teachers (AFT), the National Education Association (NEA), the American Federation of State, County and Municipal Employees (AFSCME) and Communication Workers of America. These unions represent workers at the city of Española, school districts throughout the County and state agencies.
The suit alleges that the new law violates workers’ constitutional rights including due process, retirement-fund soundness, uniform taxation, equal protection and vested property rights.
Prior to the bill’s passage, ERB itself noted that the change might violate the state constitution if it pulled money from public retirement funds. Although the change swaps state dollars for those of employees, the two contributions are not equal. Workers can withdraw their own contributions at any time, whereas state dollars remain in the fund to provide benefits. Therefore, each employee dollar is worth 95 cents to the state’s dollar, a bill analysis states. PERA’s actuaries estimated that the impact to its overall fund would be minimal.
According to the same analysis, the state was facing a budget shortfall of $575 million, and it is constitutionally mandated to balance its budget. Average pay for state employees has risen more than 28 percent since 2003, far outstripping the cost-of-living increase of 16.8 percent, the analysis states.
Despite heavy lobbying from unions, the bill passed 42-24 in the House and 34-4 in the Senate. Its sponsor, Rep. Kiki Saavedra (D-Albuquerque), did not return a call seeking comment.