Chaos: Judge rules state’s 3% public employee pension contribution requirement

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Tallahassee Circuit Judge Jackie Fulford ruled against the state in a case involving a new requirement passed last year that requires state workers to put 3 percent of their weekly check into a retirement account. The legal questions in the case revolved around whether the changes to the pension program break a portion of the law declaring the system a contractual obligation between the state and its employees.

Fulford ordered the state to immediately stop the withholding.

Updates first, full-story below.

4:19 p.m. – Times: State has already signed another $300,000 contract to appeal pension ruling.

4:18 p.m. – Governor Rick Scott issued the following statement:

“As you would expect, I believe this decision is simply wrong.  The trial judge has ignored thirty years of Supreme Court precedent in a decision that refuses to allow Florida to have common-sense pension reform. This is another example of a court substituting its own policy preferences for those of the Legislature.  The Court’s decision nullifies the will of the people and leaves Florida as one of the only states in the country in which public employees contribute nothing towards their retirement, leaving working Floridians with100 percent of the tab.  The State plans to file a swift appeal to reverse this decision.  Nonetheless, the Court’s order should be stayed throughout the appellate process, which will avoid an immediate impact on the 2012-2013 budget.”

4:17 p.m. – Florida Democratic Party Chairman Rod Smith issued the following statement:

“This decision is yet another blow to Rick Scott’s continued assault on the middle class and a victory for Florida’s families. In the midst of our economic recovery, Scott’s brazen, unconstitutional attempt to cut wages by 3-percent moves our state in the wrong direction and continues to put the burden of solving our state’s budget crisis squarely on the backs of working families. We applaud the court’s decision which will protect working Floridians from the serious and devastating consequences of the GOP’s extreme, Tea Party agenda.”

4:15 p.m. – Florida Tax Watch’s statement:

“Independent Florida TaxWatch research has shown that pension reform put into law last year by Governor Rick Scott and the Florida Legislature would help make the pension system much more sustainable, bring public employees’ benefits more in line with those of private sector workers, and save the citizens of Florida a significant amount of money.

While today’s decision is disappointing, we expect that this issue will find its way to the Florida Supreme Court. Florida TaxWatch continues to believe that this reform is in the best interest of all Floridians, and will continue to be a strong advocate for the much needed reforms that our research has shown to be prudent.”

2:46 p.m. – Statement from Floridians for Sustainable Pensions Coalition regarding today’s ruling:

“Today’s ruling on public employee pension contributions was a deep blow to Florida’s long-term economic stability and should be promptly appealed to a higher court. With 47 other states in our nation requiring public employees to contribute to their own pension plans, this puts our state dangerously behind the curve. What once was a chance to make a significant change to our state’s future financial security could now be a lost opportunity.

Balancing the state budget is never an easy task and now we could have up to a $2 billion shortfall. While Florida’s private sector employees continue to be responsible for their retirement, it is only reasonable to have asked public sector employees to do what’s best for the public in their service and help pay toward their retirement. We must show future generations that our state and its residents can and will make the necessary sacrifices to ensure a more secure fiscal future for all.

Times have changed and our state cannot continue down the same path by providing benefits we cannot sustain. Pension reform may not be an easy solution to swallow, but it is vital for our state’s survival.”

2:29 p.m. – Speaker Dean Cannon released the following statement:

“I look forward to reviewing Judge Fulford’s order in detail in the coming days. While I respect the authority of the court to offer an opinion in this case, I disagree with Judge Fulford’s position.

“Fiscally responsible adjustments to the Florida Retirement System protect the long-term solvency of the program, ensure that we can avoid massive layoffs and severe cuts to public employee pay and modernize our program, bringing Florida more in line with the private sector and the majority of states that require a modest employee contribution to retirement benefits.

  “The ruling of a trial court judge is the first and not the final step. Today’s ruling will have no immediate impact on the passage of the 2012-2013 General Appropriations Act, which the House will take up this Friday in fulfillment of our constitutional responsibility to pass a balanced budget.”

2:24 p.m. – The Florida Chamber of Commerce issued the following statement from Mark Wilson, President and CEO of the Florida Chamber:

“Today’s ruling is an affront to the taxpayers and voters of Florida.

 “Instead of moving forward to secure Florida’s future, as expected, an activist judge’s ruling bypasses the will of the people and fully plants 100 percent of the financial burden of state government workers retirement plans on taxpayers.

 “Once again Florida becomes the only state in the nation in which taxpayers must foot the entire retirement bill for state government employees and some local government workers that are part of the Florida Retirement System.

“If Florida is going to grow our economy, pay teachers more, invest in infrastructure and focus on job creation, we must focus on modernizing government retirements to reflect the realities of our state and of the private-sector.

“While investing in our economy and our teachers is a priority of many, it would be ironic if the union lawsuit that brought forward this activist judge’s ruling actually reduced the salaries of government workers and the union members they represent by three percent.”

In a stinging rebuke to Gov. Rick Scott and legislative Republicans, a state judge struck down a key portion of last year’s pension overhaul, a decision that could eventually force the state to return hundreds of millions of dollars to its employees.

The ruling from Circuit Court Judge Jackie Fulford bars the state from requiring employees hired before July 1, 2011, to contribute 3 percent of their income to their retirement plans. It also struck down a portion of the law that would reduce the cost-of-living increase for those employees.

Gov. Rick Scott said the state would appeal the decision, likely resulting in a stay that would allow the law to remain in place for now. Opponents of the law said they expect the state to continue withholding the 3 percent until the Florida Supreme Court rules on the issue.

The provisions struck down by Fulford’s decision were expected to save the state $861 million a year — money that would eventually have to be paid back if the appeal fails. It would cost counties around $600 million a year to have the changes reversed, likely leading to service cuts at the local level.

Scott and the lawmakers who pushed the provisions in last year’s session said the changes were needed to bring public workers’ pension plans in line with the private sector and help patch a multibillion-dollar hole in the state budget. But Fulford said that was not a good enough reason to ignore a law that essentially casts the pension plan as a contract between the state and its workers.

“The Court cannot set aside its constitutional obligations because a budget crisis exists in the State of Florida,” Fulford wrote. She added that ruling for the state “would mean that a contract with our state government has no meaning, and that the citizens of our state can place no trust in the work of our Legislature.”

Employees and unions who had taken the fight to court were elated by the ruling and said Scott and lawmakers should move quickly to reimburse state workers.

“They gambled taxpayers’ money that they could balance the budget on the backs of the hard-working public employees of this state,” said attorney Ron Meyer, who represented the plaintiffs in the case. “They lost that bet today.”

Instead, state Republicans and their allies seemed to dig in — painting Fulford, who has ruled against them before, as an activist judge and vowing to push ahead with an appeal.

Scott told reporters that Fulford’s ruling “doesn’t make any sense to me” and said she had overstepped her bounds.

“This is writing the laws of the land,” Scott said. “That is wrong. And I’m very comfortable this will be held to be constitutional.”

House Speaker Dean Cannon, R-Winter Park, said lawmakers wouldn’t immediately try to find the funds to reimburse employees.

“A first opinion by a single trial court judge is a long, long way from final,” Cannon said. He said the decision “validates the wisdom of always having a billion dollars in reserve,” a House budget policy in recent years.

Senate President Mike Haridopolos, R-Merritt Island, also said the Legislature would not re-open the budget, which is already printed and ready for a final vote Friday.

“I do not expect to open the budget, I expect to win the court case,” he said.

But Fulford’s ruling still touched off a round of speculation about how lawmakers could find the money if it came to that. Groups who have pushed for the state to consider closing tax loopholes or otherwise finding new revenues renewed their calls, which have run into resistance among Republicans who find tax increases unpalatable.

Meyer said that the state should tap its reserves to repay employees. But supporters of the law were already suggesting ideas that would hit the same workers who sued the state.

“While investing in our economy and our teachers is a priority of many, it would be ironic if the union lawsuit that brought forward this activist judge’s ruling actually reduced the salaries of government workers and the union members they represent by three percent,” Florida Chamber of Commerce President and CEO Mark Wilson said in a statement issued Tuesday.

Meyer acknowledged that possibility.

“If the Legislature and the governor want to punish workers, I’m sure they’ll find ways of doing it,” he said. “But they’re not going to do it by imposing this tax upon their salaries.”

Materials from the News Service of Florida used in this report.

Peter Schorsch is the President of Extensive Enterprises and is the publisher of some of Florida’s most influential new media websites, including SaintPetersBlog.com, FloridaPolitics.com, ContextFlorida.com, and Sunburn, the morning read of what’s hot in Florida politics. SaintPetersBlog has for three years running been ranked by the Washington Post as the best state-based blog in Florida. In addition to his publishing efforts, Peter is a political consultant to several of the state’s largest governmental affairs and public relations firms. Peter lives in St. Petersburg with his wife, Michelle, and their daughter, Ella.