State-pension surplus shrinks by 80 percent

OLYMPIA — A billion-dollar state-pension surplus that figured in budget deliberations this year has dwindled to about $200 million and may not be tapped after all.

A surplus accumulated in the pension plan for law-enforcement officers and firefighters who were hired before a less-generous plan was created in 1978. Earlier this year, budget writers and the Locke administration proposed tapping the funds for the 9,400 pensioners.

Senate Democrats wanted to create a special state reserve account and give pensioners a rebate check and give local governments part of the money for pension-related costs. Senate budget writers wanted to spend $250 million in the new state budget; the House eventually bargained that down to $125 million. House Republicans then balked at the whole plan, saying it was a "grab" that might not be wise.

James Parker, executive director of the State Investment Board, told the Joint Committee on Pension Policy last week that the slump on Wall Street has caused the surplus to dwindle to about $200 million.

The losses will not affect pension checks, and contribution rates don't need to be increased, the Department of Retirement Systems said.

Locke's budget office and some lawmakers said the surplus apparently won't be used to fill a looming budget gap of as much as $1 billion.

"It's a big resource that we and folks in the Legislature saw as a way to help, and it won't be there," Deputy Budget Director Wolf Opitz told The Olympian newspaper.

State Rep. Gary Alexander, R-Olympia, said that state taxpayers may have dodged a bullet.

"Right now the budget is bad enough," he said. "But we could have been in deeper trouble had we allowed the Democrats to dip into this one-time money to pay for ongoing programs."

Senate budget Chairwoman Lisa Brown, D-Spokane, and other lawmakers aren't flatly ruling out use of the money. "I don't know if it's off the table, but it's not as significant as it once was," she said.