Gov. Bill Haslam quietly scoots away from the nutty ideas of the Legislature's far right. But he isn't shy about the legislative agenda he has steadily put in place to favor high-end tax savings for the wealthy — like his own family's multi-billion-dollar Pilot Oil dynasty — and for business interests generally. Nor is he bashful about cutting state benefits for state employees particularly and working Tennesseans generally.
He already has accomplished his goal of ending state inheritance taxes for the wealthiest residents of our relatively low-income state. Now he's going after the state's workers' compensation plan, and pushing to end guaranteed retirement incomes under the state's widely appreciated fixed-benefit pension plan for state employees and teachers.
The former, pitched by Haslam as a way to make the state more "business friendly," clearly would reduce workers' rights and compensation benefits, even as it adds an estimated 20 government jobs in the state's labor department's workers'-compensation division. The pension plan changes — Haslam's office predictably calls both initiatives meaningful reforms — would close the current fixed-benefit pension plan next year for new employess and shift to a hybrid plan that would provide some guaranteed income coupled with variable 401(k)-based income.
Both initiatives, if passed into law, would become effective July 1, 2014. Both, understandably, are also controversial: They reasonably can be seen as gratuitous changes to relatively solid programs. They would cut rather ordinary benefits to help pay for Haslam's various other plans to give cash incentives for new businesses, along with generous tax abatements and new tax cuts for business-related income. While similar "reforms" have been made or are underway in other states, there is a commonality in purpose that typically undermines benefits for state workers while expanding favors to businesses.
Workers' compensation whittled
Advocates for retaining the current worker's compensation plan, which underwent an overhaul by former Gov. Phil Bredesen, cite good reasons why workers would be hurt by Haslam's plan. His blueprint, which Republicans are steamrolling to his desk, would create a new agency to handle workers' compensation claims.
Instead of letting injured workers take disputed claims to civil courts, the state would designate a fixed schedule for compensation due for various injuries. Disputes would be handled by a panel of arbitrators appointed by the governor's office. Despite that conflict of interest, Haslam says the system would save money and time and expedite payment for workers' claims. In fact, it's rather obvious the governor's plan would save some money on claims: The crux of the matter is how much savings would be fair to workers under an administrative plan that the governor would clearly control.
Lawyers and lawmakers who favor the current system argue, with good reason, that a schedule of fees wouldn't account for pain or complex injuries with multiple affects, nor would it necessarily be fair in complicated medical circumstances. The also reject the difficulty of achieving the narrower legal right to a judicial appeal of a low-ball compensation award guided by insurance companies that weigh compensation by their own profit motives.
Haslam should provide workers fairer access to independent arbitrators and judicial appeals. But given the backing of his GOP-dominated Legislature, he doesn't appear interested in an impartial path to compensation for Tennessee's injured workers.
Pension changes merit deeper review
Gov. Haslam's proposal for a revised state pension plan seems equally gratuitous, never mind that many companies and state and local governments are moving away from fixed-benefit pension plans. The proposal is less one of economic necessity than the executive trend to cut employee benefits to make room for more perks for businesses. The inherent result is bound to be a needless loss of employee morale and loyalty.
Both are important, and intertwined. Tennessee's state employees and teachers — and even the county government employees who participate in the state's Consolidated Retirement System — often remain in their jobs at lower pay than they otherwise could earn, because they value their pension plan. Under the current plan, a teacher making $45,000 a year and retiring this year after 30 years of service would earn a pension of $2,113 a month.
Tennessee's state pension plan is widely regarded as one the nation's most well-managed and paid-up plans. Indeed, the long-term unfunded liability is barely 10 percent of the fund's current value — and that's in the wake of the worse financial implosion in 80 years. Tweaking it would fix it. Terminating the fixed plan would undermine the loyalty of state employees and teachers. Why change good for bad?