Senator Kevin Kelly implores legislature to focus on state’s fiscal crisis

May 2, 2016

HARTFORD – Lieutenant Gov. Nancy Wyman, in a rare parliamentary move, broke a tie Saturday night, approving a controversial bill that would create a state-sponsored retirement program for workers in small business.

“Ladies and gentlemen, I cast my vote for yea,” Wyman said after an 18-18 deadlock was posted shortly before 8, culminating a two-hour debate. Wyman, a Democrat, who presides over the Senate, had to ask aides for the next move. “Now what do I do?” she asked before making the final pronouncement on legislation that sparked deep philosophical arguments, in both the House and Senate, over the role of government.

The bill, which narrowly passed the House earlier in the week, is aimed at helping as many as 600,000 state workers who do not have retirement plans. Supported by the AARP, the bill heads next to Gov. Dannel P. Malloy’s desk. Three Democrats voted against the bill, including Sen. Paul Doyle of Wethersfield, Sen. Gayle Slossberg of Milford and Sen. Joan Hartley of Waterbury.

Nora Duncan, state director for the AARP, praised the Senate.

“We applaud the Senate leadership for their commitment to providing Connecticut’s 600,000 workers without a workplace retirement savings plan an opportunity to build a secure financial future for their families,” she said in a statement. “We are confident the governor will also support the bill that adds no additional cost to taxpayers and lead to less reliance on state-funded social safety net services in the future.”

Republicans claimed that the current private market has plenty of opportunities for workers to save for retirement, and that setting up a quasi-public board with a vendor to offer the plans would be redundant because there are many plans already offered in the open marketplace. At a time of fiscal crisis, they said, it may become a waste of government resources.

Sen. Edwin A. Gomes, D-Bridgeport, who introduced the legislation, said the board would not be state run and participation would be voluntary.

“A competitive bidding process would award the business to a third-party vendor, similar to the retirement options offered to many large companies,” Gomes said. “The savings accounts would travel with the employee from job to job. The state does not take or borrow money from the employee retirement accounts. The topic has been debated for nearly a decade in Connecticut and still there is only a 4.25 percent participation in retirement savings accounts for people who have no employer payroll retirement savings plan.”

Gomes said that when employers offer retirement plans, more than 70 percent of workers join.

The retirement board would set up Roth IRAs that have tax advantages for participants.

The bill passed the House early last Tuesday 76-63 after a six-and-a-half-hour debate. The Connecticut Retirement Security Authority would be created, along with a nine-member board. The retirement program would be open to those at least 19 years of age and would begin during the fiscal year that starts July 1, 2017. All eligible employees in companies of five or more workers, who make at least $5,000 a year, would be automatically signed up for the program unless they opt out.
An amendment offered by Republicans was rejected.

Sen. Michael A. McLachlan, R-Danbury, said the bill seems to force small employers into having to file complicated federal tax records that go with retirement plans. “The disclosure requirements alone that are part of the code of federal regulations related to retirement plans are onerous,” he said. “My concern is that we are passing along burdens to small companies across Connecticut without the proper training, number one and number two, I have concerns that the liabilities that go along with federal law are going to put some of these employers in a Catch 22. This is a big deal. This is a very very big deal for the state of Connecticut.”

Sen. Kevin Kelly, R-Stratford, said that the state’s fiscal crisis should be focusing lawmakers’ attention to the looming $930-million budget deficit.