Ind. Governor Signs Legislator Pay, Health Insurance Bills

April 26, 2007

Indiana Gov. Mitch Daniels signed two bills into law this week _ one that would raise the base pay of legislators and another that would create new health care retirement benefits for some state employees and elected officials, including lawmakers.

Daniels, a Republican, said that in the interest of bipartisan cooperation, he decided the bills were acceptable.

“It would have been best to deal with these bills after action on more important matters, but under the law they must be signed or vetoed today,” Daniels said. “But now let’s see equally decisive action on items of major importance to all Hoosiers, especially taxpayers, school children and vulnerable Hoosiers.”

The pay raise bill increases the base salary for members of the General Assembly from $11,600 a year to more than $20,000 in 2009. That bill also ties salary increases for statewide elected officials, including the governor, to the average pay increase for state employees.

State lawmakers would no longer receive a public pension package that matches $4 to every $1 they contribute. Instead, the package would be about a $2 to $1 match _ essentially tying it to the same rate the state contributes to public employee pension benefits.

The other bill would create new health care benefits for retiring state employees and state elected officials, including legislators who have served at least 10 years.

Sen. Mike Delph, R-Carmel, voted against both proposals.

“I’m very uncomfortable with state lawmakers sitting in judgment of their own pay and benefits,” he said.

Several legislators have noted that base pay for lawmakers have not been raised since the mid-1980s, and a higher salary would encourage people from all walks of life _ not just the wealthy or retired _ to run for the General Assembly. Some also have said that by eliminating the more lucrative pension plan, overall compensation essentially would even out.

Lawmakers were stung by public criticism in recent years for their previous pension plan and for having created health care retirement benefits for themselves that were more generous than those of other state employees. They already had rescinded the special health benefits without legislation.

However, the health benefits bill they passed this session would create a plan for retiring state employees or elected officials who have served at least ten years. It would provide money that could help cover their health care costs, including insurance premiums. If there is a balance in their account when they reach age 65, it could be used to supplement Medicare.

The state would make annual payments to the account for each employee or elected official, depending on their age. It would range from $500 for those aged less than 30, to $1,400 age 50 or over.

For the next 10 years, employees who retire with at least 15 years of service, or elected officials who have served for at least 10 years, would get “catch up” payments of $1,000 for each year of their service.

That provision would help those who retire before having time to build a balance through annual contributions, and would expire in 2017.

The cost of the total plan is estimated by the Legislative Services Agency to be $55 million beginning in fiscal year 2008, but drop by about 40 percent after 10 years. That’s in part because if an employee leaves their job before retirement, they would lose the money in their account and it would go back to the state’s general fund.

Half the cost of the plan would come out of the state’s main checking account, with the rest from federal money and dedicated funds.

Senate President Pro Tem David Long, R-Fort Wayne, said the plan may allow some state employees to retire earlier because they will not have to keep working just for health insurance.

Under the pay raise bill, legislative pay will become 18 percent of the annual salary of judges, so lawmakers will get raises based on the average for state employees, as judges do.

Lawmakers will no longer have to specifically vote to increase their own pay. But they would have to approve appropriations that would provide pay increases for employees, which would also raise legislative salaries.

Although legislators’ have not increased their pay since 1985, their per diem pay for expenses has increased over the years. In recent long sessions like this one, lawmakers have earned an average of about $45,000 in salary and per diem.

Topics Legislation Indiana

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