A Lakelands lawmaker involved in finding solutions to cutting down on the state’s massive unfunded pension liability said he backs Comptroller General Richard Eckstrom’s suggestion to roll a year-end surplus into the account.
The state’s fiscal year ended June 30, and general fund revenues grew 8.6% over 2018, bringing in $8.8 billion, creating a $350 million windfall.
“South Carolina faces a dangerous ticking time bomb. The state retiree pension plans face a whopping shortfall of $24 billion, and I’d argue that it’s perhaps the most serious problem we face,” Eckstrom said. “Across the country, retirement systems which have ignored mounting pension shortfalls have been forced to take drastic measures — steep tax hikes, deep cuts in services and reductions in pension benefits for retirees.”
Eckstrom said it would be “foolish” for officials to allocate the money to any other cause, and state Sen. Mike Gambrell, R-Anderson, agreed.
“Sounds sensible to me,” Gambrell, a member of the Joint Committee on Pension Systems Review, said.
That committee hasn’t met since February 2018, but it did help shepherd through legislation created to stop pension costs from ballooning even more by requiring employers to increase their contribution into retirement system by 2 percentage points in 2017-18 and then 1 point a year after that through 2022-23, until they reach a total of 18.56%.
At three times the state’s budget, Eckstrom said solving the pension crisis should be a top fiscal priority for legislators.
“Every little bit we pay now helps alleviate some of the inevitable pain that lies ahead. Continuing to put off dealing with this problem shouldn’t be an option. Of course, paying down the pension debt is just a small step toward fixing our pension problems. It will require substantial structural changes to truly put the retirement system on sound footing and protect the pension benefits of retirees and current employees,” he said.
“It’s also worth noting that there are signs of economic uncertainty ahead. It’d be wise to be careful about any new spending now that might be subject to belt-tightening in the near future.”