Legislative Report #05-22

Report 05-22
July 1, 2005

GENERAL ASSEMBLY ADOPTS CONTINUING RESOLUTION

There was very little progress on Senate/House budget conference negotiations this week as both chambers focused attention on passage of House Bill 1630 to continue operations of state government into the new fiscal year that begins today. House and Senate approved the continuing resolution on Thursday.

Early in the week, the House rejected the Senate's version of HB 1630, triggering the appointment of a joint conference committee to resolve differences. The conferees reached a compromise on Thursday.

The resolution continues state government operations through July 20. Agencies are authorized to continue spending at the 2004-05 Appropriations Act. The continuing resolution also extends the temporary ½% state sales tax that was due to expire on June 30 to the date that the 2005-07 budget is approved, but in no event beyond December 31, 2005. Further extension of the tax will be addressed in negotiations on the 2005-07 budget.

There are two provisions in the continuing resolution that affect retirees. The employer contribution rate to the Teachers' and State Employees' Retirement System will remain at the current level (2.17% of payroll) until the new budget is adopted. Also, the resolution extends the law allowing retired public school teachers to return to work after a 6-month separation from service without loss of pension benefits and with no limitation on earnings through June 30, 2007.

WHAT ABOUT COLA'S?

Several members have called our office to find out what will happen with retired governmental employee COLAs for 2005 if the new budget is not approved until the latter part of July. At this point, it appears that budget negotiations may take several more weeks. If negotiations extend beyond July 20, the COLA increase in monthly pension checks will be delayed. However, once the budget is approved, COLAs authorized by the General Assembly will be paid retroactively to July, 2005.