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“Republican” lawmakers in South Carolina are contemplating pay raises for state employees in an effort to offset reductions in the generous retirement benefits these employees are entitled to receive, sources tell FITS.

Our legislative sources say that pay raises for state employees will be a “top priority” as GOP budget writers determine how they should spend an estimated $1 billion in new revenue for the coming fiscal year. Last year, state government grew by $1.3 billion to a record $22.1 billion.

South Carolina taxpayers? They received nothing back in the current budget … and aren’t likely to get anything back in the coming budget, either.

Meanwhile, as of November 1, 2011 there were 15,536 full-time state employees in South Carolina who earned more than $50,000 a year – not counting these benefits, obviously. On those salaries alone, taxpayers are shelling out more than $1.1 billion a year. Also, the current unfunded liability of the S.C. retirement system is an estimated $14-17 billion.

The state’s controversial “retirement czar” – the flamboyant, Lamborghini-driving Robert L. Borden – resigned his post earlier this month. Borden’s commission was operating on a $5.8 million budget a year ago – but convinced Gov. Nikki Haley and leaders in the “Republican-controlled” S.C. General Assembly to appropriate another $5.5 million in the current budget. The agency was planning to ask for $19 million in the coming budget – which prompted several fiscal conservatives to begin investigating how the agency was spending its money.

Chief among those? State Treasurer Curtis Loftis, who has been pushing pension fund reforms ever since he was elected.

Some of those reforms are now gaining traction – although it appears as though they will come with a sizable up-front cost to taxpayers.

A proposal introduced by a S.C. House of Representatives subcommittee this year would require state employees to put 7.5 percent of their salaries into the state retirement system (as opposed to the current rate of 6.5 percent).

Employees would also be prohibited from collecting full benefits until they had worked for 30 years and attained the age of 62. Currently, workers can draw full benefits after 28 years of service – with no age restrictions.

Additionally, lawmakers want to begin calculating each employee’s pension amount based on the average of five consecutive years of their highest salary – as opposed to three years. That would reduce the benefit amount – as would a new provision that addresses attempts to “spike” benefits.

Finally, the plan would do away with automatic cost-of-living increases and would require that state lawmakers vote on these increases each year. Also lawmakers have toyed with the idea of closing the costly and controversial Teacher & Employee Retention Incentive (TERI) program to new participants.

We support all of these reforms – in fact, we proposed several of them months ago.

What didn’t we propose? This notion of cutting employees a check in an effort to make up the difference …

South Carolina state employees receive far better salaries and benefits than their private sector peers. And reasonable reductions in their retirement benefits are not only sensible – they are unavoidable.

Unfortunately, rather than making a responsible reduction in state government’s future obligations – lawmakers are trying to pull off some quid pro quo with our tax dollars.

While such a situation would ordinarily call for strong fiscal leadership from our state’s so-called “Tea Party” governor, Haley obviously doesn’t have a leg to stand on when it comes to this issue (click here and here to see what we mean).

Our state should absolutely take steps to reduce its unfunded liabilities. In fact if it doesn’t, taxpayers will be on the hook for an even bigger mess. What it should not do is force taxpayers to subsidize those reforms via unnecessary pay hikes.

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