Fed pensions up for debate in highway bill

Wednesday - 2/8/2012, 6:47pm EST

By JOAN LOWY
Associated Press

WASHINGTON (AP) - Federal employees would pay more toward their pensions and new employees would receive less generous retirement benefits under a House Republican plan to pay for highway programs.

The proposal, posted online Wednesday by the House Rules Committee, is intended to help make up a shortfall between federal gasoline tax revenues and the $260 billion that Republicans want to spend on highway construction and transit programs over the next four and a half years.

Under the proposal, the pension contributions of federal employees would increase a total of 1.5 percent over three years. New employees' retirement benefits would be calculated based on an average of an employee's past five years of earnings, instead of the current three years, among other changes. The savings to the government would be about $40 billion over 10 years, according to an estimate by the Congressional Budget Office in December of similar legislation.

Members of Congress would also have to contribute more to their pensions.

Federal employee pay has already been frozen for two years to save money. The government is the nation's largest employer, with about 2 million civilian employees, according to the Bureau of Labor Statistics. About 85 percent of those work outside the Washington, D.C., metro area.

Colleen Kelley, president of the National Treasury Employees Union, called the proposal "a gratuitous attack on the public servants who protect our borders, safeguard our air and food supply and look after our life savings."

Republicans have been scratching for a means to pay for popular highway programs because revenue from the federal 18.4 cents-per-gallon gas tax and 22.4 cents-per-gallon diesel tax has been declining and is no longer sufficient to cover spending. Revenue from the taxes goes to a trust fund for highway and transit programs.

Congress could resolve the highway program shortfall by increasing fuel taxes, but lawmakers of both parties are reluctant to raise any taxes, especially in a slow economy and during an election year.

"Using revenues unrelated to transportation undercuts the user-pays principle that our transportation system is based upon and fails to ensure the long-term viability of the nation's transportation program," said Erich Zimmerman, a policy analyst with Taxpayers for Common Sense, a federal budget watchdog group.

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Associated Press writer Sam Hananel in Washington contributed to this report.


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