Boston – State Representative Barbara L’Italien (D-Andover) today announced that the House of Representatives approved by a wide margin a bill granting significant financial relief to cities and towns across the Commonwealth by allowing the consolidation of underperforming local and county pension boards into the state Public Retirement Investment Trust board (PRIT).
The savings for cities and towns could be more than $100 million per year and, combined with the measure approved last week allowing communities to opt into the state’s health care system, the Group Insurance Commission (GIC), the House action could bring more than $250 million in savings to help communities reduce the reliance on property taxes.
“The House has continually put cities and towns first and this is just another example of our commitment to do all we can for the communities we represent,” said Representative L’Italien. “We have provided a roadmap for millions of dollars in savings in local budgets and I’m proud to have supported this important bill.”
“This is yet another significant reform measure that sends a strong message to cities and towns that we are serious about relieving pressure on the property tax,” said House Speaker Salvatore F. DiMasi. “Now we need to see communities join the GIC, improve their pension investments and more aggressively find efficiencies in their own budgets.”
In the bill, underperformance is defined by a two part test: Not having a funded ration over 65 percent and not being within 2 percent of the PRIT rate of return over the last 10 years. The administration of benefits will remain the responsibility of the local board that currently manages the pension system. Twenty-five systems will currently be incorporated into the state system.
“Taxpayers should not be left holding the bag for investment underperformance and the funds impacted by this legislation would be over $700 million healthier if they had been invested with PRIT,” said Public Service Committee Chairman Jay R. Kaufman (D-Lexington), whose committee primarily worked on the bill. “It would be irresponsible to allow this kind of underperformance and stress on local property taxes to continue.”
The legislation now proceeds to the Senate for its consideration.
