Colorado’s $12 Billion Pension Bond Bill Passes House, Will Face Battle in Senate

640px-Denver_capitol

A bill that calls for the issuance of $12 billion in pension bonds passed the Colorado House easily on Friday.

Now the proposal moves to the Senate, where it faces more skepticism and an uphill battle.

From the Denver Post:

The bill is the first step toward authorizing the Colorado Housing and Finance Authority to sell up to $12 billion in bonds to more quickly close the gap between PERA’s pension demands and its income.

PERA would invest the proceeds from the bond sale in the stock market.

Proponents say that with the current low interest rates on borrowing, the PERA could meet its payments and come away with extra money to fund pension obligations.

But opponents say it’s too risky, and fear the move could damage the state’s credit rating and put pensions at risk — especially if the investment market tanks.

[…]

On the House floor Friday, Rep. Kevin Priola, R-Henderson, worried what might happen if the economy declines after the state treasurer invests a lot of money.

“It’s possible that $10 billion could take a 20 to 30 percent haircut within months,” he said.

[…]

Sen. Chris Holbert, R-Parker, withdrew his name as primary sponsor on Friday.

Holbert says the bill is too complex to be fully vetted at the eleventh hour and said in a statement that he will vote “no” if it’s brought to vote.

“If this is a good idea today, then it ought to be a good idea next January,” he said in an interview.

The Colorado Public Employees Retirement Association is about 64 percent funded.

Read the text of the pension bond bill here.

 

Photo credit: “Denver capitol” by Hustvedt – Own work. Licensed under Creative Commons Attribution-Share Alike 3.0 via Wikimedia Commons

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