Monday, May 9, 2005

RE: 2005 Taxpayer Advocate of The Year

CONTACT: Mike Jerman, Vice President, 972-8814 or 808-8814 (cell)

Rep. David Clark Receives 2005 Taxpayer Advocate of the Year

The Utah Taxpayers Association has awarded Rep. David Clark (R-Santa Clara) the 2005 Taxpayer Advocate of the Year for his sponsorship of HB213. HB213 reformed the process in which state employee accrued sick leave hours are converted into retirement benefits.

“Rep. Clark demonstrated commitment to sound fiscal policy and dedication to taxpayers in his district and throughout the state”, said Mike Jerman, vice president of the Utah Taxpayers Association. “Many legislators are intimidated by powerful special interest groups like government employee unions, but Rep. Clark led the charge in reforming an overly generous state employee retirement benefit that was harming the state budget and was increasing pressure for tax increases”, Jerman added.

HB213 reformed the process that converts state employee accrued sick leave into retirement benefits. Prior to HB213, retiring state employees could “cash out” 25% of accrued sick leave hours and convert the rest, after a 480-hour deduction, into health insurance coverage at the rate of eight hours sick leave per one month insurance coverage – a $600 benefit for eight hours of sick leave. Since state employees receive thirteen sick days per year and since health insurance costs continue to escalate, the impact of this benefit on the state budget was becoming increasingly critical every year. In fiscal year 2005, this benefit will cost taxpayers $16.3 million, and the cost is growingly alarmingly at an annualized rate of 16.7%.

HB213 allows sick leave that is accrued prior to December 31, 2005 to be converted into health insurance coverage under the previous arrangement, with minor IRS-mandated changes, thereby keeping commitments made to state employees. Sick leave accrued after 2005 will be converted into 401(k) transfers and medical savings account distributions based on ending rate of pay. “Compared to benefits in the private sector, this is still an exceptionally generous benefit, especially considering that state employees will continue to receive thirteen sick days per year and will be allowed to accumulate these sick days and covert them into financial benefits at retirement based on ending rate of pay or based on average state employee rate of pay, whichever is higher”, Jerman added.

HB213 was intensely opposed by the government employees union, and many legislators buckled under intense lobbying pressure. Nevertheless, both houses passed HB213, and Gov. Huntsman signed the bill into law following the legislative session.

“Passage of HB213 was a huge victory for taxpayers. Rep. Clark represented taxpayers while being fair to state employees” Jerman concluded.