The campaign from the Washington Federation of State Employees was launched Sunday with ads in the Seattle Times and six other newspapers.

OLYMPIA, March 27.—For nearly two weeks a public cone of silence has fallen over the budget talks at the state Capitol, but an ad campaign from the state’s biggest public employee union offers a roaring confirmation that a proposal to end early retirement incentives for state employees is a big sticking point.

The Washington Federation of State Employees has launched a statewide campaign, with radio and newspapers ads, a Web page and links posted prominently on Internet search engines – the kind of campaign that costs tens of thousands of dollars. And all of it appears to be aimed at influencing four people – those who are negotiating the budget for the Democrats and Republicans in the House and Senate.

The union says budget negotiators need to keep their mitts off early-retirement benefits.

At a time when all is quiet at the statehouse and budget negotiators are practicing a tight-lips policy with the press, the ad campaign is practically a neon sign – proof that the early-retirement proposal is one of the biggest hitches, if not the biggest.

“It is very much alive and we are concerned about it, and we won’t believe that we are out of the woods until we are out of the woods,” said Tim Welch, spokesman for the 40,000-member union.

‘Middle Class Under Attack’

The federation kicked off the campaign newspaper ads in the Seattle Times and six other newspapers over on Sunday. They point the finger at Senate Bill 6378, the pension measure introduced early this session by Senate Republican budget chief Joe Zarelli, R-Ridgefield. Without quite explaining what the bill does, the ad declares, “Washington’s Middle Class is Under Attack,” and it says the measure “imposes new costs on middle class families who have already made huge sacrifices during tough economic times.”

At this point in the game, the bill itself doesn’t matter. Certainly Zarelli is the key player in the Senate right now in the budget negotiations, thanks to the dramatic vote March 2 by 22 minority Republicans and 3 centrist Democrats that shifted control of the budget to the right.

But Zarelli already has said publicly he is abandoning one key element of the bill – a proposal to close the state’s traditional “Plan 2” pension plans to new entrants and shunt them to “Plan 3,” a more modern approach in which half the employer contribution operates like a private-sector 401(k) plan. The State Investment Board shot that one down when it argued so much money would have to be kept liquid that it would foreclose lucrative investment opportunities – and that the state risked a loss in the billions.

The second major element of Zarelli’s bill, a suggestion that the state skip a pension payment this year and use the extra $143 million to help plug the state’s billion-dollar budget hole, is going nowhere, insists Gov. Christine Gregoire. She is the only player these days who is willing to say anything at all about the budget talks. Democrats firmly oppose that idea, she said late last week, and an accounting maneuver proposed by her office last week may have taken its place.

So if the costly ad campaign wasn’t proof enough, a process of elimination works just as well. That leaves the third main element of Zarelli’s bill – an end to the early retirement incentives.

Can Retire at Age 62

Since 2001, state employees with more than 20 years’ service have been able to retire with only a modest hit on their pensions. Until that time, pension payouts for those who retire before age 65 were governed by an actuarial calculation. Under the old system, a worker retiring at age 55 would take a 64 percent reduction, and just 30 percent under the new. Since 2007 public employees with more than 30 years of service have been able to retire at 62 with no hit at all.

Ending early retirement incentives for new hires was originally proposed by the governor last year. Since the full effect wouldn’t be felt for more than 20 years, it would only save a few million over the next few two-year-budget cycles. Over 25 years it would save $2.3 billion.

Said Welch, “It doesn’t make sense to us. It has nothing to do with the budget. It is an ideological attack on state employees, and we believe it is right up there with Wisconsin and Ohio, because it doesn’t generate any savings. In fact, in its original form, it would make the state much worse off financially, the entire state, not just state employees.”

And while the proposal applies only to new hires, Welch said the union has to look out for the interests of future employees, not just current ones. It’s not fair to let one class of employees have better benefits than another, he said.

Union officials have pressed the point in meetings with Democratic legislative leaders over the last week, urging them to stay firm. Meanwhile, the ad campaign urges Washington residents to call the legislative hotline and leave messages for lawmakers – who presumably would press budget negotiators as well.

Unions say the creation of the early retirement benefit was part of the decade-old tradeoff for the creation of the optional Plan 3 pensions. The current setup now allows employees a choice, though Plan 2, with its guaranteed benefits, is far more popular.

But is it an attack on the middle class? Unions say yes. A few high-paid employees aside, Welch says most state workers would be considered members of the middle class.

“They are in dangerous jobs where they face the risk of injury every day,” he said. “We have members who work in hospitals, who are community corrections officers, park rangers – even a clerk-typist in any state office faces injury because you can’t control the types of people who come in, so that was the recognition – not only that it was a trade-off, but also a recognition of the dangerous jobs that state employees have.”

Critical Element of Reform

Budget negotiators aren’t talking to the press and public about the issues that have been bogging them down. Two weeks ago Senate Republicans were enraged when Senate Majority Leader Lisa Brown told the Seattle website PubliCola about the latest talks in the governor’s office. So the Gang of 25 held a news conference to announce their latest budget proposal. And then the governor denounced their side for going public. “This is no way to get a budget through the Washington state Legislature,” she said.

But if the participants are keeping mum, there are many who are following the debate with interest, and not just on the union side. Richard Davis, president of the Washington Research Council, says changes in pension policy are a critical element in long-term efforts to bring down the cost of state government. The state has a tendency to approve new benefits when times are good, and fails to rein them in when times are bad.

“I think what we’re seeing now is a collision between two perspectives,” he said. “One says we just need to hold our breath, figure out how we need to maintain the compensation status quo, survive yet another downturn, kick the can forward – maybe try to raise taxes on people during a recession to allow that to occur, which is what the ad suggests.

“And the other is that the state ought to move into a more contemporary private sector reality and permanently address the cost curve for new employees. Nothing is being taken away except for an early retirement benefit that was not actuarily justified. For new employees going forward, they are joining a workforce with the same sort of compensation package that more approximates what you see in the private sector.”

Parity is long overdue, Davis argues.

“We’re talking about saving billions of dollars over the next couple of decades. One of the reasons that reforms are so hard to get in government is that the benefits are experienced over the long term, and you have an awful lot of people invested in maintaining the status quo right now and not solving the long-term problems. The healthiest part of this budget stalemate I think has been in redirecting the focus on long-term savings reform, and pensions are really the primary way where you can realize actual savings long-term.

As for whether state employees’ jobs are more dangerous than those in the private sector, Davis says it might be true for police and firefighters, who have a separate system. But as for clerk-typists, it’s “just like you never know if you’re working at J.P. Morgan Chase whether the ‘Occupy’ protesters are going to come smashing through the front door.”

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