Move to Use Pensions of WA Firefighters, Cops to Help Budget Shortfall Draws Heat

State lawmakers’ proposal to help cover a budget shortfall by using billions of surplus dollars from a police and firefighters’ retirement fund is getting some heat in Olympia.

House Bill 2034 would end the Law Enforcement Officers’ and Firefighters’ (LEOFF) retirement system Plan 1, which has been walled off to new members since 1977. It would fund a newly created retiree-benefit plan in 2029 at 110% rather than the estimated 160% as of 2024, letting more than $3 billion of pension-surplus money be transferred for other general-fund spending.

A previous version of the bill would have shifted $569 million of the surplus to the clean energy project-focused Climate Commitment Account. A Senate amendment adopted Friday, though, removed that from the legislation.

HB 2034 passed off the Senate floor March 6 on a 25-22 vote. Four Democrats joined Republicans in voting no: senators Deb Krishnadasan of Gig Harbor, Jessica Bateman of Olympia, Steve Conway of Tacoma and Adrian Cortes of Battle Ground.

The adopted striking amendment states that plan members have a constitutionally protected right to pension benefits provided under their employment contract. However, it says, they don’t have a “right to assets beyond the amount needed to completely satisfy all liabilities under the plan.”

Opponents of the measure include firefighters and Republican lawmakers who fear that LEOFF 1 members could be left out in the cold if investment markets were to freeze over. But backers believe that the move would ensure the state is in better fiscal standing without posing a real risk to recipients.

House Majority Leader Joe Fitzgibbon has said that it makes sense to look to the fund’s surplus for one-time assistance with the state’s budget woes, according to The Seattle Times.

“We think that that could go a long way towards improving our state’s fiscal situation,” the West Seattle Democrat said.

LEOFF 1 counts four active employees who still pay into the plan and more than 4,400 retirees as of last June, according to the Association of Washington Cities. The plan by 2029 will be approximately 200% fully funded.

The legislation would likely attract legal challenge.

A Feb. 26 news release from the Hagens Berman law firm announced that, should the bill pass, it is readying itself to “bring litigation against the state of Washington and its Department of Retirement Systems on behalf of our state’s first responders.”

Firm co-founder Steve W. Berman said in a statement that the bill would have “devastating effects for thousands of members of LEOFF 1,” calling consideration of the at least $3.3 billion transfer “unconscionable.”

HB 2034 passed off the House floor last month on a 55-39 vote, with only Democrats in favor. Democratic representatives Greg Nance of Kitsap, Adison Richards of Gig Harbor and Tarra Simmons of Bremerton joined Republicans in voting against the measure.

Allyn Rep. Travis Couture, the House Republican budget lead, called the proposed redirection “risky as hell” because of the legal questions surrounding it. He also worries that the tapping of these funds would set the stage for the state to later do the same with other pensions.

“We’re doing this unprecedented raid of a law enforcement officers’ and firefighters’ pension fund — people in their 70s, 80s and 90s — to cover up for budget negligence and reckless spending here in Olympia,” he said.

Pierce County Sheriff Keith Swank blasted the bill in a Feb. 14 post on X, writing that the LEOFF plan had been well-managed for decades.

“This plan was solvent,” Swank continued. “Democrats are saying FU to cops, firefighters, and their families.”

Bellingham Fire Chief Bill Hewett said in a call that governments are hurting economically. He noted that this year, the city had to cut several positions, including three fire-department layoffs.

The state has done a good job keeping its pension systems solid while other states and municipalities struggle with theirs, he said. Even though the actuaries say there’s enough funding in LEOFF 1, he said, it’s still scary to think that the proposal could make the pension less stable.

“This is a one-time Band-Aid, but it’s not going to solve the structural deficit in the state’s budget,” Hewett said.

He added that a portion of the LEOFF 1 fund was paid by the state, but it also was built from contributions from retirees, cities, counties and fire districts; local governments, for instance, cover retirees’ medical costs.

Hewett thinks that any tapped surplus should be fairly divided up between those paying in, rather than the state taking all the funds.

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