State may offer early retirement to thousands to close budget shortfall; layoffs possible

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BOSTON — Thousands of state employees could receive incentives to retire early under a proposal Gov. Charlie Baker hopes will help plug a sizeable deficit in the next state budget, the administration confirmed Monday.

The governor's office is hoping about 4,500 workers will opt for early retirement, saving the state about $178 million, according to Kristen Lepore, secretary of Administration and Finance. Those eligible for the program would be required to sign up between April 6 and May 29.

"We need to get to this number quickly," Lepore said, adding the alternative to a successful early retirement program would be layoffs.

Baker planned to file a bill on Wednesday, the same day the Republican submits his proposed budget to the Democratic-controlled Legislature for the fiscal year beginning July 1.

The Massachusetts Taxpayers Foundation, a budget watchdog group, has said that a gap of about $1.5 billion likely exists between anticipated revenues and the spending that would be required to maintain current program levels in the budget.

House Speaker Robert DeLeo sounded a skeptical note about the early retirement proposal when asked about it Monday following a private meeting with Baker and Senate President Stanley Rosenberg.

"I can remember there have been a number of early retirement plans ... that we have looked at in the past and decided that it was not in our best fiscal interest to do this," said DeLeo.

He did not, however, rule out consideration of the governor's plan, saying the House would wait to see the specific details of it.

Lawmakers would have to act on the bill within the next several weeks for it to take effect in time for sign-ups to begin in April and the savings to be realized in the next fiscal year.

The program would be available to executive branch employees who are at least 55 or have accrued 20 years of service. But workers could also qualify by adding five years to age or length of service, or some combination of those two factors, Lepore said. For example, someone who is 52 with 18 years of service could apply.

The administration estimates that about 20 percent of the jobs that become vacant through early retirement would be refilled, resulting in the net $178 million in savings.

One potential concern was how the program would affect the state's pension system.

"I look forward to reviewing the details of the governor's proposal, keeping in mind the impact it will have on our unfunded pension liability and potential effect on the state's bond rating," said state Treasurer Deb Goldberg, a Democrat who oversees the state retirement board.

Baker has ruled out new taxes, but Lepore said the budget would include other approaches toward closing the projected shortfall.

"This is one of many new tools and spending solutions that we will be announcing," she said, adding the administration hoped to avoid cuts that would impact core state government services.

One proposal calls for an amnesty program for taxpayers who have tax obligations in Massachusetts but have never filed in the state. Baker anticipates the measure to generate $100 million.

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