A proposal to add a $5 surcharge to all homeowners and auto insurance policies in Minnesota to bolster struggling police and fire pensions got a hearing before a state House committee Tuesday, April 16.
Backed by police and fire unions, the proposal is part of an omnibus tax bill in the House that also calls for increases in cigarette and alcohol taxes and income taxes on the state’s highest earners.
The Senate is also considering the proposal, where it is awaiting a hearing in the Taxes committee.
Representatives from police and fire unions testified in favor of the bill, telling lawmakers the surcharge is needed to replace declining revenues from long-standing insurance taxes that support police and fire pensions.
“We need funds to stabilize this (pension) so we’re not coming back here every year to cut benefits,” said Brian Rice, a lawyer representing several police and fire unions, noting that reforms in 2010 and other proposals on the table this year amount to nearly $1 billion in benefit cuts for police and fire workers.
Under the proposal, some of the revenue would go straight to the pension funds to help pay down unfunded liabilities. The remainder would go to police and fire departments, including volunteer fire departments, to help pay the taxpayer share of pension costs.
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