Guest column: Reflecting on federal budget deal’s impact on veterans



The bipartisan budget act of 2013 was passed by Congress and signed by President Obama in late December. The bill establishes the federal government’s budget and helps prevent future government shutdown threats for another two years. It erases cuts to the military that were made in the automatic so-called “sequester” cuts a year ago. The bill also makes changes to military pension rules that many Minnesotans have asked me about.

Under current law, the U.S. secretary of defense annually adjusts military retirement pay to mirror changes in the Consumer Price Index (CPI), which helps adjust for inflation. This new budget bill will subtract 1 percent from the increase military retirees receive called the Cost of Living Adjustment (COLA), but will not allow a negative COLA. That means, if the CPI increased by 2 percent from one year to the next, the COLA increase for retirement pay would only result in a 1 percent increase. This change does not impact all military retirees.

These changes go into effect in December, 2015, meaning no COLA rates will be altered until at least 2016. This will have the largest effect on retirees drawing retirement pay prior to age 60, as this group will see lower COLA every year until then. However, all retirees will see a one-time COLA “catch-up” increase at age 62 which will increase their pension as if it were adjusted every year. Some experts predict this will reduce vested veteran pensions for many retirees by a significant amount. That concerns me.

Our retired veterans and their families were promised fair pensions, which I believe should be untouchable by Congress. It isn’t fair to cut pensions after soldiers have already served. If long-term changes needed to be made for military pensions in the future, that would be a different story. The savings from cutting these pensions over time will make only a tiny dent in national spending but a noticeable dent in retirement earnings for our nation’s heroes.

These pensions should not be a bargaining chip when budget negotiations reach gridlock, and I am concerned they could be used more and more in the future.

I want you to know that I am following this issue closely from a state perspective. I plan on again offering legislation this spring to stop imposing state taxes on the retirement pay of Minnesota veterans — we are one of only a handful of states that still impose this penalty.

Rep. Bob Dettmer, R-Forest Lake, represents House District 39A in the Minnesota House of Representatives. District 39A includes part of Stillwater, as well as several communities to the north up to Shafer.