SANTA FE, N.M. (AP) — Current and future public employee retirees would see smaller cost-of-living adjustments under a proposal before New Mexico lawmakers to rebuild the long-term finances of a pension plan for more than 55,000 state and municipal workers.

The Senate is expected to debate the proposal Thursday to resolve one of the largest financial problems confronting the state.

The Public Employees Retirement Association pension system has an unfunded liability of about $6 billion. That's the gap between current assets and what's owed for expected future retirement benefits.

The latest projections indicate the retirement system won't be able to pay pension benefits beyond about 40 years unless lawmakers and Republican Gov. Susana Martinez agree on a solvency plan.

Supporters of the proposed changes, which were developed by the pension program's governing board, say it's critical for lawmakers to approve the legislation before adjourning in about 10 days. If nothing is done, it could require more dramatic changes in benefits and payroll contributions to restore the retirement system's future financial health.

Besides trimming inflation adjustments in pension benefits, the legislation would require larger payroll contributions by workers and taxpayers to help shore up the pension fund. Starting in July, newly hired employees would have different retirement eligibility and benefit provisions that require them to work longer before collecting pension benefits.

New Mexico's PERA covers about 31,000 retirees and 55,400 workers for state and local governments, including police and firefighters.

Public employee pension funds nationwide have similar financial problems, in part because of investment losses during the recent recession, demographic trends of people living longer and generous provisions allowing workers to retire at relatively early ages.

The legislation, if enacted, would:

— Reduce annual cost-of-living adjustments for pension benefits to 2 percent from 3 percent. Those currently become available two years after retirement, but the legislation would phase in a seven-year waiting period. The inflation adjustments would be 2.5 percent for some retirees with yearly pension of $20,000 or less.

— Require workers to pay an additional 1.5 percent of their salaries into the pension fund. Contributions by governmental employers — meaning taxpayers — would increase 0.04 percent.

If the proposed changes are implemented, the retirement program is projected to rebuild its finances and by 2042 will have 90 percent of the assets needed to cover benefits for retirees and workers who receive payments in the future.

The Senate had planned to consider the measure on Wednesday but postponed it a day.

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Follow Barry Massey at https://twitter.com/bmasseyAP .