Pension time bomb keeps on ticking
In fairness to Pennsylvania's legislature, most members had not yet been elected in 2001 and, therefore, did not participate in building the pension time bomb that since has exploded in the wallets of state taxpayers. Sen. John Gordner, while he was serving at the time as a state representative, declined the increase, a decision that lives on permanently for him.
Any sympathy for their plight this budget season should be limited, however, as they try to deal with a burgeoning budget deficit driven mostly by rising pension costs. Every day that current lawmakers refuse to reform the multiple blunders committed 13 years ago is another day on which they personally benefit at the expense of the people they represent.
The state government is responsible for 55 percent of employer contributions to the statewide pension plan for public school employees and 100 percent of the plan for state workers. Together, the increase in those costs will be about $600 million this year, not counting the local increases to be paid by school districts. (For a fresh perspective on that impact, see the alarming news from Southern Columbia Area in today's edition.)
It is a legislative and gubernatorial election year. All of the House and half of the Senate are on the ballot, along with the governor's race. So there is no chance that the $600 million - the principal driver of an even larger overall state deficit - will be covered by a tax increase. Gov. Tom Corbett already has said as much.
To Corbett's credit, he took a shot last year at truly reforming the pension systems, reasoning that he would able to do so with support of the majorities his fellow Republicans enjoy in both legislative houses.
The plan got no more traction with Republicans than Democrats, for whom state employee and teachers unions are major constituencies.
Some lawmakers actually contend that a modest "reform" they enacted in 2010, which applies primarily to new employees, "is working." Yet, since then, the annual costs have escalated and are projected to continue to do so, and rating agencies Fitch and Moody's have downgraded the state's debt due to its failure to deal with its pension obligations.
Even though the pensions systems demonstrably are unsustainable, the focus of the Legislature is to get through this budget and election season without a tax increase. That means they likely will do what their predecessors did more than a decade ago - continue to accrue unconscionable pension benefits for themselves while bequeathing the cost to the next generation of lawmakers and taxpayers. So, from their perspective, maybe Act 120 is working.