Pension Debt Grows $15M Per Day
By Rep. John D. McGinnis
$15 million of new pension debt each and every day over the last 15 years! That’s what our state government has dumped on the taxpayers of the Commonwealth, all the while falsely claiming to have had balanced budgets and making Pennsylvanians some of the highest taxed and most debt burdened citizens in America. No wonder the demographic projection for Pennsylvania’s future is dire.
The new pension bill that passed the House on June 14th does nothing to stop the increasing pension debt and, frankly, is a joke, albeit a cruel one. Even if all the assumptions baked into this convoluted plan hold true (and none of them likely will), the total present value of taxpayers’ “savings” over the next 35 years is about $1 billion. Compare that to the present value of the unfunded liabilities of the state pension systems, which is $70 billion and grows $1 billion every ten weeks, and you get an idea of how unserious elected officials are at addressing the single worst financial calamity in the history of Pennsylvania.
It is particularly disappointing that rank-and-file members were excluded from trying to improve the bill through the amendment process on the House floor. Using sleight-of-hand parliamentary maneuvers that would have impressed David Copperfield, and manipulating the requirement for actuarial analysis of all pension bills, House leadership shut out all meaningful reform. No House member even had a chance to look at the actuarial analysis for the stacked hybrid pension amendment before they voted on it. All other amendments were ruled out of order because the House wouldn’t wait two weeks (or two hours for that matter) to review legislation that will have a fiscal impact on the Commonwealth for more than 80 years.
In 2001 and 2002, legislators expropriated for themselves and other public sector employees a $15 billion pension surplus that belonged to taxpayers. In 2003 and again in 2010, legislators voted to divert taxpayer dollars intended for pension funding to other line items in the budget. These acts would be called theft and misappropriation of funds if it weren’t for the folks writing the law.
The upshot is that taxpayers, still shackled with paying for and indemnifying exceedingly costly public sector retirement plans, are also stuck with paying off $70 billion of pension debt. As private sector employees struggle to fund their own modest retirements, public sector employees are guaranteed the most generous retirement benefits anywhere. Who’s the master and who’s the servant in this relationship?
Supporters say the new pension bill is a step in the right direction. Folks, if you are on a beach when a tsunami is about to hit and you take one tiny step away from the ocean, it’s not going to make any difference. It is past time for the incremental approach to fixing the financial house of our state pension systems.
Supporters also say the bill will slow the deteriorating financial condition of the state pension systems. That’s not true, but even if it were, what difference would it make to drive off a cliff at 55 m.p.h. instead of 60 m.p.h.?
The governor and supporters of the stacked hybrid plan will claim that bipartisanship is alive and well in Harrisburg. The sad fact is it always has been with respect to public sector pensions. The party of stupid and the party of evil always find a way to agree to do what is both stupid and evil. Taxpayers today and into the distant future will have a hard time appreciating this “spirit” of cooperation. Or, as growing numbers of citizens are already doing, they will just leave the state.