Legislature much more active in election year
To say members of the Pennsylvania Legislature did nothing last year would not be true. To say they did next to nothing would be. But it’s amazing how the prospect of standing for re-election can motivate even the most moribund of lawmaking bodies.
Last year, the General Assembly and the governor couldn’t even produce a budget, which is the only absolute duty of the Legislature. They also punted on virtually every other issue of import. But with all seats in the state House and half of those in the state Senate up for grabs this year, it’s as if our lawmakers started feeding from a trough of Geritol.
First, they approved a long-overdue medical marijuana law. More recently, they took a step in the right direction with a bill to partially privatize wine sales in the commonwealth. And now, the House has OK’d a measure to address – albeit in a small way – the state’s huge public pension problem.
Under the plan, newly hired state workers would come under a hybrid system that combines a traditional defined-benefit plan and a 401(k)-type plan. Proponents said the state would save billions over the next 30 years.
Specifically, those hired starting in 2018 would receive a traditional pension benefit on the first $50,000 they earn each year, a figure that would rise by 3 percent a year. Retirement benefits on pay beyond that amount, and on all pay earned after 25 years of work, would come through the 401(k)-style plan.
“We will be fully 20 years behind the private sector,” Rep. Warren Kampf, R-Montgomery, told the Associated Press. “It is high time that we enact legislation which creates a defined-contribution plan.”
We would agree with that, but we’d also note our elected officials in Harrisburg are about 20 years behind on dealing with the mess they and their predecessors created in the current retirement system for public school employees and state workers, which has a projected deficit somewhere in the neighborhood of $65 billion. This latest proposal won’t do anything to address the existing pension burden.
Opposition to the measure came largely from House Democrats. One of those voting no, Philadelphia Democrat Mark Cohen, was quoted in the AP report as saying, “I am very, very skeptical about the merits of cutting people’s pension benefits because some model somewhere, some assumption, says we have a $60 billion debt. I do not think that is a real figure.”
Well, there may be some debate about the exact amount of indebtedness, but we can say with certainty it is extremely large. We’d also advise Rep. Cohen no one’s pension benefits are being cut. The proposed pension change would apply only to new hires, and those people would know exactly what benefits they were being offered when hired.
But the House action could be an exercise in futility, because its prospects of passage in the Senate are cloudy, at best.
A Senate bill that would have made larger cuts to future pensions was rejected by the House late last year, and Senate Majority Leader Jake Corman, a Centre County Republican, said the House bill doesn’t achieve enough savings because most new hires earn less than $50,000 a year, meaning their retirement benefits would come entirely through the traditional side of the plan.
Neither the House’s bill nor the Senate measure go far enough in addressing the state’s pension mess. Making a significant dent in that $65 billion unfunded liability, which grows larger with every passing day, requires an increase in revenue, which is typically achieved through an increase in taxes. Did we mention it’s an election year?