May 18, 2017
The analysis of Pennsylvania's pension crisis by Miriam Fox (PennLive, May 8 "This is the pension reform issue no one is talking about") was intriguing. However, if not the "rest of the story," Pennsylvania taxpayers deserve more of the story.
The enactment of Act 9 in 2001, was passed by a Republican-controlled House and Senate and signed into law by former Gov. Tom Ridge so it would have been easy for Ms. Fox to blame Republicans.
But she knows that without Democrats joining with Republicans to form the "Bonnie and Clyde" team that stole the surpluses of the two major pension funds, Act 9 would not have passed.
Fox also knows that the pressure to pass Act 38, which dipped even deeper into the surpluses to give COLAs to retirees, could have been easily defused had Act 9 never passed.
And she knows that had statesmen from any of the four caucuses stood up in loud opposition to the underfunding of Act 40 and Act 120, and instead insisted on proper funding of pensions in each budget year, Pennsylvania would not be facing a $75 billion pension debt.
Absent from her analysis is the blatant greed of Act 9 where "Bonnie and Clyde" established in law in Pennsylvania a "caste system" where some people are "more special" than others; where Legislators declared themselves to be more special than others when they stole for themselves a retroactive 50 percent increase in pension benefits and a 25 percent retroactive increase for other public employees, including teachers and school employees.
The latter, of course, was designed to deflect criticism at the time from public employee unions for their 50 percent pension grab.
So, it was then and remains, a "pox on both their houses."
Debating "how we got here" in Pennsylvania's Pension crisis is little more than an intellectual exercise.
We need solutions.
To the extent that Fox is correct -- and she is -- that both Republicans and Democrats are guilty of spending employer pension contributions on other things rather than keeping up with obligations to which they agreed in Act 9.
It could be argued that for that period 2001 to today, state revenues ... arrghh ... yes "taxes"... were too low.
If you are not paying all the obligations which you, i.e., the Legislature and Governor, put on the books, and made no effort to reduce spending on other things, you fall deeper into debt.
Funny how that works.
Regrettably, Fox, as do most Legislators, misses one crucial point: Sept. 11, 2001 changed much of the world in which we live.
Governments at all levels have been forced to spend billions more on security. That's money which, prior to 9/11 were available for "indulgences" dreamed up by Legislators and Governors worried only about re-election.
But times have changed; and institutions must change. Pennsylvania's pension crisis demands a twofold response.
First, the Commonwealth needs a clean, defined-contribution plan that is fair, reasonable and applicable to every taxpayer funded new hire employee.
A defined-contribution plan in which the state and schools district contribute in each budget year a 5 percent to 7 percent employer match to avoid any legacy costs being passed on to future generations of Pennsylvania taxpayers.
The defined-benefit plan of the state's two major pension funds is an indulgence Commonwealth taxpayers can no longer afford.
Double digit investment returns may surface again, but experts argue it is unlikely or would be of limited duration, so any legacy costs accruing to future taxpayers when market returns do not support defined-benefit promises, ensures Pennsylvania's generational theft will continue; and that's immoral.
Second, start paying down the $75 billion pension debt.
A .5 percent increase in the personal income tax raises $2 billion, which, if dedicated to paying down the debt, pays it off in about 20 years.
That's a reasonable timeframe.
For a person earning $30,000 a year, the increase will add $150 in taxes annually or less than $3 a week.
Conversely, if that person does not want to pay that $150 per year to help pay off the debt threatening Pennsylvania's financial future, he or she will add in each year $500-$700 of debt to future generations as the debt grows.
Only when the stakeholders, including the Governor, leadership in the House and Senate, teacher unions, state employee unions, school boards, the Chamber of Business and Industry, senior organizations., sit down in a room, face-to-face and come to grips with the reality that Pennsylvania's financial future is at stake.
And they realize that all of us, by our actions or our inactions, created this crisis and allowed it to fester and grow as we too often pursued our selfish interests; only then can we forge a long-term solution.
We owe that to the generations of Pennsylvanians that follow, even those not yet born.
Barry Shutt, a retired state employee, writes from Lower Paxton Township.