Pennsylvania State House Democrats are calling Governor Tom Corbett’s search for pension reforms wrong-headed, because rising costs are on track to subside. They say the key now is to find new revenue to pay for the debt connected to the state’s pension plans.
Corbett has repeatedly said since last summer he wants to find a way to tamp down rising pension costs. Next fiscal year, state and public school employee pension costs will require an additional $530 million just from the state’s General Fund.
Bernie Gallagher, a budget analyst with the House Democrats, said based on projections, rising pension costs will taper off in about seven years and then decline.
“If you have a very short time horizon that you’re interested in, it’s a big problem. If you have a long view, it’s a much smaller problem,” said Gallagher.
According to Gallagher, by the year 2030, the state’s pension plans should be funded at a healthy level again, due both to projected economic recovery and the fact that the state essentially re-financed its pension funds in 2010.
“If we look at our past we can see that if we follow the schedule, if we follow the plan, we can get ourselves into a healthy position again,” said Gallagher.
The governor hasn’t introduced a specific pension reform plan, but has said he’s interested in changing the un-earned benefits of current and future state and public school employees. He frames the pension crisis problem as one of rising costs.
“Right now we put 1.6 billion dollars from the general fund, which is at about 27.6 right now, into pensions. In ‘16-‘17, not that far from now, we have to put 4.3 billion in,” said Corbett.
Corbett has recently expressed interest in reforms that reduce not-yet-earned pension benefits for state and public school employees. House Democrats say such a move would invite legal battles over whether the commonwealth can amend a contract with its employees.