Gov. Corbett is touring Pennsylvania to convince people that changing the public pension benefit system will directly reduce property taxes. But an understanding of Pennsylvania’s current pension problem shows that’s not the case.
1. Pennsylvania’s problem is pension debt, not the cost of pension benefits. Just a little more than a decade ago, the public pension systems were funded at MORE THAN 100 PERCENT. The failure of the state to help school districts fully contribute to the pension funds in good times led to massive debt when bad times arrived in the mid-2000s. If we want to fix the pension problem, we need to pay off the pension debt.
2. Pennsylvania has a plan in place to reduce the debt. In 2010, the General Assembly passed Act 120 with bipartisan support. It protects the state and school districts from huge pension payment spikes by setting out a schedule for paying off the debt gradually over the next several decades. Just like any debt reduction plan, it won’t work if we don’t make the scheduled payments.
3. The pension plan the governor is pushing DOES NOT reduce the pension debt any faster than Act 120. His assertion that placing new public employees in a hybrid pension plan will save money and reduce property taxes in the near term is simply false. On top of that, the governor’s February proposal to avoid the scheduled payments in Act 120 will only make the debt problem worse.
4. The governor and the Republican-controlled General Assembly could have addressed the real pension problem by providing funding to school districts so they could educate students and make their pension payments. Instead, they’ve done the exact opposite: they’ve cut funding for schools by nearly $3 billion since 2011. Those cuts have driven up property taxes for senior citizen and middle-class homeowners. To add insult to injury, the funding that should have gone to school districts to help keep property taxes down has instead gone to profitable corporations in the form of $2.1 billion in tax cuts. In return, Pennsylvania residents got a job-creation rate that is second-to-last in the nation.
The governor and other Republicans want to gradually transition new teachers, firefighters, police officers, nurses, janitors, counselors and other public workers to a 401K-style retirement plan. Any significant savings this might produce won’t come for decades. In any event, school districts will be forced to use any short-term relief they see from any source to backfill the classroom funding the governor has taken away, not to provide property tax relief for homeowners. The Corbett pension plan has absolutely NOTHING to do with saving money for current state and school district budgets, or reducing property taxes for homeowners today.
The governor’s budget choices have put us where we are now, not pension benefits for retirees. His sudden attempt to link pensions to property tax increases that have been occurring throughout his tenure is little more than a desperate, election year ploy – and an incredibly deceptive and misleading one at that.
Members of the Allegheny County Delegation are: