First Posted: 5/2/2014
You don’t hear much from the gubernatorial candidates about Pennsylvania’s overwhelming public pension obligations.
Every candidate ought to be addressing this thorny topic. With close to $50 billion owed over the coming decades and no visible means to fund it, it’s an unwelcome challenge, but it’s not going away. And it gets worse the longer it remains unresolved. Without a solution, pension obligations for retired teachers and state workers constitute an enormous, unfunded liability that jeopardizes other vital parts of Pennsylvania’s budget.
Now credit rating agency Standard & Poor’s has noticed. Standard & Poor’s recently announced it might actually downgrade the Keystone State’s rating if it doesn’t see concrete efforts to structurally balance the budget and address its long-term pension liabilities. The agency cites growing cost pressures, slow economic growth and little reserve cash combined to produce the negative outlook.
Four Democrats are vying for the nomination: businessman Tom Wolf, state Treasurer Rob McCord, U.S. Rep. Allyson Schwartz and former Department of Environmental Protection secretary Katie McGinty. All have given pension reform short shrift. Likewise in his proposed budget for the coming fiscal year, incumbent Republican Gov. Tom Corbett offers only short-term fixes.
Long-time government watchdog Tim Potts offers a novel solution: Imposing a small tax on stock purchases.
Whether you agree with the idea or not, he’s right to wrestle with a huge fiscal problem that has dogged Pennsylvania for more than a decade and right to note that, without a fix, the pension crisis will afflict taxpayers for decades to come.
Even large public pension plans are sustainable – if they’re funded properly. Public retirees have done their duty by making their own contributions toward their pension. But successive Pennsylvania governors and legislators from both parties have failed to act.
Pennsylvania voters deserve to know where all candidates for governor stand on this vital issue.