Sunday, April 26, 2009

PA State Pension Grab- Taxpayers Bear The Burden

Pennsylvania taxpayers will soon be facing a tax burden of insurmontable proportions. Mark Scolforo of the Associated Press writes a column about the great pension grab of 2001 and its impending impact on all of us in the very near future.

Depending on what happens in the stock market, taxpayers could soon find themselves stuck paying more than $5 billion in additional annual payments.

The figure is a moving target. But in a March presentation to a state House panel, the state's two large public-sector pension plans estimated that the $821 million a year they currently get in "employer contributions" _ the vast majority of it from taxpayers _ will need to grow to $5.7 billion a year by 2012.


There is plenty of blame to go around for this potential slow-motion train wreck, not the least being state lawmakers' unwillingness to face up to the consequences of their 2001 vote to increase their own pensions by 50 percent.

It was part of legislation that also increased pensions for about 300,000 teachers and state government workers by 25 percent. And in the following year, lawmakers pushed through a cost-of-living adjustment for retirees.

All those fresh obligations triggered a sudden need for massive taxpayer support, so in 2003 the Legislature and Gov. Ed Rendell _ then in his first year _ struck a deal to rejigger the financial structure of the pensions to delay the problem for a decade.

The Legislature and Rendell could have eased the pain by making larger contributions into the pension systems, but chose not to.

As recently as last June, then-Budget Secretary Michael Masch called for higher payments into the systems, warning that failing to act would likely result in a crisis in 2012-13. The budget that passed a few weeks later did not address the pension shortfalls, and the current budget debate centers on how to fill a $2.3 billion hole _ not on spending that might make it larger.

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