State House Sound Bites

Capitol reporter Katie Meyer covers Pennsylvania politics and issues at the Pennsylvania state capitol.
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Corbett carries the pension torch

Written by Mary Wilson, Former Capitol Bureau Chief | Jul 20, 2014 9:09 PM

Photo by Mary Wilson / witf

Governor Corbett isn't giving up the ghost of a public pension overhaul -- saying he may still call a special session of the state Legislature to address the issue.

His preferred proposal still does not have enough support in the House and Senate, Corbett said at a roundtable discussion in Hummelstown Friday - one of many such events his office scheduled across the commonwealth last week.

The governor made daily statements about the plan to reduce retirement benefits of future public workers. Supporters say the changes would reign in long-term costs of public pensions. Opponents, most of them Democrats, say a better solution is to find new funding for pensions by raising taxes.

"They just feel, well you have to tax more," Corbett said. "Well, you'd have to tax and tax and tax everybody. You couldn't tax any one business enough."

The governor has begun to acknowledge that the proposal in question would not generate short-term savings for the state or school districts, both of which are buckling under rising pension costs due to the state's heavy debt on its two public pension funds.

"This is a first step," Corbett said of the House proposal that evaded a vote in July. "This stops the bleeding by moving everybody over to a different system."

Opponents say even the long-term relief Corbett promises is in question.

"The actuarial studies show these very small savings in some of the out years," said Stephen Herzenberg, director of the left-leaning Keystone Research Center. "But the actuarial studies also point to a potential transition cost." Herzenberg said switching future public employees to a partial 401(k)-style retirement system, as has been proposed, would leech money from the state's traditional pension plan funds.

Changing retirement benefits for state workers and public school employees would not make immediate reductions to what Pennsylvania owes now in pension payments - an outstanding obligation pegged at about $50 billion, an ever-climbing figure. But Corbett said grappling with that existing debt should happen after pension benefits are changed for the long-term.

"We need to sit down and think about what brings relief sooner and saves money for the school districts, but more importantly for the homeowners, and the taxpayers and property owners," said Corbett. "And there should be more discussions."

The governor isn't carrying the torch in a vacuum. The gubernatorial election looms four months away.

Corbett will face Democrat Tom Wolf, the man who won the May Democratic primary in a landslide and who surpassed Corbett by 20 points in a June poll. The two candidates disagree over how to handle both the state's pension debt and current public pension benefits.

Wolf opposes changing benefits, though he has said he may support borrowing to reduce the size of the state's existing pension debt. Corbett is no longer pushing any particular proposal to reduce the current debt, which is the immediate source of rising pension costs for the state and school districts.

Published in State House Sound Bites

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