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TV Smart Talk - Gov. Corbett's Pension & Liquor Reform Plans

Written by Nell McCormack Abom | Feb 6, 2013 11:45 AM

Is your head spinning from all the reforms and initiatives proposed by Gov. Tom Corbett in his new budget? We’ll try to ease the confusion by inviting the chief architect of the governor’s plan, Pennsylvania Budget Secretary Charles Zogby, to join us Thursday night at 8. He’ll take your questions and comments along with Richard Dreyfuss, an actuary and senior fellow at the right-leaning Commonwealth Foundation and the Manhattan Institute who has written extensively about Pennsylvania's pension woes, Sharon Ward, director of the left-leaning Pennsylvania Budget and Policy Center, and Jerry Oleksiak, vice president of the Pennsylvania State Education Association.

Gov. Tom Corbett.jpg

Pennsylvania’s rapidly rising public-pension obligation is the behemoth, or the “tapeworm,” as Gov. Corbett likes to call it, that threatens to consume 60 percent of all new revenues in the current fiscal year and more in years to come. The Pennsylvania State Employees’ Retirement System (SERS) and the Pennsylvania Public School Employees’ Retirement System (PSERS) have $41 billion in unfunded liabilities. The state’s mandatory pension contribution this budget year jumps a half a billion dollars to more than $1.5 billion and then leaps another half a billion dollars next year and each year for the foreseeable future.  Mandated pension contributions will devour most, if not all, new state revenues unless something drastic is done, Corbett contends.

To help tame those wild costs, the legislature last session passed Act 120. It changed retirement benefits for future employees, but it did nothing to solve the unfunded liability problem. Now, Gov. Corbett proposes a highly controversial and potentially unconstitutional remedy: Reducing the future benefits of current state and school employees. AFSCME, PSEA and other public unions threaten lawsuits. Lawmakers, many from the governor’s own party, question the legality and practicality of the plan (in fact, no one in the State House Chamber during Corbett’s budget address, including his Lieutenant Governor and Cabinet, applauded his pension-reform plan). New hires would have to enroll in a 401(k)-style defined contribution plan, similar to the retirement plans used today by most private-sector companies. Many public-sector workers are worried and furious, while taxpayer groups praise most aspects of the plan. 

At the same time, Corbett launches another area of attack: Harpooning the state’s liquor monopoly. In the name of both customer convenience and help for public schools, Corbett wants to shutter the 600 state stores, auction off 1,200 retail wine and liquor licenses, thereby producing $1 billion that he would funnel over four years into grants for education programs benefitting children in grades K-12. Grocery stores, big box retailers and beer distributors can bid on the licenses. The plan also allows restaurants and taverns to sell beer and up to six bottles of wine to go, and beer distributors would be able to sell smaller quantities of beer, like six-packs.

The governor calls it his “Passport for Learning” block-grant program. Keep in mind that governors over the last 30 years have tried and failed to get PA out of the liquor business. Corbett’s counting on this version that at least temporarily produces “cash for kids” to provide the incentive to get it done.  Join the conversation!

We’d love to hear from you. What’s your question or comment about Gov. Corbett’s spending plan? You can call-in live Thursday night at 8 to 1-800-729-7532, post a message to this article, or on Facebook, send an email to, or send us a Tweet.

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