Pension tsunami
Next month’s primary election is mostly a free pass for state lawmakers. Without challengers, the incumbents don’t have to mount much of a re-election campaign.
And while we don’t miss the attack ads or the mailbox-jamming, taxpayer-funded faux “newsletters,” we regret that there are no challengers to pressure lawmakers to talk about things that matter — things such as the pension tsunami. That’s the tidal wave of tax increases that will slam family budgets every year for years to come.
Indeed, this is the first year of the big hits. School districts are on the hook for a state-mandated 50 percent increase in their contributions to the state-run pension plan for teachers. In other words, millions of dollars for most districts. And don’t expect Act 1 to protect us taxpayers. The state-imposed tax limit on school budgets, which caps increases at around 1.7 percent for most districts in our area, allows an exception for tax hikes associated with pension demands.
You might recall that we got into this mess early last decade when members of the state Legislature approved a 25 percent increase in pension benefits for teachers and state workers whose unions are among lawmakers’ most generous benefactors. Then they grabbed a little something extra — a 50 percent pension boost for themselves. In one admittedly extreme example of how that pension bump plays out, retired state Rep. Frank Oliver of Philadelphia collects an annual pension that is nearly double his former salary. Try $280,000 a year with an anticipated lifetime payout of $8.5 million.
The thinking that enabled such an outrage occurred during the stock market boom, when times were good and the state’s pension funds were flush with money. So much so that lawmakers lowered the contribution rate for school districts, making the problem we now confront much worse.
When the economy soured and the market crashed, the pension funds took a bath. In the private sector, employers merely cut benefits while hiking employee contributions. This kept pensions afloat — at least for employees already in the plan. Many employers nixed participation for new employees while nixing their own contribution. They also limited retirees’ access to pension benefits by among other remedies banning lump-sum payouts
Public employees have been much more fortunate. Pointing to state law, legislators argue that they cannot tamper with the state’s pension obligations. And so taxpayers have been ordered to bail out the state pension plans — while absorbing their own pension losses.
If that doesn’t get you foaming at the mouth, think about former Rep. Oliver and his pension-induced, taxpayer-funded millions. And know that those hefty hikes in school taxes that you’ll be seeing for years to come are the result of both recklessness and selfishness. And now a shameful and irresponsible refusal to tackle a complex problem head on.
Fact is, the state pension plans as currently funded and regulated are unsustainable. Real reform is needed and not the kick-the-can-down-the-road sort of approach lawmakers took when they lowered school districts’ pension obligations by stretching out the payment schedule.
This, in our view, is the most pressing problem facing taxpayers in this state — even if lawmakers don’t want to talk about it. So it will be up to us — we here at the newspaper and you at home — to press lawmakers and their challengers for solutions once the real campaign gets under way this summer. So don’t let them off the hook. Demand reform. Tell them if they don’t have a plan — a real plan — they don’t have your vote.
Bucks County Courier Times