Oct. 01, 2015
Gov. Tom Wolf finally made a counter proposal to the Republican controlled legislature offer from mid-August.
On September 16, 2015 the Governor, after taking a month to consider the Republican proposal finally declined legislative leader’s proposal of $400 million in education funding in exchange for major reform of public service pensions and privatization of wine and spirits.
The pension reform bill that the Governor vetoed would have placed all new employees and elected legislators in a 401(k) style defined contribution pension plan.
The Governor’s counterproposal includes only new employees making over $75,000. Randy Albright, the Governor’s Budget Secretary reports that approximately 20% of new-hires would make over $75,000. This provision renders the governor’s pension reform meaningless, as it applies to too few to make an impact. In addition, Wolf proposes borrowing an additional $3 billion to provide more money to the pension system. Borrowing $3 billion more for a system already burdened with over $50 billion in unfunded liabilities does not solve the problem.
I do agree with Governor Wolf’s anti-spiking and reduction in Wall Street fees. An anti-spiking provision would limit overtime pay in pension calculations and salaries are averaged over a longer period of time. Reducing management fees paid to Wall Street fund managers should help pension returns. However, pension reform that places only new employees making over $75,000 per year in a defined contribution 401(k) style pension simply is not real reform. The Governor’s proposal does little to fix the problem and could make the problem worse.
The Governor’s proposed privatization of our antiquated liquor system also falls short. It would lease the system to private management company, but forces them to keep the current employees, with salary and benefits that far outpace anything in the private sector. What about performance and competitive wages? Where is the competition if one private firm runs the entire system? Under the Governor’s plan, it would remain a monopoly under private management. That certainly is not what I consider competition and the free enterprise system. The state store system without structural changes will spend more money to operate than it takes in revenue by 2018. The Governor’s proposal would exacerbate this problem.
Neither of these counter proposals have the ability to help fund our educational system. We need true structural reform to our pension and liquor systems as well. The Governor’s current proposals do not go far enough to set Pennsylvania on a sustainable financial path.
There is no question that there are serious issues that need continued discussion, but in the mean time, let’s get basic reforms and money flowing to the agreed upon line items in the Governors original budget. I will encourage our leadership to pursue any avenue to provide funding to those agencies.
By Rep. Steve Mentzer (R-Lititz)
Representative Steven Mentzer
97th Legislative District
Pennsylvania House of Representatives
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