This is the year. So says Budget Secretary Charles Zogby, who in a speech in Philadelphia earlier this week indicated that pension reform will be in the state budget presented by Gov. Tom Corbett Tuesday.
This must be the year. Unfunded pension obligations are poised to take an intolerable chunk out of this and successive state budgets. Payments will go from $1.5 billion in the current fiscal year to nearly $3 billion in 2014-15 and more than $5 billion by 2019-20.
A typical state budget, remember, runs around $27 billion. What would happen to your business if upward of 20 percent of your revenue was sequestered from operations and future investment in this way, for years to come?
Since the more significant shortfall is in the Public School Employees Retirement System, that will mean significantly less in coming years for education as money is redirected to the fund, Zogby predicted. But we know money also will be tight in nearly every other aspect of the state budget — from roadwork and public safety to economic development and environmental protection — because of the need to shore up the State Employees' Retirement System.
The pension mess actually is a three-headed beast: Current obligations, now totaling about $44 billion, must be met. Changes need to be made to tame future pension commitments for state workers and school employees so the state can stand well away from any pension "cliff" again. And municipal pension funds, which aren't in nearly as much trouble currently, should be rationalized so the solvent ones can remain that way and the distressed ones stabilized all at the least cost to taxpayers.
With 1,438 individual municipal funds, efficiencies are just waiting to be found. We're not sold on a state government takeover — we need less government, not more — but opportunities to consolidate funds under continued private management exist.
This is the year — the year Gov. Corbett can deliver the most significant budget address of his tenure and, with both the House and Senate in his column, expect results. In addition to pension reform, his administration has been signaling that he also intends to present a plan to tackle another big-ticket item, the state's crumbling roads and bridges.
His speech Tuesday needs to be full of determination and practical detail. It should demand swift action from the legislature and also ask both the public and private sectors to work together to put the commonwealth back on the path to solid growth.
We look forward to hearing what he has to say.