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Editorial: Delayed response to pension reform unacceptable

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Should Pennsylvania get out of the liquor business? Yes. Does the commonwealth need to worry about growing the state lottery revenue stream that funds senior programs? Yes.

But should either of these issues be the top priority of the General Assembly when it returns to Harrisburg next week? That's an emphatic no — not when an ever-burgeoning state pension obligation remains unabated and unaddressed.

Until this issue is tamed, everything else should take a back seat at the Capitol. Because until the public pension system is reined in, at both the state and municipal level, it will continue to drain resources from every other state service.

When the Business Journal published an in-depth two-part report on the broken pension system last September, the unfunded liability in SERS and PSERS was $41 billion. Since then, it has risen to $47.4 billion. Financial experts predict that even with the fixes proposed by Gov. Corbett in his February budget address, the liability will rise to $65 billion by 2018. The thousands of municipal pension plans add another $7 billion to the total (though most of that number is owing to Philadelphia and Pittsburgh).

Every day not spent on pension reform, therefore, is making the problem more unmanageable and is increasing the drag on Pennsylvania's future.

It means the cost of doing business rises, because there is less money for education, infrastructure, development and public safety and less ability to keep taxes low. Moreover, the best and brightest will leave for better-run states, thus depressing innovation and new business startups.

Lawmakers' response to Corbett's proposal was lukewarm and, to date, few if any have championed it publicly. There seems to be much more concern about how the public employees' unions will react to change.

State Rep. Seth Grove, R-York County, has begun circulating a plan to tackle the municipal pension system. In comparison to the two big state pension systems, municipal plans — 95 percent of which comprise less than 50 employees and 90 percent of which are either "not distressed" or "minimally distressed" — are in clover. Their biggest issue right now is inefficiency, since their relatively small sizes result in higher administrative fees, but they are not sustainable indefinitely either.

Grove says he hopes his plan will at least spark discussion and he wants to make sure his colleagues don't lose sight of the municipal side of the equation when debate begins.

So let the debate begin. And if the House and Senate leadership don't take up the issue — vigorously — soon, we call on more rank-and-file members to step up and get the ball rolling.

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