Corbett: Pensions a pocketbook issue
Superintendent John Hoover has a $600,000 problem that he fears will cause Hampton Township School District to raise tax rates again.
“We raised taxes last year, we raised them again this year. In all likelihood, we'll have to raise them next year,” he said. “This system is just not sustainable.”
The district's pension costs are set to spike by $600,000 to $2.5 million next year, more than quadruple what they were a few years ago.
Hoover spoke at an event on Monday afternoon with Gov. Tom Corbett, who embarked on a statewide campaign to push pension reform. Lawmakers broke for summer vacation without enacting policies to deal with the state pension system's nearly $50 billion in unfunded liabilities or annual cost increases at state and local levels.
Corbett spoke at Shaler Municipal Building, where he once was a commissioner, in front of a banner reading, “Pension Reform = Property Tax Relief.”
In Allegheny County, pension costs for school districts increased $92 million in 10 years, data show, part of $1.9 billion in increases statewide.
“All you have to take a look at is what's happening with your property taxes to see that there's a pension issue,” Corbett said.
It's a central focus of his re-election campaign, where he trails York County businessman Tom Wolf. At a morning event with Boilermakers Local 154 on the heels of their endorsement, Corbett asked how many of the 90-some members in attendance paid higher property taxes in the past few years. About half the crowd raised hands.
School districts in Pennsylvania are subject to a state-calculated cap on property tax increases. To raise taxes past that cap, they need approval from the Department of Education. In the 2014-15 school year, 163 districts — including 13 in Allegheny County — said pension costs contributed to raising rates past the index.
Lawmakers lacked votes in both chambers to pass a proposal to put new employees into a hybrid pension plan that utilizes a 401(k)-style plan. Critics said it does not address the pressures of short-term contributions. Corbett abandoned his proposal to modify eventual benefits for current employees when legislators balked at the potential for the policy to wind up in court.
A hybrid plan remains politically viable, Corbett said: “This is the one that has the most votes behind it.”
Corbett called out Democrats for withholding support. Senate Democrats favor a plan involving $9 billion in borrowing and cutting contributions in the short-term, Minority Leader Jay Costa, Forest Hills, said.
“The reason he can't get the plan past the members of his own party is because it's an irresponsible plan,” Costa said.
Pennsylvania's pension debt stems from failure to make annual contributions, said Stephen Herzenberg, executive director at Keystone Research Center, a left-leaning policy group in Harrisburg. But Herzenberg said state actuarial reports show the hybrid proposal “doesn't provide any short-term budget relief at all. It actually does cut benefits sharply for a lot of new employees, but any savings come well down the road.”
Marty Marks, a spokesman for the Pennsylvania AFL-CIO, said Corbett's latest campaign is “political desperation.” Public education funding has been cut by about $1 billion since Corbett took office, he said.
“We don't have a problem on the spending side of the ledger,” Marks said. “Our problem is on the revenue side, and the governor has done nothing towards bringing new revenues into the state.”
Democrats proposed expanding Medicaid, enacting a severance tax on natural gas drilling, and taxing cigars and smokeless tobacco. Corbett said that won't address “the root cause” behind budget struggles.
His administration says federal funding that expired when he took office led to the $1 billion gap in education funding.
Melissa Daniels is a staff writer for Trib Total Media. She can be reached at 412-380-8511 or email@example.com.
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