Friday, July 3, 2015

Editorial: A new pension crisis

Link: A new pension crisis [Daily News]

Editorial: A new pension crisis

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Link: A new pension crisis [Daily News]

THE HOUSE vote expected today on the city's budget-relief bill, enabling it to raise the sales tax, has been delayed another two days. This gives House members - including the Philadelphia delegation - more time to check their math on what might be most damaging: angering labor or devastating an entire city if City Hall reverts to a draconian plan that includes 3,000 layoffs.

The Senate amended a bill that would allow Philadelphia to raise its sales tax and delay pension payments to include pension reforms for all cities in Pennsylvania, not just Philadelphia. The amendments would mandate a changed pension plan for future members. Labor says this unfairly interferes with collective bargaining. We get it, but what we don't get: If the bill fails and the city lays off a significant number of union workers, doesn't that undermine collective bargaining more seriously?

It makes you wonder: How much lower can legislators' popularity get? According to a new Daily News/Franklin & Marshall poll, nearly 80 percent say the state Legislature is doing a fair or poor job.

But here's the biggest mystery: Why, in its haste to reform municipal pensions, the state has ignored its own pending pension crisis?

In 2001, the Legislature enhanced pensions for all state employees and school district employees in the commonwealth. A few years later, it established a 10 year loss-postponement period that ends in 2013. Having failed to adequately fund its own pension obligations, the state faces a devastating pension crisis in 2013. The extent of that crisis has been outlined in budget reports from the governor's office, but those projections pre-date the economic meltdown cause by the recession. That means the crisis is likely to be even more serious.

Now we get it: Maybe the state rushed to reform municipal pensions to distract us from its own pension mess.

 

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Every year, city government spends slightly more than $4 billion. Where does all that money come from? More importantly, where does it go? Are we getting the most bang for our tax buck? “It's Our Money” is a joint project between Philadelphia Daily News and WHYY, funded by the William Penn Foundation, designed to answer these questions.

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