Legislature must get serious about pension reform
Employers in the Philadelphia area know that public pension reform is needed if we are to grow our economy and improve government operations.
Without legislative action soon, our pension obligations will continue to consume larger portions of the state budget and further strain the ability of state, county, and municipal governments, as well as school districts, to maintain, let alone improve, basic services.
Today, the state and school employee retirement systems of Pennsylvania and Philadelphia have a combined unfunded liability of more than $50 billion.
Rising pension costs are the reason that City Council and Mayor Nutter have been exploring various strategies to make further payments into the city pension fund in hopes of reducing an unfunded liability that is nearing $5.3 billion.
But the continuing decline of revenues and the increases in expenses and interest payments also jeopardize the fiscal stability of the commonwealth.
Credit rating agencies have warned the state that if the legislature does not address the ever-increasing pension liability, they would downgrade the commonwealth's bond rating, which would increase the cost of borrowing for the state. Recently, Moody's downgraded Pennsylvania's general obligation rating, citing pension issues as a key reason.
Legislators on both sides of the bargaining table agree that the long-term outlook on pensions is bleak and changes need to be made.
Gov. Corbett and several state lawmakers have attempted to tackle this complex issue and have offered proposals that await consideration in Harrisburg.
Many of these proposed solutions do not affect the defined-benefit pension plans of current state and school employees, but introduce plans for new workers that would be less costly to taxpayers.
Other options suggest tapering payments and addressing the state's unfunded pension liability through bonding proposals that would take advantage of very low interest rates, continue employer contributions, and provide some immediate budget relief.
For several years, the chamber has been working closely with our partners in western Pennsylvania, the Allegheny Conference on Community Development, to advance a shared policy agenda and to urge action on meaningful state and municipal pension reforms. During the 2013-14 legislative session, our organizations' top priorities included pension reform and funding for transportation infrastructure.
In the same bipartisan spirit that saw lawmakers in Harrisburg come together to enact transportation funding, we urge all of our elected leaders to continue working together to address an even greater challenge, the commonwealth's pension issues.
Our members know that leadership often requires difficult choices. The Greater Philadelphia Chamber of Commerce represents more than 600,000 employees throughout the region. About 80 percent of our membership is made up of small businesses. Each year, these business owners make tough decisions about hiring and benefits to balance their books and plan for the future.
We encourage the General Assembly to adopt this same attitude and vote for fiscal stability in Pennsylvania by supporting real and meaningful pension reform now. Doing nothing should not be an option.
Rob Wonderling is president and CEO of the Greater Philadelphia Chamber of Commerce. firstname.lastname@example.org