Pa. House passes pension reform, which critics say doesn’t reform anything

HARRISBURG, Pa. (WHTM) – $170 dollars per second.

$4 billion per year.

The pension clock continues to run, visible for all to see just outside the Capitol cafeteria.

The overall pension debt is now approaching $70 billion.

The state House passed Representative Mike Tobash’s (R-Schuylkill/Dauphin) bill that, he says, will begin to fix a problem decades in the making.

“In its most basic, fundamental form, we’re introducing what the private sector has and shrinking down what we can’t manage,” Tobash said of the bill that passed the House Tuesday by a 136-59 vote.

It is called a stacked hybrid plan and it would not affect current workers.

It would only apply to state and school district employees hired in 2018 and beyond.

In simple terms, the first $50,000 in income would be put in a traditional defined benefit plan. Employees would contribute 7.5 percent of their salary.

Income beyond $50,000 would be put into a 401(k)-style plan. State and school districts would match 4 percent.

Tobash calls it an important first step and long overdue.

“Let’s get it established. Let’s allow it to grow. This doesn’t mean we’re finished working on this crisis, but this is a major step in the right direction for Pennsylvania,” he said.

But critics, and there are many, insist it doesn’t go near far enough.

“People will say, ‘well, it’s a step in the right direction’,” Representative John McGinniss (R-Blair) said, “but it’s like bringing a squirt gun to a house that’s fully enflamed. It’s not gonna do anything of consequence.”

McGinniss, who had his own pension bill that’s stuck in committee, says the only real fix to the pension crisis would be a dedicated funding source to pay off the huge debt and simultaneously putting all future hires totally into a 401(k)-style plan.

“This bill is doing something that does nothing,” McGinniss said. “It is simply window dressing and puts off for a long time real reform measures.”

Pension watchdog Barry Shutt, who created the clock and has been perched outside the cafeteria advocating for real reform for nearly two years, agrees with McGinniss.

“I’ve had half a dozen legislators come by this morning and say, ‘well we did it. It’s not gonna fix anything. It probably makes things worse, but they voted for it anyhow.’ Where’s the courage?” Shutt asked.

The bill now goes to the Senate and faces an uncertain future. Majority Leader Jake Corman (R-Centre) said his chamber will look at the House version, but he generally prefers getting taxpayers off the hook by putting all new hires into a 401(k)-style plan.

“We’ll compromise to a point, but we’re not gonna say we did something and pat ourselves on the back,” he said. “Pension reform is what’s driving revenue discussions here in Harrisburg. The reason people are talking about tax increases is because of pensions. So this is the top priority.”

Interestingly, the House version would not touch the pensions of current elected officials. Corman said the Senate prefers a plan that would require current lawmakers and public officials, upon re-election, to go into whatever new pension plan they’re proposing for others.

Governor Wolf supports the House version and, in a statement late Tuesday afternoon, urged the Senate to move quickly to pass it.

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