HARRISBURG – Sen. Lisa Baker, R-20th, issued the following statement regarding Senate Bill 1, the Pension Reform Bill, which passed the Senate 28-19 on May 13 and was sent on to the House. Baker was one of the 28 yes votes:
“It is certainly understandable why the members of the state pension systems want to retain the current structure, and the arguments in favor of it do have merit. However, in recent years there has been a great deal of study and debate directed toward the growing problem of unfunded liability in the SERS and PSERS and the negative implications for taxpayers. The unavoidable conclusion drawn by many experts is that the status quo is unsustainable, financially and politically.
If there is general agreement on any aspect of the issue, it is on the causes of the crisis – the 2001 pension increase, two severe recessions, and years of employer contributions that were far too low. This combination has created a problem that most experts do not believe can be solved solely through better investing and more responsible budgeting.
Pennsylvania is not alone in suffering from a significant pension fund shortfall, but our situation now ranks among the worst in the nation. Without significant corrective steps, neither the problems nor the public demands for reform will subside. There are substantial short-term costs already apparent in the form of higher taxes, funding reductions, program eliminations, and higher interest rates. The impact on spending and tax decisions for years to come is providing the impetus for action.
On the spending side, there has been considerable unhappiness expressed over the limits on state funding and cutbacks that have been used to balance state budgets in recent years. Rising requirements for pension contributions have crowded out program funding from both state and local budgets.
The assertion frequently made is true – the pension problems are not the fault of workers. But the same can be said for the majority of taxpayers who are private sector employees. They face the prospect of higher state and local taxes to support a pension system far better than they have. Reform does not exclude state legislators, who will face the choices other workers will.
I realize that some individuals and groups would prefer a slower process. The parts of the pension reform proposal are not new. These items have been discussed for years, and the arguments for and against have been aired in numerous public forums and public hearings. What is new is the combination of elements and the extent to which the bill changes the structure. The pension problem is tied to the state budget, so a demonstration of support for substantial legislation is needed to prompt negotiations.
The bill passed by the Senate is a good start, but is unlikely to represent the final product. Additional steps, including those proposed by Governor Wolf, are potential items for negotiation and inclusion.”