For years, legislators short-changed state employees
Secure retirement is imperative for a healthy economy. That’s why a key component of Gov. Wolf’s budget proposal is pension reform. State employees have contributed 6.5% to 7.5% of their paychecks toward retirement every payday. But bad policy from over a decade ago allowed the state to skimp on its share of pension contributions. That’s like not making the minimum payment on a credit card for over ten years. That, combined with the stock market downturns, created a pension funding problem that has reached $52 billion.
What’s more, because of the corporate tax shelters like the Delaware Tax Loophole and the Corbett Administration’s refusal to consider a tax on shale drillers, we’ve let huge corporations get away with not paying their fair share.
State employees have already made sacrifices. Five years ago, Act 20 was passed, which cut benefits for new employees, And now some legislators would have them sacrifice even more or even give up their retirement security altogether. It’s time for a solution that makes sense and does not burden the middle class.
So how do we fix it?
As part of his state budget proposal, Gov. Wolf has a commonsense approach to pension reform that saves retirement and does not ask anyone to make more sacrifices. His plan works by putting an end to huge payments to Wall Street, paying our bills on time, making sure politicians can’t spend workers’ retirement on other projects, and creating new sources of funding:
- Every year Pennsylvania gives nearly $700 million to Wall Street firms and hedge fund investors (much more than most other states), rather than making sure those funds to workers’ retirement. Gov. Wolf will change that system, making sure money goes to our middle class, not Wall Street millionaires.
- Governor Wolf’s budget will create a dedicated revenue stream for pensions and put the funds into a restricted account so politicians can no longer spend workers’ pension savings at their whim.
- The governor’s plan also modernizes the liquor store system to generate more money for pensions.
- This budget plan will reduce Pa.’s long term liability by more than $10 billion.
What about Big Business?
To make things even more fair for Pa. residents, Gov. Wolf is asking big business to stop shirking their responsibilities and be part of the solution.
His budget would institute a modest 5% extraction tax on Marcellus Shale drilling companies. Pennsylvania is the only major gas-producing state that does not have a severance tax and it’s estimated to generate $1 billion for Pennsylvania in this fiscal year alone. His budget also aims to close corporate loopholes (like the Delaware Tax Loophole) which huge corporations have used to avoid paying taxes by hiding their taxes out of state. That move would generate an additional $500 million per year.
As a businessman, Gov. Tom Wolf plans to make our state more attractive to business investment by significantly lowering the corporate net income tax (one of the largest in the country) and phasing out the capital stock and franchise tax. With the Governor’s budget, not only will corporations finally be paying their fair share, they’ll be getting a fair deal to make doing business in Pennsylvania a win-win situation for everyone.
The choice is clear. Supporting Gov. Wolf’s budget is right for Pennsylvania and its workers. Now the rest of the Legislature needs to get on board.