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Editorial : Wolf's waffle

Tom Wolf is a denier. No, we’re not referring to global warming. We don’t much care what the Democratic gubernatorial candidate says about that issue, if anything. We do care what he and other candidates for state office have to say about a much warmer topic here in Pennsylvania: the public pension crisis.

It is, in our view, the hottest and most troublesome issue facing state government. In short, the state’s two pension funds — one for public school employees and one for state workers — are a combined $47 billion in the hole. That number is expected to grow to $65 billion in just a few years.

Making up the difference will require an enormous infusion of tax money, mostly property taxes paid to school districts, from every household in the state. How much? At this point, some $13,000 per property owner stretched out over numerous annual tax hikes. We say “at this point” because the hole is getting bigger; in other words, $13,000 isn’t the end point.

As we reported last Sunday, the current bull market isn’t growing the state’s pension funds at a pace needed to make up the debt because the hole is so deep. So anybody who says improving market conditions will fix this mess either isn’t being honest or hasn’t done his or her homework.

This is why we’ve paid great attention to what the candidates are saying about public pensions, especially Wolf, since he has a double-digit lead on Gov. Corbett.

What Wolf is saying about this very real crisis is very worrisome. Essentially, he isn’t saying much.

On his website, under “Workers’ Rights”, Wolf says this: “Tom Wolf absolutely opposes changes to current employees’ pension plans, and he believes that a defined benefit retirement plan is the most effective tool for ensuring that our public workers have a financially secure retirement.” It goes on about how the state needs “high quality workers” and that defined pension plans attract and keep those workers while supplementing what he considers substandard wages.

The “defined benefit” pension plans that Wolf mentions are all but extinct in the private sector for a very good reason: They are unsustainable. They guarantee a specific benefit at retirement despite how an investment fund performs. Employers with an underperforming pension fund could go out of business trying to meet those obligations. It’s why they’ve gone away in favor of defined contribution plans, which share the investment risk with workers.

All reasonable pension reform proposals, to one degree or another, convert the state’s defined benefit plans to defined contribution plans. Which, by the way, is what Tom Wolf did with his own business. That’s right. He transitioned his own employees to 401(k) plans.

So maybe Wolf isn’t a denier after all. We hope not. Our state is facing financial disaster; more accurately, taxpayers are. We’ll need leaders who not only recognize reality but have the political backbone to deal with it — no matter how much the public employee unions stuff in candidates’ campaign treasuries.

Read the article here

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