Contact Information 

District Office
1555 Highlands Drive
Suite 110
Lititz, PA 17543
Phone:  (717) 626-1776
FAX:  (717) 626-4234

Capitol Office
51A East Wing
PO Box 202097
Harrisburg PA 17120-2097
Phone: (717) 787-1776

E-Mail:  
smentzer@pahousegop.com

Pension Costs Driving State Budget Issues
5/5/2016
After months of discussion, debate and negotiation the 2015-16 state budget that became law spends $30.02 billion. One issue that is continuing to drive our state budget difficulties is pensions. Total state budget expenditures are nearly $3.65 billion. Public pension costs will continue to rise over the next several years as the state’s contribution to our public pension systems increases. Between the state’s two pension systems, the Public School Employees Retirement System, which includes educators, and the State Employees Retirement System which includes all other state employees, have a combined unfunded liability of over $60 billion—which is two-times the size of our annual state budget.

In order to payoff this unfunded liability over time, state contributions will continue to increase unless additional reforms are enacted. In the past year alone, pension payments increased nearly $1 billion over last year. Next year, pension payments are estimated to raise by another $600 million. By the end of the decade, during the 2019-20 budget year total pension payments will be over $5 billion—which is nearly 20 percent of our current budget.

How can the state continue to shoulder this increasing burden on the taxpayers? Our state economy is not growing fast enough to produce enough additional revenue to cover the necessary increases in payment to our state pension system. Looking back at the past decade of economic growth in the Commonwealth, the average increase in our economic output is approximately 1.5 percent per year. If that average continues and our revenue collections and economy grew at only 1.5 percent next year, that would only produce approximately $450 million in additional tax revenues.

Without an economy that is growing fast enough to collect the needed revenue to pay additional pension costs, the Legislature must consider ways to address this issue. I believe that the General Assembly should consider reforms to retirement benefits for newly hired state employees, as an effort to ensure that pension funding issues will not be a long-term issue for the Commonwealth. We must also work to implement pro-growth legislation that allows businesses to expand and create more jobs in the Commonwealth.

 

Representative Steven Mentzer
97th Legislative District
Pennsylvania House of Representatives

Media Contact: Eric Reath
717.260.6187
ereath@pahousegop.com
RepMentzer.com / Facebook.com/RepMentzer
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