It sure is easy for politicians to make promises. It just ain’t easy to fullfill them. The story below is about the Pennsylvnia  state budget. It is the same story across all states. Politicians sign legislation giving out goodies to get re-elected. The time bomb doesn’t explode for a decade or more, after the slimy politician is running the Department of Homeland Security or being paid as an Obama shill on MSNBC. The lack of courage, fortitude, honesty and intelligence extends across both parties. Tom Ridge signed legislation in 2001 that provided gold plated pension benefits to government workers and the slimy politicians that voted for the legislation. Ed Rendell further extended and increased these benefit promises. You can see from this chart that PA is not even the worst offender.

A recent study estimated that the unfunded pension liabilities for state government workers exceeds $4 trillion. In classic government fashion, Governor Corbett of PA is being branded a scrooge for drastically cutting spending and impoverishing school districts across the state. That is humorous since this year’s budget is $27.3 billion and next year’s budget will be $27.7. Only in this land of delusions could a $400 million increase be described as horrific cutbacks in government spending. There is never a mention about the fact that every school district in the state went on a spending spree in the mid-2000s because the real estate taxes from the housing boom were rolling in like waves on the ocean. Well the waves have receded from the shore and a Tsunami of unfunded promises are about to wash over the delusional morons who spent all the money and made all the promises to government employees.

The wailing and grinding of teeth over this year’s budget is laughable when you consider what is coming. The taxpayers must foot a $1.2 pension expense for the government drones this year, or 4.3% of the state spending. These pension payments are on automatic pilot. In 2016, the taxpayers of PA will be on the hook for $6 billion of pension expense, or approximately 20% of the state spending. This is called math. Either the taxpayers of PA will have to pay a whole lot more in taxes or drastic spending cuts will need to occur in other parts of the budget. There are 5.2 million households in PA. Each would have to pay over $900 more per year in taxes to pay for the pension promises made to government union drones. We all know that the FSA in Philly and Pittsburgh don’t pay taxes, so the average hard working middle class schmuck would have to ante up over $1,200 more per year to satisfy the insatiable appetite of government union workers.

This tapeworm was introduced into the digestive system of Pennsylvania by a Republican governor in 2001. He’s rich. He earns money for speaking engagements. He started our beloved DHS. This brilliant guy even invented our color coded terrorist warning system. We are now at Shit Your Pants Yellow alert. By 2016 we’ll be at Commit Suicide Red.

Will any politicians have the guts to confront the government unions and kill this pension parasite before it kills us all? I doubt it. There are elections to be won and promises to be made. That tapeworm looks harmless.

Funding Pa. pensions is ‘tapeworm’ in budget talks

Wednesday, June 6,2012

It’s crunch time in Harrisburg. In other words, it’s budget time.

As school districts across the state reel from the effects of an austere spending plan put forth by Gov. Tom Corbett, Republicans in the state Senate have created their own budget and restored many of the cuts proposed by their fellow Republican governor. The state House is expected to vote on that version this week, possibly as early as today. Then both sides likely will hammer out a final version with the governor.

Here’s the good news: Some education funding is likely to be restored, in particular when it comes to higher education.

Here’s the bad news: It won’t necessarily solve the fiscal woes afflicting school districts.

Now here’s the really grim news: None of this even addresses the elephant in the room, the biggest budget crisis in the state.

That, of course, would be the ocean of red ink inundating the state’s two large public employee pensions, those covering the bulk of state government workers and public school teachers.

This year the state’s on the hook for $1.2 billion in pension payments. That increases to $1.6 billion next year and an astronomical $6 billion by fiscal year 2016-17.

Perhaps that is why Corbett is reluctant to start restoring money to the budget. He refers to the pension crisis as “the tapeworm” in state budget talks.

The pension crisis has been exacerbated by several factors. First, while enjoying a bullish ride on Wall Street for years, the state and districts looked at more rosy predictions and cut their contributions to the fund. Then the market tanked.

Also crucial was a deal cut by former Gov. Tom Ridge back in 2001 that boosted the payouts for pols and teachers while cutting taxpayer contributions.

Now the bill is coming due, and it’s a whopper. It won’t solve the current dilemma, but some denizens of Harrisburg with an eye on the future are offering an important change.

State Senate Majority Leader Dominic Pileggi, R-9 of Chester, is proposing legislation that would derail this gravy train for all future public employees. Instead of the defined benefit plan those workers now enjoy, they would instead join the rest of us in a defined-contribution plan, similar to a 401(k).

It’s a common-sense move that is long overdue. Sure, it would be easy to harpoon Pileggi and several other Republicans for cutting someone else’s retirement benefits while theirs remains intact. It won’t change the fact that the current system is unsustainable.

More importantly, it does not address how the state is going to fund its current pension woes.

What almost no one in Harrisburg is willing to say is the very real possibility of someone actually proclaiming what many are thinking – that as currently constructed the system, will not be able to pay out what was promised.

One possible solution would be to reconfigure pensions to their pre-2001 levels. That no doubt would be met with catcalls from those approaching retirement.

The move to get public employees out of defined-benefit plans is a start. But it must be accompanied by a solution to the more immediate problem — that $6 billion tab lurking in the distance.

One thing we’re sure of. This tapeworm is hungry. And it’s not going away.

— Journal Register News Service


  1. Admin – to more accurately depict and illustrate your point, please post the Alien bursting through the chest scene from the movie – this, I understand, is an actual government drone from California.

  2. I saw that guy who is bursting out of the taxpayer’s chest on the news yesterday – he was in Wisconcin.

  3. Wisconsin, Pennsylvania, Illinois, New York, what’s the difference? The government drone parasites have pensions coming that nobody can pay for, so, once again, and as loud as I can, I say “FUCK ‘EM”.

  4. In North Carolina, the unfunded largess is free health care upon retirement, vested at 5 years of service, a $20B liability, one year’s general fund budget and over twice the amount of the pension fund.

    At least the General Assembly had sense enough to move the vesting out to 20 years, but that was only 5 years ago. Too late to stop the demographic toll of the boomer infestation.

  5. Liberals, unions, government drones and desk warmers and bankrupt states; Oh wait, bankrupt states cancels out the first 4, hallelujah!


  6. While the state retirement shortfalls get a lot of attention, very little media seems to be devoted to the federal employees’ retirement pension.
    It is considered a level 1 obligation – an explicit liability – and is listed on the balance sheet at around $5 trillion.
    The FASAB is the accounting advisor for the federal government.
    It has come up with a new classification – “dedicated collections” to replace “earmarked funds.”
    Dedicated collections have at least one non-federal source of payments and its contributions are dedicated exclusively for the beneficiaries.
    From a report entitled “Funds From Dedicated Collections: Amending Statement of Federal Financial Accounting Standards 27, Identifying and Reporting Earmarked Funds; Statement of Federal Financial Accounting Standards 43:”
    Page 9: “Funds excluded.
    Certain categories of funds are excluded from the reporting requirements of this standard. Intragovernmental funds (such as loans from the Social Security trust fund to the Treasury, my words) are excluded because they are revolving funds that conduct business primarily within and between government agencies. Funds established to account for pensions, other retirement benefits, other postemployment benefits, and other employee benefits provided to federal employees should not be classified as funds from dedicated collections because such funds account for employer-employee transactions and requirements tailored to those transactions are provided by SFFAS5, Accounting for Liabilities of the Federal Government. In addition, because these funds recognize significant long-term liabilities, the large negative net position offsets much of the generally positive net position of other funds from dedicated collections. The result at the government-wide level is that the large negative net position of these funds obscures the large cumulative amount that needs to be repaid by the general fund in order for the dedicated collections to be used for their intended purposes.”
    Don Levit

  7. Will my contribution to the Wisconsin Retirement System (WRS) change?
    Yes, under the Budget Repair Bill, all state employees covered by the WRS, with the exception
    of State Patrol Troopers and State Patrol Inspectors, **will be required to pay more** Currently
    executive status employees pay nothing, general status employees pay 0.2% of earnings, and
    protective status employees pay 0.8% of earnings. Under the Bill, executive status employees
    and general status employees will pay one-half of the WRS contribution rate for their status
    type, while protective status employees will pay the same percentage as general employees. For
    2011, this means executive status employees will pay 6.65% of earnings, and general status
    employees and protective status employees will pay 5.8% of earnings.
    So the Wisconsin workers are going to pay more and apparently the taxpayers arent going to be paying less. This is a budget repair bill in Wisconsin, not a help the middle class cope by tax relief bill. But Im sure those clever politicians already knew that.

    I have a feeling things wont be much different in PA when the dust settles.


  8. AWD, then what? Federal pensions amount to the same thing, with automatic COLA, and union pensions are guaranteed by you!

    When the banks are nationalized, so will be pensions. I say let’s start cutting with all the bennies and retirement perks the US Congress has voted for themselves, get rid of their pensions and medical benefits and asundry, and put them of SS and Medicare. If we start there, the rest is child’s play.

  9. nonanon:

    I feel they should lose everything, sorry to say, and they will, as state go bankrupt en masse. That’s the only way to get the “union cancer” out of the system. They’re getting paid 60% more than everyone else while working. They get to retire at 50 around here with 75% pay, it’s complete and utter bullshit. If they were stupid enough to rely on these ridiculous pensions and save nothing when they were making a fortune/money for nothing, then tough shit. They lose their pensions and health benes, and they can go after the crooked politicians, union bosses and lobbyists that made it all possible.

  10. OK, just for shits & grins, I’ll take the “devil’s advocate” position. Suppose you are an experienced professional looking for work. Private industry offers bigger salary. but longer hours and less security. The gov’t offers lower salary, but stable, mostly in town work, minimal overtime (unpaid, of course) required. They also offer a defined-benefit pension plan-a term of employment.

    So, the state made a deal-is it unreasonable to expect them to honor its end of the commitment down the road? Not asking if they can or not-should they renege on a term of employment? I pay my mortgage, regardless of whether the value of my house increases or decreases, because I made a commitment. My employer is not held to the same standard?

    Fire at will, Gridley

    1. AKAnon

      The question is not whether the government SHOULD honor their pension committment. The question is CAN they honor it. The answer is NO.

      There is not enough money available to honor the committment. It’s really about math and the stupidity and corruption of politicians.

      So Solly. Your pension will not be honored, because it can’t be.

      Math is hard.

  11. AKA – the difference is 1) the state does not pay less, it very often pays more, and 2) if the company makes a bad deal, it goes broke and the employee gets nada. With the state employee he expects the deal to be honored by the public – broke isn’t considered by him to be an option. The state employee expects absolute certainty, while private employees know, or should know, no such thing exists. There should never be defined benefit oensions.

  12. llpoh-with all due respect, I disagree, at least in specific circumstances. I took a significant pay cut when I went to work at the state of Alaska from private sector. I have since increased my salary, but compared to private sector, I could make more. This is based on my peers’ salaries, and (IMO) comparable work and responsibility. My primary benefit is not working long hours on short notice the way they do. That and the defined benefit retirement program. As I said before, a term of employment, for better or for worse. Not my fault (at the individual level) that the state committed to my term of employment, but they did. Whether gov’t or private industry, no entity should commit to future liabilities it is unable or unwilling to honor. I don’t, and I know you don’t either.

    In any case, I appreciate your input. I didn’t expect my argument to be universally endorsed. More popcorn.

  13. Aka – the problem is that these arrangements are made by government drones backed by my money. And too often – universally often- they re bad deals and cannot be paid for. Business cannot give guarantees that are good forever. Governments cannot either. They may have promised you something, but fact is they are not in position to fulfill said promise. I can agree to anything if I know in the end i will not have to actually pay out. A salary and basic benefits is all any employee should be promised. Governments are no different.

    If you are going to rely on them to honor their promise in the long run, you are taking a mighty risk. Especially as the people will in the end refuse to honor that promise.

  14. llpoh-FWIW, I don’t count on them honoring their contract, but it would be nice.

    I tried to find the “Road Warrior” scene video, where Max tries to get the refinery boss to honor the contract he had with the dead expeditionaries, but I’m not savvy or dedicated enough to do so. IIRC, the response was “If you had a contract with that man, it died with him” or equivalent That’s what I expect, anyway.

    I just threw this out there as food for thought.


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