Wednesday, April 30, 2008
Happy Days Ahead for State Retirees
A state House committee has passed legislation that would enact cost of living increases for state retirees that range from 2.7 percent to 25 percent. Why would legislators do this? Look no further than the old adage of the “squeaky wheel getting the grease”. One newspaper report notes pressure from retirees on lawmakers due to the level of returns the two statewide retirement systems (SERS and PSERS) are getting and the sponsor of the legislation noted retirees need for financial relief.
Where to begin? There are a lot of retirees in this state, union and non-union, that did not work for the state government and are feeling the pressure of mounting costs and the crushing tax burden that don’t have the luxury of leaning on the legislature for pension enhancements. These retirees will have to dip further into their pockets to pay for the enhancements through higher school property taxes or state income taxes. Remember that thanks to the last cost of living increase in the early part of this decade contribution rates for the school and state systems are projected to jump significantly. That could amount to steep tax hikes.
And what about the rest of the state? Taxpayers have been complaining about taxes and regulations and common sense reform that would grow investment here, yet we only get tepid change. Yet when the head of the retirees’ union queries “what's a better economic stimulus package than to give your former state employees a cost-of-living increase, which they're going to spend right here in Pennsylvania?,” few if any point out that such an action may end up costing Pennsylvanians in the future or the flippant nature of the comment. Consider that, according to the 2006 SERS financial statement, the last three cost of living adjustments for retirees (effective dates of July 1 in 1998, 2002, and 2003) added an additional $1.1 billion to actuarial liabilities of the system. Did this infusion of cash help stimulate PA’s economy?
Where to begin? There are a lot of retirees in this state, union and non-union, that did not work for the state government and are feeling the pressure of mounting costs and the crushing tax burden that don’t have the luxury of leaning on the legislature for pension enhancements. These retirees will have to dip further into their pockets to pay for the enhancements through higher school property taxes or state income taxes. Remember that thanks to the last cost of living increase in the early part of this decade contribution rates for the school and state systems are projected to jump significantly. That could amount to steep tax hikes.
And what about the rest of the state? Taxpayers have been complaining about taxes and regulations and common sense reform that would grow investment here, yet we only get tepid change. Yet when the head of the retirees’ union queries “what's a better economic stimulus package than to give your former state employees a cost-of-living increase, which they're going to spend right here in Pennsylvania?,” few if any point out that such an action may end up costing Pennsylvanians in the future or the flippant nature of the comment. Consider that, according to the 2006 SERS financial statement, the last three cost of living adjustments for retirees (effective dates of July 1 in 1998, 2002, and 2003) added an additional $1.1 billion to actuarial liabilities of the system. Did this infusion of cash help stimulate PA’s economy?
