Alarm bells are going off in Scranton, PA (the only second class A city in the Commonwealth). The Auditor General predicts the City’s pension funds will be broke in several years, and unable to pay out benefits for more than two and a half years. There are tax hikes, as well as a planned sale of a sewer authority, of course, and planned concessions on the part of workers. Such is to be expected for a pension system with an aggregate 16% funded ratio. The Auditor General wants to see a statewide solution, and a City Council member lamented that the state is “…doing nothing for municipalities except telling us how bad it is”.
Presumably there are no statewide problems relating to the state’s own pensions, but do we not recall the efforts of Act 44 of 2009? Philadelphia got an additional point on its sales tax, Pittsburgh got to hold steady its parking tax instead of reducing it downward, and levels of distress with appropriate remedies were all established. As a 2010 Policy Brief pointed out, pension benefits are guaranteed and there is no pain-free way of solving the build-up of liabilities. Unions will resist change, the state won’t pass language to amend the PA Constitutional language, so what is left? Bankruptcy, which is where Scranton could be headed according to the Auditor General.
A wake-up call? That’s what the Councilman said it was, but our work goes back many years showing the issues with local pensions and what could be done to reform them.
