By Barry Shutt
Most who follow politics in Harrisburg realize Pennsylvania’s unfunded pension liability is over $70 billion and increases daily by nearly $14 million. When asked why anyone would spend time trying to convince politicians to begin paying down that debt, the answer is simple: It’s all about the kids.
The pension crisis in Pennsylvania began with Act 9 in 2001 when the pension fund surpluses were stolen by the Governor and Legislature. Subsequent action and inaction by governors and legislators from both political parties made the situation worse.
However, while the unfunded pension liability, by itself, threatens the future of our kids and grandkids, and now, our great-grandkids, there is another crisis brewing in Pennsylvania destined to ensure future generations will not enjoy the progress and lifestyle most of us have experienced throughout our lives.
Some Pennsylvanians will remember Act 89 of 2013, or if not by name, by its impact in raising the gasoline tax and vehicle registration fees. Some may also remember the raising of Pennsylvania Turnpike tolls.
The promise of those increases was to provide funding necessary to rebuild to a reasonable level, thousands of miles of roads and bridges across the Commonwealth for generations to come.
Most of us balked at those tax and fee increases, however, with an objective analysis, including an honest comparison of tax and fees with other states, made many of us realized that, painful as they were, the increases were necessary for this generation to leave to the next generations of Pennsylvanians, a transportation infrastructure worthy of a prosperous future.
Passage of the authorizing legislation demonstrated statesmanship among those with the courage to cast an affirmative vote. It was a vote for the future of the Commonwealth.
And one could argue: It was, at the time, all about the kids.
Unfortunately, what happens too often in Harrisburg, statesmanship soon disappeared. Subsequent action by the Legislature and governors from both sides of the aisle, began “borrowing” nearly $500 annually from the Motor License Fund to supplement funding for the state police, and “borrowing” $450 million annually from Turnpike fees to supplement funding for mass transit.
Nearly $1 billion a year of our fuel taxes and fees have been used to supplement General Fund expenses which should have been paid for by General Fund revenues, namely the personal income tax, the sales tax and corporate taxes.
As a result, $1 billion annually is no longer dedicated to the rebuilding of roads and bridges.
Pennsylvanians have been misled. Our leaders said the increase taxes and fees on drivers were needed to upgrade and maintain the roads and bridges when for years now, large chunks of those taxes fees were being “stolen” by those same leaders for other purposes.
The question is simple: Why?
The answer is also simple: Politicians did not want to raise general fund revenues, i.e. the personal income tax and sales tax, so they continued the shell game of stealing from the Motor License Fund and the Turnpike to pay for General Fund expenditures; the proverbial “robbing of Peter to pay Paul” while Pennsylvania roads and bridges continued to deteriorate.
Believing that criticism without a solution is unfair, here’s an idea shared last spring with then-House Majority Leader Dave Reed, and with others since: Raise the personal income tax from 3.07 percent to 4 percent.
That raises approximately $4 billion dollars annually: $2 billion annually to pay down the unfunded pension liability over 20 years; $1 billion each year to stop stealing from the Motor License Fund and the Turnpike Fund, effectively adding $1 billion each year for bridge and road repair; and leaving about $1 billion each year for legislative initiatives in each of the Commonwealth’s 203 legislative districts across the state, or nearly $5 million each year per district.
With communities struggling to keep local fire companies and Emergency Medical Services (EMS) afloat, with small communities struggling with water and sewer problems and serious infrastructure issues and communities with limited tax bases, what better way to use some of those new annual revenues than to maintain vital services and improve infrastructures in communities throughout Pennsylvania?
Nothing is more important for Pennsylvania than ensuring the Commonwealth’s fiscal house is in order and building a modern infrastructure necessary for its economy to grow. Our generation enjoyed such a legacy from those who came before us.
Now, this generation must step up. It really is all about the kids.
Barry Shutt, keeper of the Pennsylvania ‘Pension Clock’ is a retired state employee from Lower Paxton Township, Dauphin County.