Finance - May 15, 2015

Pension reform passes Senate

As predicted, SB 1, dealing with pension reform was introduced late Friday and moved quickly through the Senate this week.  The bill passed Wednesday by a vote of 28-19 before the legislature recessed until June 1. The only Republican who voted against the bill was Senator Greenleaf, R—Montgomery. Democrats voiced their opposition to the bill during the Senate Finance committee meeting this week and on the floor prior to passage. Democrats claimed there was not enough time to review the bill before making a decision; the bill includes a provision that rolls back future pension benefits to previous funding formulas for employees who do not agree to increase their contribution. The bill will now be sent to the House of Representatives for consideration.

Governor Wolf has said he’s still reviewing the bill but that doesn’t seem adequate enough to meet his “standards of fairness.” Wolf’s own pension reform plan for the state included “the use of a $3 million bond issue and savings from reductions in fees paid to external investment managers”

Wolf also tackled municipal pension reform this week, asking Auditor General Eugene DePasquale to head up a task force on the issue. Members of the task force will include former budget secretary, Mary Soderberg, former vice president and treasurer of 3M, Janet Yeomans, and executive director of the Local Government Academy, Susan Hockenberry. Auditor General DePasquale said the group will study the issue, meet with “municipal, legislative, business and union leaders” and offer recommendations on ways to address the under-funding.

Property tax reform Passes House

The House of Representatives had a busy week as well. The House passed a property tax reform measure on Wednesday. The bill calls for increases in personal income taxes and sales taxes in an effort to reduce property taxes. The vote was 105-86 with a mix of Democrats and Republicans voting both ways.  While the proposal doesn’t exactly match Governor Wolf’s own property tax reform plan the, he did praise the bipartisan effort. Opponents to the bill feel the savings from the proposal will be lost when school districts increase property taxes, putting them back at current levels.