Lyrics not worthy of Bing Crosby, but still music to the ears of a growing number of house lawmakers, including state Rep. Frank Ryan, who first proposed his “Financial Rescue Plan” more than a year ago.
Rep. Ryan, a Lebanon County Republican, knows something about fiscal insolvency. He made a living as a CPA helping hundreds of companies avoid such a fate. He explains:
Pennsylvania has two to four years to turn around its finances or the state essentially becomes insolvent. A bankruptcy could ensue in the next 10 years, or sooner if we have a recession before then.
Ryan’s plan includes many of Commonwealth Foundation’s policy recommendations designed to escape the cycle of yearly budget deficits, so families, business owners, and job-seekers can keep more of their hard-earned resources and foster economic growth. Those specific goals are:
Using spending and revenue projections that are based in reality to balance the budget. Pennsylvania needs to end the practice of borrowing money to pay for overspending and using one-time revenue sources that are unavailable in subsequent years. This includes a responsible use of surpluses or windfalls to reduce outstanding debt.
- Paying down unfunded pension obligations. The commonwealth’s pension liability for the SERS and PSERS system stands at nearly $70 billion. Rather than allowing our children to be crushed by this growing elephant in the room, we need to prioritize the payment of this debt. It is critical to relieving the pressure for tax hikes on working families and will provide breathing room for priorities like infrastructure. In addition, state lawmakers must consider reforms to address the growing deficits of municipal pensions.
- Placing new public employees on defined-contribution pension plans. These 401(k)-type plans are common in the private sector and can’t be manipulated by executives or politicians. Today many retiring public employees—including former elected officials—enjoy six-figure pensions regardless of the state’s fiscal condition or the pain that handing over the money causes the people of Pennsylvania.
- No new taxes. Pennsylvania can and should have one of the top economies in the country. State tax reform is a critical starting point. Tackling our high tax burden would transform Pennsylvania from a state with the second highest corporate tax in the U.S., the fourth worst income growth, and a declining population, to an attractive state with a competitive business climate that brings quality jobs and retains our talented young people.
Finally, among the key components of the “Financial Rescue Plan” are initiatives to make state agencies more accountable, including the reduction of waste, fraud, and abuse in Medicaid. Thankfully, one proposal has been enacted into a law that requires all state agencies to respond to audit findings and implement findings of cost savings or lose funding.
We would add to Rep. Ryan’s objectives the elimination of Pennsylvania’s $847 million in corporate welfare, the addition of a work requirement for healthy, childless adults in welfare programs and passage of the Taxpayer Protection Act that ties spending increases to inflation and population growth.
“May your days be merry and bright/And may your tax burden be light.”