Pension-grab vote still not widely understood, but that will change
State lawmakers, who now express near-universal regret over the controversial 2005 pay-raise vote, suggest that their 2001 pension-grab vote is different — and nobody cares. State Rep. Daryl Metcalfe, R-12th, in a recent Butler Eagle article on the pension issue, said, "To be honest, I have had less than a handful of people contacting me about this."
If more people had known about the implications of the pension grab of 2001, Metcalfe would have heard from many people. And, the more people learn about the implications of the 2001 pension deal, the more all lawmakers will hear about it.
The pension-grab vote, much like the pay-raise vote four years later, came without warning. There were no press conferences discussing the proposed 50 percent jump to the pensions of lawmakers and major boosts for other state employees. The public missed the three days of consideration in the House and the Senate, as the state constitution requires. The pension vote was the result of backroom dealing between the legislature and the administration of then-Gov. Tom Ridge.
Most Pennsylvanians had their eyes opened to the self-serving actions of the legislature by the pay-raise vote, which happened at 2 a.m. on July 7, 2005, with no advance notice to the public and no debate.
The pension-grab vote, which was every bit as self-serving and undeserved as the pay-raise vote, did not cause a similar storm of outrage. But there are reasons for the absence of outrage. It happened before the pay-raise vote, when few Pennsylvanians were paying much attention to Harrisburg, and it involved an arcane adjustment to the formula for calculating lawmakers' pensions.
Even though it was reported as a 50 percent increase in pension benefits to lawmakers and a 25 percent increase for others, it involved a vague future liability and therefore caused less citizen opposition than the pay raise vote, which was an immediate boost in every lawmaker's salary of at least $11,000.
People understood the pay raise, but the implications of the pension increase were less obvious.
The impact of the pension grab is now looming, as state taxpayers' contributions to the two big state pension funds is predicted to shoot up to $3 billion a year, from about $1 billion a year now. And despite lawmakers' attempts to downplay the impact of the pension-grab vote, it could be devastating to struggling taxpayers. To make matters worse, it was totally unnecessary.
Pennsylvania's lawmakers already are among the most well-compensated lawmakers in the United States. Their pension and other retirement benefits, such as free health care for life, are an unattainable dream for most Pennsylvanians.
The only reason lawmakers voted themselves a massive pension increase is because they believed they could get away with it, and because the pension funds at the time of the vote had large surpluses, the result of the booming stock market of the late 1900s.
But instead of preserving the surplus to cushion any future decline in investment returns, the lawmakers took the money and promised themselves and other state workers massive pension increases.
It helps to understand the pension grab by seeing it as a deferred pay raise — for life. In 2005, voters caught lawmakers giving themselves a massive pay raise, and the subsequent political firestorm forced a repeal. In 2001, voters failed to notice lawmakers giving themselves a massive pay raise, a raise that would not take effect until lawmakers were out of office.
In an ideal world, the 2001 pension grab would be repealed or ruled unconstitutional. In reality, that won't happen. Lawmakers appear to have gotten away with a huge deferred pay raise that was neither warranted nor affordable to state taxpayers.
The best that can be hoped for now is to minimize the financial damage. State Sen. Jane Orie, R-40th, has suggested several remedies, including rolling back the employee/employer contributions to pre-2001 levels and also extending the vesting period from the current five years to perhaps 10 years.
Newly elected state Rep. Jaret Gibbons, D-10th, suggests stopping end-of-career pay raises through job changes that artificially boost some lawmakers' pensions. An example of this is former state Rep. Joe Conti, the Bucks County Republican who decided not to risk re-election after his defense of the 2005 pay raise, but who was given a $150,000-a-year job as chief executive officer of the Pennsylvania Liquor Control Board.
In the Eagle article, Metcalfe described the motivation for the lawmakers' pension grab as an effort to catch up to state judges, who have a higher multiplier and qualify for 4 percent of their salary per year of service. "So a judge who works for 25 years would have a 100 percent (of their salary) pension," said Metcalfe.
Judges' pensions should not matter to lawmakers. If they want a judge's deal, they should quit and become a judge. With the pension grab, state lawmakers again demonstrated their ability to get things done (in a bipartisan way) when it involves lining their own pockets.
It is unlikely that lawmakers would attempt the pension grab in today's political climate. But back then, they were so confident of re-election that they felt impervious to voter anger.
There is no defense for state lawmakers' actions in 2001 to boost their pensions. It looked self-serving and imprudent at the time. And today, it appears to be a very bad decision made at the worst possible time.
Now Pennsylvanians are left facing massive property tax increases to pay for lawmakers' greed and the ill-timed pension grab.
The pay-raise vote cost many lawmakers their jobs. The pension grab, once fully understood by voters and fully felt by taxpayers, should cost many more lawmakers their jobs.
