The debate over how to pay off Pennsylvania’s roughly $70 billion unfunded pension liability has seen some movement.
The commonwealth’s Independent Fiscal Office recently released an actuarial note estimating a current House measure would save up to $18 billion by paying down the debt faster.
Republican Representative John McGinnis of Blair County is sponsoring the proposal, which would jack up the state’s required pension payments by about a half billion dollars in just its first year.
That would shorten the time it would take to pay off the debt. But it also means the commonwealth would have to divert significant funds from other programs.
McGinnis sees it as a good trade-off.
“I think the proper thing is to give priority to your unpaid expenses in the past before you commit to new expenses,” he said.
Others aren’t buying it.
Pat Shaughnessy, a budget analyst for House Appropriations Committee Democrats, said the current payoff rate is as high as Pennsylvania can reasonably afford — particularly, he notes, because GOP majorities don’t support sourcing new revenues from taxes.
“We’re already facing a structural deficit, so I would say there’s really not that much more to do in terms of budget cuts,” he said.
Similar measures haven’t received backing from GOP leaders, who have favored plans that would restructure state pensions into a multi-tiered system, without changing how payments are made.McGinnis himself acknowledged that the plan’s not a politically popular one.
“My approach — and I think the right approach — is, you have to start immediately with paying down, and that means an additional half billion dollars, perhaps, in fiscal year ’18. And since we already have this gap in place, they don’t even want to go that way,” he said.
Like most other Republicans, McGinnis opposes funding pension payments through new taxes.