The Pennsylvania House overwhelmingly rejected changes to state pension plans Saturday, and that effectively collapsed progress on a compromise for a new state budget. NBC10’s Drew Smith reports on what the problem with the plan was.
A proposal to revamp Pennsylvania's two large public-sector pension systems was defeated overwhelmingly Saturday in the state House, collapsing a deal to solve the state's 6-month-old budget impasse.
The House voted 149-52 against a bill that would force newly hired teachers and state workers into a hybrid system made up of a traditional pension along with a 401(k)-style benefit. Every Democrat voted against the bill, along with a majority of Republicans.
House Majority Leader Dave Reed, R-Indiana, who argued strongly for the bill, said the next move will be to advance a stopgap budget. He said the pension changes were needed to address costs that have been increasing for school districts and state government.
"If that's not possible, then new revenue is off the table as well, and we're going to have to plan accordingly," Reed told reporters after the vote. "It just went down pretty resoundingly."
Rep. John McGinnis, R-Blair, argued on the floor that the proposal would have actually increased the state's pension debt and that the Legislature should instead look to completely end the defined-benefit, traditional pension.
"We like to think that this is an honorable institution," McGinnis said. "But by underfunding our pensions, we steal from children and from children not yet born. How is that honorable?"
The bill would have been a step in the right direction, said Rep. Mike Tobash, R-Schuylkill, by shifting half the investment risk to the new hires and off the backs of taxpayers.
"This bill does not kick the can down the road," Tobash said. "In fact, it forces our pension systems to get a sharper pencil and safe money on investment fees."
The pension changes were part of a framework that Democratic Gov. Tom Wolf had negotiated with the Republican-controlled General Assembly, along with higher taxes to increase education funding and reforms to the state-controlled system of selling wine and liquor.
Wolf said Friday that he had obtained enough votes to get the taxes through the House, but the pension bill's defeat pre-empted a tax vote. His office had no immediately comment on the vote Saturday.
Pennsylvania has been without a budget since the start of July, leaving schools and government agencies scrambling to pay bills.
The vote represents a win for unions that represent teachers and government workers, as well as for those who fought the tax increase.
