POLS ON THE STREET: Pension Deal Is Sweet for Wolf

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BETTER THAN EVER, was the consensus on this year’s African Odunde Festival. L-R: Gov. Tom Wolf, organizer Bumi Fernandez, Councilman Kenyatta Johnson, State Rep. Jordan Harris, Mayor Jim Kenney (sporting a Bob Marley (“Satisfy My Soul” t-shirt) and Stanley Straughter. Photo by Leona Dixon

BY JOE SHAHEELI
Coming to grips with an important piece of Pennsylvania’s looming pension-funding overhang was a bipartisan coup that should make most incumbents look competent and responsible. By our take, though, it is obvious Democratic Gov. Tom Wolf is the prime winner.

That’s because most Republicans in the General Assembly hold safe seats. Barring a national meltdown in 2018, they have little to fear; and even if a Democratic wave develops, Republican incumbents statewide can point to their pension votes as evidence of their pragmatic, bipartisan temper.

Wolf’s seat, on the other hand, must be considered vulnerable, given the strong rightward tilt in the Keystone State last year and the tendency of Republican voters to turn out in greater numbers in off-year elections. Now it will be difficult for Republican challengers to paint him as a reckless manager. While of course it took many Republicans to negotiate the pension deal, the electorate tends to look to the man at the top for credit or blame.

This time, it’s credit. Pennsylvania’s pension deal has drawn widespread praise from all sectors of the Commonwealth and the governor is entitled to crow about it.

“Governors in years past have tried and failed to reform our pension system, allowing politics as usual to persist in Harrisburg and our commonwealth’s fiscal problems to grow,” Wolf Said in his first statement after signing SB 1. “Today, we took another step toward fixing Harrisburg and putting the financial security of Pennsylvania first.

“After working together with a bipartisan group of legislators, I signed SB 1 to reform our state pension system by reducing risk to Pennsylvania taxpayers, continuing to pay down our debt, and slashing Wall Street fees while still offering state employees fair benefits and easing the financial burden on our school districts in the long term.

“The Pew Charitable Trusts,” Wolf went on, “called it ‘one of the most – if not the most – comprehensive and impactful reforms any state has implemented,’ and a group of leading business organizations in Pennsylvania joined together to call this bill ‘historic and meaningful legislation.”

AT POPULAR Johnnie Walker Lounge in Chinatown, Councilman Mark Squilla drew a crowd of supporters like Kenny Poon, L, and David Taing. Photo by Wendell Douglas

The Pennsylvania School Boards Association is also on board. Soaring pension liabilities have led to painful local tax hikes in recent years. Now this body “applauds the recent passage of Senate Bill 1, which makes significant changes to reform the state’s troubled pension system for state and school employees. “This plan is a positive step forward in enacting meaningful reforms that will reduce employer costs over time,” said PSBA Executive Director Nathan Mains. “SB 1 ensures that our schools will have a retirement plan that provides options for future employees in a fair manner that is both competitive and sustainable.”

“PSBA has been leading the call for pension reform for more than a decade. In 2006, the association created a pension study commission with statewide representation that reviewed the topic and issued a report with recommendations, many of which are similar to those in SB 1, such as a hybrid system for future employees,” Mains continued.

“SB 1 successfully focuses on the long-term advantages by gradually shifting the investment, inflation and longevity risks away from the state and school districts, thus providing the protection and relief school employers have been asking for.”

Even the rightwing Commonwealth Foundation found itself in the rare position of having to compliment the governor.

Nathan Benefield, its VP and COO, released the following statement at the hour of signing: “Today, Pennsylvania takes the first step down a new path toward fiscal responsibility. Three years ago, Gov. Wolf denied a pension crisis existed, and less than two years ago, he vetoed reform. But voters facing skyrocketing property taxes wanted meaningful pension reform, and lawmakers made it a priority. As a result, the transformative reform set to become law today — with Gov. Wolf’s signature — begins the critical task of fixing our state’s broken pension system while laying the groundwork for additional improvements that will benefit future generations of Pennsylvanians.”

That’s like a hearing a Democratic think tank commend President Donald Trump for the way he’s handled Russia.

Wagner Still a Holdout

Only one Republican senator, out of 34, voted against SB 1. That was Wolf’s fellow York County businessman State Sen. Scott Wagner, who is running for the governor’s seat. He called the measure “watered down,” noting, “The House and Senate passed pension reform in June of 2015 that would have placed all employees into a full 401-k style program, and the governor vetoed it on July 09, 2015,” said the senator. “Everyone in Harrisburg knows that was the real solution to the pension plan design problem, not the legislation that Gov. Wolf is signing.”

Wagner also criticized a provision in the legislation that allows current lawmakers to stay in the old pension system.

“Gov. Wolf is allowing lawmakers to keep their premium pension plans while working-class Pennsylvanians are struggling,” continued Wagner.

“This is just more evidence of how out of touch this Governor is – he is once again failing to do what is right by Pennsylvanians so that he can protect his special interest donors.”

If elected governor, Wagner said he will make a mandatory 401(k) plan for all state workers a top priority of his administration, in addition to other benefit reforms that are “vital to reigning in state spending.”

While this position may play well with the conservative Republican primary base, it will irk all his colleagues who voted for SB 1. As Wagner is none too popular with his colleagues already, look for them to strew nails on the road in front of his campaign bus.

Rooting around in Wagner’s online campaign email, one of Wagner’s hometown newspapers, the York Dispatch, came up with a link in which Wagner “seemed to take credit for helping to get pension reform over the goal line.”

In it, Wagner stated he’d “worked with conservative leaders in the Senate to pass historic pension reform, paycheck protection and budgets that didn’t raise taxes.”

Conservative leaders in the Senate are likely to disagree with the claim that Wagner had been working with them.

Beverage Tax May Fund Its Foes

Philadelphia Mayor Jim Kenney has enjoyed an 18-month honeymoon with the voters remarkable in recent history. Now, perhaps, the first signs of tangible dissatisfaction among some voters is emerging.

It’s the sweetened drinks tax. Corner grocery stores and caterers swear their costs have soared and their revenues are down as a result of this tax, and many are swearing vengeance.

By themselves, they are not well organized or well funded. But the beverage industry is both wealthy and well heeled. If it chooses to invest in an opponent to Kenney in the 2019 primary, all they need is a candidate.

FUNDRAISERS are one thing; fundraisers at the swanky Waterworks overlooking the Schuylkill are a treat. Many turned out for State Sen. Larry Farnese’s spring affair, including, L-R, Farnese’s predecessor in the Senate Vince Fumo, Farnese and Ward Leader Matty Myers. Photo by Wendell Douglas

One possibility is State Sen. Anthony Williams (D-W. Phila.) Williams has a background in the beverage industry and is sympathetic to business concerns. While he lost soundly to Kenney in the 2015 mayoral primary, he earned citywide name recognition in the process.

Another name to play with is Controller Alan Butkovitz. He will be out of office starting January 2018 and looking for something to do. The Mayor’s Office has always interested him. And he has the next six months as the city’s auditor in chief to amass evidence that the Sweetened Drinks Tax is hurting people.

At the moment, the controller’s reports on this subject are a bit of a wash. Wage Tax receipts are up in most industries that are impacted by it. But his analysis shows that revenue from the Sweetened Drinks Tax is facing a shortfall from its advocates’ predictions.

According to Butkovitz, while the city lowered its initial budget projections for the first two months and then reported better-than-expected revenues, the fact is the city’s initial budget projections indicated that the Beverage Tax needed to generate $7.7 million every month. Instead, the monthly average is $6.4 million.

“Lowering the projections for the first two months and not reflecting those revised figures in the annual projection ultimately created a deficit that the city now has to realize,” said Butkovitz. “The City needs to collect $10 million in each of the next two months to meet its goal – a figure that appears to be significantly out of reach.”

“These shortfalls are potentially creating a multi-million-dollar burden on the city in order to pay for programs and initiatives like Pre-K and Rebuild,” said Butkovitz.

The School District of Philadelphia encountered a similar problem when it implemented the Cigarette Tax. Initially, the School District budgeted $80 million in the first year of the tax. It never reached that figure and has been on a steady decline since, generating less than $50 million for the current year.

The controller requested the finance director provide the latest revenue projections that would demonstrate the city’s ability to meet future Beverage Tax revenue projections.
If this tax, and the Rebuild program it is intended to fund, are in trouble as 2018 begins, a challenger to Kenney will have at least a leg to stand on.

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