(The Center Square) – Lumbering over chronic unfunded pension and retiree health care benefit costs, Pennsylvania found itself unprepared for the fiscal challenges brought on by the coronavirus, according to a recently released report.
Truth in Accounting, a Chicago-based nonprofit focused on government spending, on Sept. 22 released its Financial State of the States 2020 report. Pennsylvania ranked No. 38 in the report, earning a grade of “D” for its financial condition heading into the pandemic.
The organization’s analysts combed through states’ audited financial reports from the past year to assign the rankings and letter grades. According to the report, most of the country – 39 states – were not prepared for the fiscal challenges on the scale of COVID-19.
Sheila Weinberg, founder of CEO of Truth in Accounting, said the report is aimed a putting a spotlight on government spending practices – most notably, borrowing large sums of money and kicking the figurative can down the road to cover short-term costs.
“(State and local governments) were claiming that they were balancing their budgets, but they were using what I call political math to pretend they were balancing them,” Weinberg said in an interview with The Center Square.
If there is a silver lining to the pandemic, Weinberg said she hopes the cash crunch that has arisen from months long lockdowns and other policy decisions serves as a wake-up call to politicians and residents alike on the budgeting process.
“Nobody in (Washington) D.C., or around the country, was paying attention to these state and local governments who were doing reckless budgeting,” she said.
Pennsylvania ranked No. 38 in the report, earning a grade of “D” for its financial condition heading into the pandemic.
In the report, Truth in Accounting analysts based their assessment of Pennsylvania’s fiscal health on the premise of the state needing $73.8 billion to cover its bills, resulting in a per-taxpayer burden of $16,400.
“Pennsylvania’s financial problems stem mostly from unfunded retirement obligations that have accumulated over the years,” the report states. “Of the $118.7 billion in retirement benefits promised, the commonwealth did not fund $42.8 billion in pension and $20.3 billion in retiree health care benefits.”
The ongoing unfunded pension and retiree health benefits challenge within Pennsylvania has been widely reported and was under the microscope, pre-pandemic.
Pennsylvania’s pension overhaul law went into effect for most state government employees on Jan. 1, 2019, and school employees across the state on July 1, 2019.
Late last year, the House State Government Committee introduced House Bill 1960, which was designed to bring reforms to outstanding obligations. As of late last year, $65 billion of the state’s $75 billion debt shortfall was linked to unfunded future retirement benefits costs.
HB 1960 was forwarded on to the House Appropriations Committee last fall and has sat within the panel in the time since.
State Rep. Mike Tobash, R-Schuylkill, the bill’s lead sponsor, said the legislation would consolidate the investment arms of two of Pennsylvania’s largest pension plans.
“Some experts believe that reducing duplication,
Dave Fidlin is a contributor for The Center Square.
This piece was originally published in The Center Square. Read the original article here.