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McGinnis Rejects 2018-19 Budget Proposal for Failing to Address Pension Crisis
HARRISBURG – The Pennsylvania House of Representatives today passed a $32.7 billion budget proposal for Fiscal Year 2018-19 that increases education funding to historic levels while increasing overall spending by 2.25 percent over Fiscal Year 2017-18. No new fees or tax increases are part of the budget deal. The budget bill now goes to the Senate for consideration.

Rep. John McGinnis (R-Blair) was a no vote on the spending plan and issued the following statement regarding his reasons:

“I was thinking of calling the 2018-19 Pennsylvania state budget the ‘budget of smug,’ but it’s more apt to describe as the ‘budget of pretend.’

“Legislators and the governor up for re-election will be smug and celebrate the completion of the budget process, including the companion code bills, before the statutory due date of June 30. Hooray! For the first time since the Ridge Administration, we lawmakers will have complied with the law.

“But that’s not to say we have complied with the Constitution, which requires a balanced budget. The funding of our state pension systems remains insufficient to stop the pension debt from growing, let alone actually begin to pay it off. So calling this budget balanced is an act of pretend.

“Of course, both Republicans and Democrats will claim we are paying the full actuarial required contribution, or ARC, to the pensions. However, the ARC is an antiquated term in the actuary profession and, in any case, it is determined by four variables: pension liabilities, pension assets, the debt amortization period and the expected return on investments. For the State Employees’ Retirement System (SERS) and the Pennsylvania State Employees’ Retirement System (PSERS), with each of those variables, the estimates are wildly optimistic. The liabilities are understated, the assets are overstated, the amortization periods are far too long and the expected investment returns are way too high. So the claim that we are paying the full ARC is mostly pretend, or to say it more directly: a lie, built on four other lies. Ben Franklin had it correct: ‘The second vice is lying. The first is running in debt.’

“No doubt when the governor, for his first time, signs the budget, there will be smiles all around the room. Incumbents will be smiling because they have avoided a budget impasse a few months out from their re-election campaigns. I doubt, however, that taxpayers have any reason to smile. In addition to the growing debt being piled yet again on their shoulders, the total General Appropriations spending number is 2.25 percent more than last year. According to the Commonwealth Foundation, if you account for population growth and inflation, you would need only a 1.3 percent increase in spending to maintain last year’s appetite. And that’s if you assume we had a bare-bones budget in 2017-18. Newsflash: We didn’t! In other words, the reckless extravagance continues. The state government insists again that taxpayers are not doing enough.

“We can pretend our way into the future, but the accumulating consequences of the poor job by our state government have real consequences. As one metric of this poor performance, take a look at the number of congressional districts in the Commonwealth. We are down to 18 from 30 back in 1960, and we’re going to lose another one or two after the census in two years. Those districts will move to states with growth and prosperity, and you can bet those states don’t have full-time legislators smugly smiling about pretend budgets.”

Representative John McGinnis
79th Legislative District
Pennsylvania House of Representatives

Media Contact: Andy Briggs
717.260.6474 /

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