For state government to work, leaders must look toward the future.
That was the point made by state Senate Majority Leader Jake Corman, R-Bellefonte, during the Chamber of Business and Industry of Centre County luncheon Monday at Toftrees Golf Resort.
“I don’t think we challenge ourselves to look to the future, and we don’t learn from our mistakes,” said Corman. “We have a tendency to solve the problems at the time without looking forward to how those plans will play out in the future.”
Corman said in each of the past eight years, the state government has had to deal with budget shortfalls, and he pointed to “legacy items” voted into law by previous legislators, himself included.
“One of those areas is the public pension program,” he said. “In the early 2000s, the pensions were 130 percent funded and everything was great. We even did an enhancement. The mistake that was made, was the enhancement was retroactive and included people who served 20 or 30 years before. That put a lot of stress on the system and a lot more liability.”
He said the government continued to smoothly guide the pension plan until the 9/11 terrorist attacks in 2001 and the recession that followed in 2002. He said the pensions and economy came to a clash in 2008, creating a “perfect storm.”
“In 2006, our contribution to the pension plan was $600 million,” Corman said. “Now it exceeds $3 billion.”
The Senate has been attempting to fashion a bill adopting change and reform in state pensions, but Corman noted there has been little movement on the legislation.
“What you have is more money coming out of your pocket that’s not going to be invested in education, that’s not going to be invested in economic development or environmental protection,” he said. “It’s going to be used to maintain the status quo.”
FINANCIAL STRAINS
When the economy started to take a downturn following 9/11, the government should have realized the potential impacts a decade down the road.
“We need to change this and start thinking ahead so we can put future legislators in a better position financially,” Corman continued. “We need to put the right work in place now for the future of the commonwealth.”
He also made reference to the aging Pennsylvania population, noting the commonwealth ranks third in the nation, behind just Arizona and Florida, as the country’s “oldest state.” He said Pennsylvania was on top of the Medicaid system, even giving residents more benefits than federal guidelines called for.
“But, again, we didn’t think ahead,” said Corman.
Previous legislators did not take into account that the baby boomer generation was set to retire, he said, bringing a wave of new consumers to the Medicaid program, and with them, $500 million to $600 million in additional expenses each year.
“Instead of preparing for it, we just kind of ignored it,” he said.
Corman also said the state’s correctional system is contributing to the financial strains, and believes forward thinking in corrections could save the commonwealth millions in the future.
“When I became a legislator in the late 1990s, I bought into that ‘tough on crime’ mentality, and it worked,” he said. “The prison population exploded in the state with 1,500 new prisoners each year. We were building a new prison every year, and we had to maintain them. That was costly. The ‘lock them up and throw away the key’ approach was expensive.”
Corman said he did not realize how expensive it was until he was elected as the Appropriations Committee chairman.
“That’s when I saw how much it was costing taxpayers and I wanted to get them out,” he said. “We set forth reducing prison populations and we were successful. We’re even closing a prison.”
Despite the reduction in prisoners, many of whom have shifted to treatment and rehab programs, the costs for maintaining correctional facilities are expensive and recidivism rates continue to stay high, he said.
“We need to do more thinking about this issue and what we can do moving forward,” said Corman. “If we don’t do anything, and just keep doing what we’re doing in corrections, I fear it’s really going to hurt us down the road.”
The Pennsylvania budget has been associated with the word “deficit” in each of the past eight years, and Corman said it will continue as long as state officials are not looking ahead.
“This is the choice we have before us,” said Corman. “We can’t think about today, we need to think about tomorrow and put things in place that have long-term benefits for those who come after us.”
