Pennsylvania, which has the eighth-worst pension system in the country, is following Illinois (#1) by punting on reform. The budget passed by the legislature on Sunday does nothing for pensions; a fix will now have to wait for the fall session.The parallels with Illinois are striking. In both states, pension liabilities are higher than total annual revenues (although Illinois is in even worse shape). In both states, the Governors have been unable
to push a pension bill through legislatures led by their own parties (Democratic in Illinois, Republican in Pennsylvania). And in both states, credit rating agencies are scrutinizing
the budget and sounding warnings about possible downgrades to come. Reuters reports
Moody’s rates Pennsylvania at Aa2 with a stable outlook. Fitch Ratings said in April that it would decide whether to cut its AA-plus rating on Pennsylvania after reviewing the budget enacted for fiscal 2014.
Pennsylvania’s system is still healthier than Illinois’, so the need for reform is slightly less urgent than it is in Springfield. But the state’s woes prove that underfunded pensions aren’t just a Democratic or a Republican problem: both parties are having trouble keeping pension costs in line.[Governor Tom Corbett photo courtesy of Wikimedia Commons]