LEWISBURG — State Sen. John Gordner (R-27) echoed a warning heard repeatedly in recent years, that fixing the state and school employee pension systems is the top task facing state government.
Gordner told 2015 Leadership Susquehanna Valley participants that most private businesses, such as his law office, pay about 4 percent of employee pensions. But public institutions now have to chip in at a rate of 25 percent of employee salaries with a higher rate to come.
Gordner said the example noted by a Central Columbia school director at a similar leadership group was typical.
“He said five years ago, in the budget, (the) Central Columbia School district had a $400,000 line item for paying the pension costs for employees,” he said. “In the current year, that line item is $2.2 million.”
At the state level, out of a $29 billion budget, an addition $550 million goes to increased pension costs.
Gordner also noted that the House would likely take up a measure which would sell the state liquor store system. If done, the state would then be in line with 48 other U.S. states that allow liquor stores to be privately owned.
Looming over all, he expected Gov. Tom Wolf to propose tax increases in the coming weeks in addition to an already pledged proposal to impose a natural gas severance tax. But Gordner observed that the state constitution only allows for a flat tax rate on personal income, which would conflict with imposing higher taxes on higher wage earners as Wolf has suggested. Changing the tax code, he said, would require a constitutional change.
Gordner projected that the bridge component of the Central Susquehanna Valley Transportation project would be put out for bid in August, with bids returned shortly thereafter. As per federal regulation, he said the rest of the 13-mile Route 11 and 15 bypass would be completed, as “bridges to nowhere” are no longer permitted by the Federal Highway Administration.
Responding to questions from the class, Gordner wondered whether there were enough medical professionals in the state to accommodate the estimated 500,000 additional people who would be covered by any expanded Medicaid program.
Gordner noted that the legislature is returning to the issue of defining what a purely public charity is. Senate Bill 4 is being considered for the second consecutive legislative session, as required to change the state constitution.
It could be a help to municipalities and school districts.
“It has become a little bit of a controversy...because local and county governments are looking for revenue,” he said, noting the high percentage of property in boroughs like Lewisburg that is tax-exempt. “A lot of communities are now being a little more aggressive as to what is a charity and what isn’t and are contesting it.”
A court decision about 20 years ago set up a five point test to determine tax-exempt status, Gordner said. But he said some facilities like YMCAs now function more like commercial health clubs than before, raising questions about the tax status they now have.
Gordner, a 22-year veteran of the legislature, recalled how budgets were balanced and passed annually by April when money was plentiful in the 1990s. This year, a state budget may not be passed before the June 30 deadline. He hoped for compromises between the sides.
Gordner is now the majority whip in the Senate, as elected by his caucus.
Staff Writer Matt Farrand can be reached at 570-742-9671 and via email at email@example.com.