House Approves Public Pension Reforms
e House recently approved a public pension reform bill that would fulfill thestate’s obligations to current workers and retirees while taking steps to reduce the long-erm burden on Pennsylvania taxpayers.e reforms are aimed at two pension systems – one for public school systememployees and the other for all remaining state employees.ese pension systems are funded primarily through three sources: employee contri-butions, employer contributions and investment returns. e state makes the employercontribution for the state workers’ pension system. e state and local school districtsmake the employer contribution for the public school teachers’ pension system.Due to a number of factors, including the recent downturn in the stock market,he state and local school districts are facing a sharp increase in employer contributionso the pension funds in the next few years.e changes included in the House bill would smooth out” those increases whilealso implementing pension benefit reforms, resulting in short-term relief and long-termcost reductions for taxpayers.For current workers and retirees in the two pension systems, a promise made will bea promise kept. e House bill would not reduce pension benefits for these workers.In actuality, the U.S. Constitution and the Pennsylvania Constitution prohibit makingchanges to pensions for existing workers and retirees due to contractual law.e House bill also would implement pension reforms for future state workers andeachers. ese reforms include increasing the amount of time a teacher or workermust be employed before they are entitled to certain pension benefits. It also increaseshe amount of time they must serve before they can retire.Together, these reforms stand to address an issue that will undoubtedly have severefiscal impacts in the future if proper reforms are not implemented. is bill is currently in the Senate Finance Committee for consideration.
Pension System Reforms
Reduced Multiplier
– A mul-tiplier is a percentage rate used todetermine pension benefits. ehigher the multiplier, the greaterthe pension benefits and the heavierthe burden will be on taxpayers ina defined benefit plan. e multi-plier rate for most new hires wouldbe reduced from 2.5 percent to 2percent, leading to reduced costsfor taxpayers.
Increased Vesting Periods
– evesting period is the amount of timeemployees must contribute to theirpension before qualifying for guar-anteed benefits. e vesting period would be doubled from five years to10 years for new hires.
Increased Retirement Ages
–New state workers and teachers willhave to work longer before qualify-ing for full retirement benefits.
Fast Facts About the Marcellus Shale and Natural Gas
As debate over the development of Pennsylvania’s Marcellus Shale natural gas reserves heats up, Ibelieve it’s important to provide you with some factual information about this issue that I have learnedthroughout this process.
General facts:
e Marcellus Shale underlies 5 of the 67 counties of Pennsylvania – all but the southeasternand southcentral portions of the state.
In October 2008, Pennsylvania State University professor Terry Engelder estimated that thegas locked in the Marcellus Shale could ultimately yield 363 trillion cubic feet of naturalgas – an amount equal to 13 years of current U.S. natural gas demand.
e first Marcellus well went into production in 2005.
Economic impacts:
During 2008, the Marcellus Shale natural gas industry in Pennsylvania generated morethan 29,000 jobs.
For every $1 million of output created by natural gas production in the Pennsylvania MarcellusShale, 6.9 jobs are created.
e Marcellus Shale natural gas industry in Pennsylvania could be generating $13.5 billionin value added and almost 175,000 jobs in 2020.
For every $1 that the Marcellus Shale natural gas industry spends in the state, $1.94 of totaleconomic output is generated.
e sum of the direct, indirect and induced impacts that the Marcellus Shale natural gasindustry has on Pennsylvania is more than $4.2 billion.
Environmental impacts:
Natural gas produces roughly 30 percent lower carbon emissions than oil.
Natural gas use produces fewer greenhouse gases (nitrogen oxides and carbon dioxide, inparticular) than burning oil.
Of all the fossil fuels, natural gas is the cleanest burning. While the Marcellus Shale offers tremendous economic opportunities for workers across our Com-monwealth, the development of this resource will place stress on local roads and other infrastructure.Because of this, I believe the state must require a percentage of any tax on natural gas to be designatedfor continued road and bridge repairs.
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