At Monday’s night’s council “meeting of the whole,” the mayor related that he’d read the recent issue of Central Pennsylvania Business Journal‘s about the impending financial crisis of unfunded “pension liabilities” and other mis-directed calls of yesterday.

He said he cringed when he learned of the anticipated additional tax cost per homeowner in the year 2016.

Borough manager, Norm Meisky, added that the era of just raising taxes is past and that government at every level must control spending and find ways to reduce costs, rather than raise taxes to balance budgets.

The article began: “Thanks to a combination of factors, Pennsylvania is in a $41 billion hole as it struggles to sustain its defined-benefit retirement plans. Meanwhile, municipal pension plans have amassed nearly $7 billion in unfunded liabilities.

“Lawmakers are talking reform that could affect future retirement benefits — this time with the help of private-sector ideas — but how will they tackle the debt already incurred when the debate heats up in 2013?”

“This is the first article of a two-part series:

“Gov. Tom Corbett has coined it the ‘tapeworm’ and the ‘Pac-Man’ of the budget.

“Whatever the term, the commonwealth’s rising pension obligations make it likely everything else in future budgets runs the risk of ‘starving,’ a top Corbett administration official said.

“‘We’re not borrowing, and the governor has said he is not going to raise taxes. That leaves one lever: cut spending,’ Budget Secretary Charles Zogby said.

“Emaciated state budgets could further shift the cost burden to municipal governments and school districts. That means higher taxes or significant restructuring at the local level, making it more difficult to do business in Pennsylvania.

“‘The business community is very interested and involved in this issue and is watching it very closely,’ said Sam Denisco, vice president of government affairs for the Pennsylvania Chamber of Business and Industry.

“The latest solution suggestions borrow ideas from the private sector — moving to defined-contribution, or 401(k)-style, retirement plans — while turning off the tap to stop the floodwaters of defined-benefit plans from rising any higher.

“‘There is a reason the private sector did away with the defined-benefit plan. It’s just not sustainable and not affordable,’ Denisco said. ‘But I don’t see (how) just moving to a defined-contribution plan will solve it, because of the unfunded liability.’

“That debt still will be owed, and where the money for it will come from is anybody’s guess.

“‘I don’t think any policymaker can cut their way to solving that,’ Denisco said. ‘We don’t want that to fall on the backs of job creators.’

“Not so rosy

“On one hand, Pennsylvania’s revenue is projected to grow about $800 million, Zogby said. On the other, the commonwealth’s share of the employer contribution to its two primary pension plans is slated to increase by $668 million in 2013-14.

“The state contribution to the Public School Employees’ Retirement System, or PSERS, will be $1.23 billion in the next fiscal year. That will be up from the current $856.1 million, which jumped from $600.2 million in 2011-12.

“The commonwealth’s contribution to the State Employees’ Retirement System, or SERS, will be $971.3 million in 2013-14. That total increases from $677.4 million this year, which was an increase of $209.3 million over 2011-12.

“As it stands now, pension obligations are about 5.5 percent of the current $27.66 billion budget. The projected PSERS share alone exceeds that total by 2014-15, according to the Office of the Budget.

“The two public pensions have an unfunded liability that totals more than $41 billion.

“Add in mandated cost growth in areas such as medical assistance, corrections and debt service, and any projected net gains in revenue are gone, Zogby said.” Click here to read this entire article with related stories at the Central Pennsylvania Business Journal.