HARRISBURG – Gov. Tom Corbett‘s budget office indicated Monday that the governor may attempt to reduce the pensions of current public employees, a politically volatile and legally questionable solution to what has become a $41 billion unfunded liability.
In a new report on the state’s two large public-sector pensions, the budget office warned of the potential for higher taxes, program cuts, lower business growth and steeper borrowing costs because of the state’s financial obligations toward the State Employees’ Retirement System and the Public School Employees’ Retirement System.
The financial pressures from the pension systems have loomed over state finances for more than a decade, and Corbett, a Republican, repeatedly has spoken of a desire to make changes to them.
The report says higher taxes “should be off the table,” but reductions in prospective benefits for current employees should be considered.