Pennsylvania Gov. Wolf vetoes Republican-crafted pension bill
HARRISBURG — Democratic Gov. Tom Wolf vetoed legislation to require retirement plans for new state and school employees like those he used for his employees in a York County kitchen cabinet distribution business, Republican legislative leaders said.
The bill Wolf vetoed Thursday would save taxpayers $10 billion over 30 years, according to the Public Employee Retirement Commission, a state panel that reviews proposed pension legislation.
Wolf said he understands the need to reform the public pension system, but Senate Bill 1 “does not address the problems facing our pension system comprehensively and fairly.” He believes the bill would violate federal tax law as “an impermissible cash or deferred arrangement.”
“There are provisions within this legislation, which as part of a comprehensive pension proposal, I could support,” Wolf said, without specifying.
Senate President Pro Tempore Joe Scarnati of Jefferson County, House Speaker Mike Turzai of Marshall and several other leaders said in a joint statement that Wolf opposed moving new public employees to a 401(k)-style retirement plan that “he himself adopted for his employees at Wolf Organization.”
“Apparently, the governor believes this type of plan, which is common in the private sector, is adequate for most hard-working Pennsylvanians but not for legislators or members of public employee unions,” they said.
Wolf spokesman Jeffrey Sheridan said that as a businessman, the governor “shared profits with employees, and the Wolf Organization contributed to employees’ retire‑ments even when the employees did not.” Wolf recently sold his interest in the company.
Under the Senate bill, state lawmakers who are re-elected would have moved from guaranteed pensions to a plan that relies on market investment choices by the employee.
Wolf and his supporters — including public-sector unions that critics said donated $3.4 million to his 2014 campaign — argued the savings would be minimal in the short term and that the bill wouldn’t address a more than $50 billion unfunded liability for pension funds. Wolf wants a $3 billion bond issue to help pay down the liability.
“It was a terrible bill,” said House Minority Leader Frank Dermody, D-Oakmont.
Unions largely were quiet following the veto. Wolf and his staff have strongly disputed supporting union positions because of campaign donations.
David Broderic, a spokesman for the Pennsylvania State Education Association, the state’s largest teachers union, told the Tribune-Review the pension bill “didn’t save money in the short term, didn’t save much in the long term and added to the pension debt. We’re pleased it didn’t become law.”
Wolf on June 30 vetoed a $30.1 billion Republican-drafted budget that does not raise taxes. He then vetoed another GOP priority: selling the state store system and privatizing wine and liquor sales.
The Senate returns to session next week, and the House the following week, but veto overrides in the GOP-dominated chambers are “virtually impossible,” said G. Terry Madonna, a political science professor at Franklin & Marshall College in Lancaster. Overturning a governor’s veto requires a two-thirds supermajority.
There are 198 members of the House and five vacancies — 118 Republicans to 80 Democrats — and a supermajority would require 132 votes.
In the Senate, there are 49 members with one vacancy. Republicans control the Senate, 30-19, and a supermajority requires 33 votes.
Wolf “has tried to negotiate. He’s given some. (Republicans) have given very little,” said Dermody.
Republicans contend Wolf has refused to alter his March budget proposal that would increase income and sales taxes and impose a severance tax on natural gas drilling.
Wolf said he and Republicans “are moving toward common ground” on pensions and the bill no longer is like the original, which curbed benefits for existing employees.
“My veto today is not to say I’m just throwing this out, but to say let’s get back to work,” Wolf told KQV Radio in Pittsburgh shortly before his office announced the veto.
Republican leaders said the “notion that we are close to a compromise on a pension-reform plan, when we only learned this morning of the veto via the press, is a bit disingenuous.”
Wolf said his consideration of the bill made it clear “that this legislation violates federal tax law,” and Sheridan supplied an internal State Employees Retirement System document suggesting there could be a problem with federal law.
“This hinges on ‘could be,’ ” said Jennifer Kocher, a Senate Republican spokeswoman.
The governor’s contention that the bill violates tax law “sounds like a convenient excuse on a bill he determined a long time ago he would veto on behalf of public-sector unions,” said Matthew J. Brouillette, president and CEO of the conservative Commonwealth Foundation.
Brouillette said Wolf “wasted a rare opportunity to meaningfully reform a broken public pension system that’s piled up $53 billion in debt. Instead of safeguarding public employees’ futures and taxpayers’ wallets, Gov. Wolf is playing politics with the main driver of property tax increases across the state.”
Sheridan dismissed the policy group’s comments as “ridiculous,” and said Republicans “continue to protect handouts for big oil and gas while ignoring our children and schools.”
Explaining the Veto override
Veto overrides are rare. They typically require some number of legislators in the party of the governor to switch sides. It is a loyalty test as well a vote on the issue.
It would be uphill in the House and Senate on the budget, liquor and pension bills vetoed by Democratic Gov. Tom Wolf in the Republican-controlled House and Senate — “virtually impossible” in the words of political analyst G. Terry Madonna since it takes a supermajority of two-thirds in both chambers rather than a simple majority.
The longer the impasse continues, though, the more frustrated lawmakers may become.
The House has 203 members, however, there are five vacancies due to resignations. Those seats won’t be filled until August in special elections. The breakdown is 118 Republicans to 80 Democrats. A supermajority would take two-thirds of 198, or 132 votes.
The Senate normally has 50 members. There are 49 now due to a vacancy. Republicans control the Senate 30-19. A supermajority requires 33 votes. All Republicans and at least three Democrats would need to oppose their own governor.
Brad Bumsted is Trib Total Media’s state Capitol reporter. He can be reached at 717-787-1405 or [email protected].