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Pa. could look to Rhode Island for real pension reform ideas

Less than eight weeks from the Nov. 4 election, Gov. Tom Corbett says if he’s reelected he will call a special session of the Legislature to work on pension reform. His election pledge, reported in a Philadelphia newspaper, sounds like a case of too little, too late. Corbett trails Tom Wolf, his Democratic challenger, by about 15 percentage points in polls.

Corbett can be given some credit for at least talking about the state’s public pension crisis. Wolf, according to Corbett, does not see the underfunded public pensions as a problem. If that’s a false claim, Wolf should speak up. And if he does not see the $50 billion underfunding of the two state pension funds, voters should know that, too.

Corbett already should have called a special legislative session on pension reform. He should have done it a year ago, two years ago or three years ago. The pension crisis has been around long enough that former Gov. Ed Rendell should have called a special session to address pension reform.

The Rendell administration talked about pension reform and did push some minor changes that mostly kicked the financial pain facing local school districts down the road a few years. It was not real pension reform.

To see serious pension reform, it’s worth looking at Rhode Island.

Rhode Island is a small state with a big pension problem. The pension reform effort there presents a stark contrast to the failures of Corbett or Rendell to do real reform here.

Last week, the Democratic primary in Rhode Island was won by Gina Raimondo, a former venture capitalist who had served as state treasurer. As treasurer, she pushed through pension reform in 2011 that included raising the retirement age for some public sector workers. Her reform plan also cut benefits and froze cost-of-living raises until the state’s pension fund is back on solid financial ground.

Public sector unions, normally strong supporters of Democrats, were bitterly opposed to her reform effort. But private sector unions and most taxpayers saw that something dramatic needed to be done. Raimondo’s efforts will help restrain local property tax increases, something that voters everywhere strongly support.

In her reform effort, Raimondo convinced the Democratic legislature in the heavily Democratic state to back the tough measures. In her primary campaign for governor, Raimondo said, “I’ve made some tough choices as treasurer, and every time you take on the status quo, people push back hard.”

Raimondo’s 13 percentage point margin of victory in the primary could be due to a variety of factors. But it also shows that doing real pension reform is not an electoral death sentence. Her efforts made enemies among many public sector workers and with the state teachers union. But her efforts also made many friends, including the marjority of taxpayers who saw the public pension crisis as a threat.

Writing about the Rhode Island race and Raimondo’s win, the Economist magazine’s headline said voters did the math and the pension reformer’s primary win could be a lesson for other states.

One lesson is that Rendell and Corbett should have had the courage to push real pension reform. Yes, it’s a politically explosive issue, but Rendell and Corbett failed state taxpayers by not doing more. As the Economist article noted, “Raimondo has shown that a politician can back painful reform and still win.”

Rendell and Corbett should have pressed for pension reform on the scale of Rhode Island’s effort. And Wolf should say whether he’s prepared to do the sorts of things that Democrat Raimondo pushed through in Rhode Island.

Inaction and silence on pension reform should both be unacceptable to voters.

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