NCPA - National Center for Policy Analysis

Pennsylvania Taxpayers Hit with Pension Costs

September 11, 2014

Pennsylvania's Governor Tom Corbett (R) has thus far been unsuccessful in convincing the state legislature to turns its attention to pension reform. But according to Steve Malanga, senior fellow at the Manhattan Institute, that may begin to change.

The state's pension system is in disarray, and Pennsylvania taxpayers will soon be hit with a barrage of new taxes to pay for public employees' retiree benefits. For example:

  • The city of Scranton, Pennsylvania, recently imposed a tax on commuters that will raise $5 million annually to pay for pensions.
  • York City, Pennsylvania, has imposed a similar tax on commuters, as well as new taxes on its own residents.
  • 163 school districts across Pennsylvania have filed requests for exceptions to the state's cap on property taxes this year, all of whom mentioned pension costs in their requests.
  • Pennsylvanians in the Conewago School District will see a 5 percent rise in property taxes due to pension costs.
  • For the fourth year in a row, the Carlisle Area School District will raise property taxes to pay public employee pensions.

According to a report from a state school district association in Pennsylvania, pension costs will rise 25 percent this year, on average. By 2020, says Malanga, pension costs will constitute 30 percent of payroll. Costs have skyrocketed upward in recent years; in 2009, pension costs were the equivalent of just 4 percent of payroll.

Source: Steven Malanga, "Pensions drive local taxes up, up and away in PA...," Public Sector Inc., September 8, 2014. 


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