Eileen Norcross | Testimony
From the testimony: “The fiscal condition of Pennsylvania is marked by ongoing challenges including weak cash reserves, spending growth, and large unfunded pension liabilities. Yet there is reason for optimism.
In recent years the legislature and executive have confronted massive and growing pension liabilities and cooperated to undertake pension reform that stops the growth of unfunded liabilities. Policymakers continue to seek additional reforms: requiring regular stress testing of the system, reducing investment fees, and committing to making the full annual contribution to the plans. These measures will help to ensure that the benefits are funded and available for retirees when they leave the workforce. Pennsylvania lawmakers have also committed to rebuilding the state’s Rainy Day Fund while improving the rules to ensure that sufficient funds are set aside to weather a recession and that deposits to the fund are automatic.
One area for improvement is in the current budgeting practices of the state. The growing tendency to shift spending from the general fund to special funds may obscure total spending and the amount of revenues needed to fund those activities and services. Budgeting should follow principles of simplicity and transparency. One reason many state pension plans have run into trouble is the systematic misvaluation of plan liabilities, a problem that became apparent during the last recession. The treasurer’s recommendation that revenue volatility analysis be employed to ensure a healthy Rainy Day Fund, as well as lawmakers’ and the governor’s interest in adopting regular pension stress testing, indicates that Pennsylvania’s policymakers are very much aware of the importance that clear financial and budgetary data and reporting play in ensuring the state’s fiscal sustainability.”
James Broughel and Thurston Powers | State Snapshot
From the snapshot: "Federal regulation tends to attract the most headlines, but it is important to remember that the nearly 104 million words and 1.09 million restrictions in the federal code significantly understate the true scope of regulation in the United States. States like Nevada write millions of additional words of regulation and tens of thousands of additional restrictions. State-level requirements carry the force of law to restrict individuals and businesses just as federal ones do.”