PHILADELPHIA--(BUSINESS WIRE)--Members of the Pennsylvania Institute of CPAs have seen the effects of the sluggish economy on their clients’ personal finances and on business growth. Pennsylvania is not out of the fiscal malaise that has affected the U.S. since 2008. The PICPA’s Fiscal Responsibility Task Force, using that experience, has created a guide to assist lawmakers manage the state’s finances. The Task Force held a press conference Wednesday, Feb. 13, at 10 a.m. in the Capitol rotunda and will conduct a webinar at 1:30 p.m. to discuss their recommendations.
The Fiscal Responsibility Task Force report details some of the most challenging fiscal issues facing the Commonwealth along with options to address those issues. The new report examines pensions, Act 47 (financially distressed municipalities), prevailing wage, infrastructure, efficiencies and streamlining of state government, and taxation. The report’s goal is to provide policymakers with objective, third-party CPA expertise and perspective to help address the state’s fiscal challenges. This is the PICPA’s second Task Force report. The first was released in January 2011.
“Our second report follows up on issues such as state pension funding and deferred infrastructure spending that remain unresolved, and adds additional material on other matters of concern in Pennsylvania's fiscal health,” says Susan E.S. Howe, CPA, chair of the Fiscal Responsibility Task Force. “Gov. Corbett and the Pennsylvania General Assembly have a tall task in front of them, given decreased revenues and escalating costs. The Task Force offers policy options to consider in closing the budget gap, with an eye toward long-term fiscal health.”
The first section in the report covers state pensions. The Pennsylvania pension situation is dire. Together, the two public pension systems (Public School Employees Retirement System and State Employees Retirement System) have a combined unfunded liability of more than $41 billion. These unfunded liabilities are expected to grow significantly over the next 10 years. CPAs have many policy options for this issue, including maintaining the current defined benefit pension systems for existing retirees and establishing a defined contribution system for all new public school teachers, state employees, and lawmakers. They also recommend required annual plan funding, with no possibility of deferring payments.
Another area the Task Force analyzed was financially distressed municipalities (Act 47). Act 47, passed in 1987, allows communities identified as financially distressed to develop a plan to correct what is causing the distress by allowing temporary access to priority funding and the ability to levy higher tax rates. Since Act 47 went into effect, 27 municipalities have entered while only six have exited. Of the 21 communities still under Act 47, 10 have been in the program for more than 20 years. Fiscal Responsibility Task Force members advise that time limits be placed on communities that enter the Act 47 program. They also recommend that communities examine cost-saving opportunities such as regionalizing services (police, emergency, etc.), sharing a tax base, and cooperative buying.
The Task Force also provided details and policy options on prevailing wage, taxation, infrastructure, and efficiencies and streamlining state government. The full report can be found at www.picpa.org/fiscal.
PICPA’s Fiscal Responsibility Task Force report was presented to Gov. Corbett’s office and delivered to members of the General Assembly. CPAs will be available during the legislative session to provide additional clarity and research as legislators address the state’s fiscal challenges.
The PICPA’s press conference took place in the state Capitol rotunda at 10 a.m. Wednesday, Feb. 13. Members of the Fiscal Responsibility Task Force were in attendance.
For more information regarding the Fiscal Responsibility Task Force report or to set up an interview with a CPA, contact Kathleen Miller at (215) 972-6188 or email@example.com, or Jacqueline Barnard at (267) 675-6255 or firstname.lastname@example.org.
The Pennsylvania Institute of Certified Public Accountants (PICPA) is a premiere statewide association of more than 20,000 members working in public accounting, industry, government, and education. Visit our Press Room at www.picpa.org/pressroom to find resources and story ideas.