EDITORIAL - Two-year reprieve: The law should recognize the city's pension efforts
A runaway train called the Pension Reform Express is barreling through the state Capitol. Why Pittsburgh's needs have been strapped precariously to a step outside the train rather than secured in a coach seat is puzzling.
You would think this city didn't have a legislative delegation to look after it.
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At issue is a measure, House Bill 1828, that seeks to do a good thing, up to a point -- let the state take control of the severely underfunded public pension plans around Pennsylvania, thereby ensuring that retirees get their benefits. But don't be fooled; the state won't assume the financial burden of the plans. Municipalities will be forced to make the needed contributions, regardless of the impact on their budgets and their taxpayers.
Philadelphia, which is teetering on the edge of financial disaster, will get a 1 percent sales tax increase under the bill to address its pension problem. Its growing fever to solve its crisis -- it wanted the law enacted yesterday -- is the fuel behind the speed of this train. Many legislators have been very happy to oblige.
Pittsburgh, which has been getting its financial house in order while under state oversight, this year adopted the tough love of a second five-year recovery plan with the guidance of the state-imposed Act 47 team. In this plan were stark terms for addressing the city's pension fund shortfall -- raising Pittsburgh's annual pension contributions to a sustainable level, keeping a lid on retiree benefits and exploring the creation of a less-costly plan for new employees. Some or all of these terms could be lost in the final form of this bill, which was passed Aug. 5 in the House and last Wednesday in the Senate. It now must return to the House for concurrence, probably some time after Labor Day.
Mayor Luke Ravenstahl and City Council, to their credit, have already made tough budgetary choices for the city. The mayor was incensed last week that the bill ignored the action Pittsburgh was taking -- steps toward a pension solution approved by its state overseers. While the size of the pension contributions required by the bill are a matter of speculation, given financial variables, the mayor estimated that Pittsburgh soon would be forced to pay a budget-busting $70 million a year into the state pension fund, compared to the $45 million it will put into its fund this year. In eight years, he said, the city would be paying $100 million-plus.
Whether the mayor's figures are right or wrong, it is astounding that city officials and the legislators who represent the city (many of whom voted for the bill) are not on the same page in regard to this costly, far-reaching proposal. It's hard to imagine the mayor of Philadelphia and his delegation being so out of sync.
To prove the point, state Sens. Jim Ferlo, Jay Costa and Wayne Fontana sent a three-page letter to the mayor and Council President Doug Shields on Thursday, trying to persuade them that the bill was good for Pittsburgh. Nice try, but the time for persuading is long past. The people elected to serve Pittsburgh should have made common cause on a pension solution months before now.
Meanwhile, other forces have been lobbying heavily on this legislation. Municipal unions, for one, are trying to get better pension terms for their members, regardless of the cost to the public. That doesn't solve anybody's funding crisis.
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It is late in this complicated game and Pittsburgh should not be allowed to exempt its pension fund, which can cover only 30 percent of its obligations, from the obligation to reach at least the 50 percent threshold. At the same time, its legislative delegation should work for terms that the city can live with -- like a two-year reprieve to let the city accomplish a pension solution already in the works: a long-term lease of public parking garages, which would drive $200 million into the city pension fund.
It's not as though this administration or council have resisted dealing with Pittsburgh's finances. They have made tough calls, balanced successive budgets and committed much greater amounts toward pension obligations. A state reform worthy of the name should acknowledge -- in fact, support -- such steps, not throw its second-largest city under the train.