Thursday, September 6, 2007

The DeSantis Pension Plan

Mr. Ravenstahl called his opponent's plan "baffling" and said it would drain money from essential city services, such as police and fire protection. (P-G, Timothy McNulty)

We'll get to police and fire protection shortly ... but baffling, this is not.

If you would have told me a week ago that the DeSantis plan for pension debt would be so simple a duck could understand it -- I wouldn't have believed you.

But there it is.

All the money we get from casinos ... goes directly into the pensions.

All the money we gather from nonprofits ... goes directly into the pensions.

If you still need help, here is some background. (Ideas Bucket)


There are a few easy objections we should dispense with quickly.

That casino money is going to save everything! What a crock!

State casino money has indeed been distributed a thousand times over -- but not city casino money. City casino money is being projected each year into the annual budget over several years, in order to make it look nice.

We don't know how much casino money there will be!

Do you think Pittsburgh is not going to gamble? Do you think Pittsburgh is not going to gamble? This is easy money. It is true we don't know the exact amount, so it should not be ... well ... budgetted.

We don't know how much we're getting from nonprofits, either!

True again. Lots of volatility out there.

However, and I tell you this with great confidence: UPMC and the gang will be made to pay something. We just don't know the mechanism yet. In the very worst-case scenario, they will re-up at the same rate with the Pittsburgh Service Fund for another three years. That's what, $14 million? Let's say $10 million. Let's say they have some lean years.

Our debt burden is huge! It is structural, do you hear me, structural! This solves nothing!

My man, you are on your game. However, it does two very useful things:

1) It is a solid, simple way to demonstrate to state officials our seriousness about exercising discipline. That is the kind of help we need.

2) It is the beginning of training ourselves to actually act with discipline. This will be helpful, down the road.


Mayor Ravenstahl more fully explains his objections:

It's really robbing Peter to pay Paul ... It's something you can certainly do, but at the same time you have to then reduce expenditures by $23 million, and I didn't hear that [in Mr. DeSantis' plan] today. To me that is fiscally irresponsible. (ibid.)

You're worried about $23 million?

Your budget gives us something like a $90 million surplus, right? We're turning the corner, we're moving in the right direction. I remember hearing something like that. This is a way to devote some of the budget surplus to Pittsburgh's future.

If you're saying $23 million would threaten the budget ... threaten police and fire protection, as you say ... then we're really in a heaping lot of trouble!

Aren't we?


Unintended consequences. The best laid plans of mice and men, gang aft agley.

What we need right now is to brainstorm for any and all possible negative unintended consequences of funneling gaming revenues and nonprofit PILOTs directly into the pension fund.

Think meteors, people. Think D-War.

The DeSantis Pension Plan is both so simple, and so politically viable, that if it is indeed a sound plan, we should be embracing it. All of us.


  1. This comment has been removed by a blog administrator.

  2. We're in, what, about the fourth year of the original Act 47 plan? So some taxes are going to start to drop (parking) and I believe some others might go away. Plus we're hired a few more cops (of necessity) and reopened a police station closed as a cost cutting move. Plus the Mayor is resistant to any more city county merger talk or action, which had been envisioned in the original Act 47 agreement. But he has had two years of surpluses, three more and the city is back on its own. So yeah, we need all that casino and non-profit revenue in the operating expenses, to keep the city in the black. We’ll just make the minimum payments on the pensions, waiting for all the Mayors to get together and force the state to bail us out.

    It’s so crazy it just might work ..

  3. If you enjoy long selections from candidate press releases, post them on your own blog. Leave us a comment calling attention to it. Long selections from candidate press releases will be DELTETED!!!!

  4. Did I leave a "long" selection from the pr? I thought I left more of a "snippet", no?

  5. Three graphs. Most of the browser window. The ruling on the field stands. First down!

  6. Let me clarify that I do think paying down the debt from pension obligations is the best use of casino funds I've heard. I just feel we have done too much budgeting the last several years in this city using funds that don't actually exist. DeSantis needs to be prepared for the fact that casino revenues may not materialize anytime soon, or in the amount we expect. Same with the PILOTs.

    I'd like to see him take the advice of the Allegheny Institute--perish the thought--and propose moving toward a defined contribution system, rather than a defined benefit system. Now, in fairness, you could only do that with new hires. But it least it keeps the debt from piling up much more.

  7. "and propose moving toward a defined contribution system, rather than a defined benefit system."

    I'd like both of those terms defined, actually. I guess I have some idea.