Wednesday, August 26, 2009

BREAKING: Pensions Situation Open Thread

I guess we're not happy with this:

The state Senate this afternoon ignored pleas from Pittsburgh Mayor Luke Ravenstahl and included the city in a bill for the state to take over struggling municipal pension systems. (P-G, Lord and Barnes)

The alleged three years of "constant consultations with our allies in Harrisburg" did not seem to bear any fruit.

"Just give us a chance to solve this locally," the mayor said in an interview between calls to Harrisburg. "We can do it ... Give us a two-year window to explore leasing [public] garages" and putting the proceeds into the city's pension pool. (ibid)

As I pointed out, even an additional $200 million from our parking garages would only boost the City's pension funding level to 50.3%, on paper. Something else would still need to happen, and apparently this is the something else we're getting.

I thought things were going okay?


  1. Question: Can the pension fund invest in anything with a higher rate of return than parking garages? How about we just give the garages to the pension fund instead of selling them.

  2. I am just thinking out loud, but Philly was not included in the vote because their pension system is at 50% funded. So, what you are saying is that after the sale of the public garages the Pittsburgh pension system will be funded at 50%. Why should Pittsburgh not be treated like Philly, who the Governor has taken care of?

  3. The mayor lobbied unsuccessfully to freeze the city's 37.5-percent parking tax, impose a tax on the payrolls of city nonprofits, and raise the local services tax from $52 to $145.

    I'm with you Anon 9:33. It is very interesting the way state lawmakers have repeatedly brushed off proposals to increase revenue for Pittsburgh, while simultaneously bending over backward to assist Philadelphia.

    These same lawmakers, in their infinite wisdom, have essentially told City of Pittsburgh to drop dead. As I see it, there is one problem with this stance: Pittsburgh is still home to the largest employers in Western Pennsylvania AND a limited number of inexpensive parking spaces exist in the city.

    Mayor Ravenstahl has stated that leasing the parking garages to private operators is the only option for the City. With those lots in private hands, parking rates for those who commute will go through the roof. (much higher than the proposed $145 municipal service tax BTW)

    In the end Pittsburgh will lose the parking garages, but parking tax revenue will soar. Unfortunately for commuters, they will have to sit and watch as the low parking rates they currently enjoy go the way of the dodo.

  4. I almost never agree with this current city admin, and I realize that YZ's comments didn't help, but I sense the frustration of Pittsburgh, the only 2nd Class city in PA, quite frankly IMHO, having so much more to offer than Philly, being treated like the stepchild of the state by this Governor, and State Legislators.

    Specifically, Jane Orie's entire career has notoriously been anti-Pittsburgh, (I have no idea why Murphy not included, he no longer runs this city) and she saw merit in the Mayor's efforts. That in itself is scary. So you tell me? WTF is going on that Pittsburgh is treated this way in Harrisburg? What? We win too many Superbowls?

  5. I'm not sure what Anon 9:33 is asking precisely. I'm saying 50.3% on paper won't be good enough because revised asset valuations and actuarial assumptions are certain to drive down that percentage significantly by the time we actually lease the garages. Of course that will be true for Philly also, so if Anon 9:33 is asking why the legislation treats Pgh different from Phil, I don't know.

    Anon 12:23 - Orie saw merit in the Mayor's idea to lease the parking garages -- that to her is 'living within our means' or whatever -- but she never said she thinks we should be excluded from this, or that the leasing would be sufficient. My guess as to what is going on, is that Philly has forged better relationships and communicated a better, more compelling case for itself.

  6. Bram, no she never did say we should be excluded from this, but better relationships? I can unequivocally say, with an educated voice, that Philly has not suffered the municipal service cuts in every aspect that Pittsburgh has endured in the last 25 years. Fat? There is still so much more fat in Philly, than in Pittsburgh it is ridiculous. Many may scoff, but I can tell you, that there is slim to no fat left in Pittsburgh to cut in that respect. You can still cut here, but not without huge repercussions to the citizens who will be affected by those cuts. No bull$hit.

    Which leads me to, is Philly more aligned with the Governor and Harrisburg, or has Pittsburgh Government so far in the last 10-12years alienated themselves from any of those alliances? If alliances are the norm, how do we, as a city, compete with Philly who gets favor, time and time again? It is just not right. When Philly was under distressed city status, great strides were made to bring them out. Strides that went beyond city govt, strides that involved State Legislators. Why is that not happening in Pittsburgh?

    Pittsburgh, in regards to Philly, is not being treated equally, and it begs the question, WHY?

  7. It could be that we are the Lehman Brothers to Philadelphia's Goldman Sachs. We accrue the moral hazard that is deferred from Philly because Philly is seen as too big to fail and is better connected.

    Part of that is structural, some is historical, but I do think part of that is (setting aside the warm and fuzzy verbiage of "relationships" and to borrow a phrase) that Philly's game is TIGHT, Mayor Nutter's game is TIGHT, Philly's message and narrative is tight and consistently and skillfully applied. This conversation will go on I am sure and tomorrow's special meeting should be revealing, if a little rambunctious, which IMHO will be a wholesome thing all around. There will also be those with the point of view that what happened yesterday wasn't all half bad.

  8. I understand that the mayor is saying we will have to start paying gazillions of dollars under the state set-up. However, given the mayor's previous "issues with the truth" and his opposition to this plan, I'm not ready to jump on his side yet. Can someone explain how this would be bad in the long run? The state will essentially put us on a payment plan. Under our current system ... well, we see what has happened there.

  9. I remember hearing many times over the past couple of years that our municipal pension issues were the State's fault, that the State had the responsibility to fix our pension problems. Now the State legislature is doing something like that, except that they are making us pay for our own municipal pensions.

    Now, I could never envision a situation where the State would willingly give us 700 million dollars with no strings attached. The best I could have seen would be that the State might let us soak the non-profits. But given the pull of entities like UPMC, Highmark and the Universities, again the best I could see happening would be that all non-profits would suffer equally, and the smaller agencies would likely close.

    The parking leasing thing seems like a red herring. We already offered the garages out way back the first of the year. Apparently there were so many offers the City decided to wait and ... see if ... the offers got ... better (?) ... because ... ... I got nuthin'.

    Well, now we are getting (sort of) what we wanted, the State wants to force us to clean up one of our messes. And we are protesting. Someone get Ravenstahl a sword so he can fall on it. That’d show ‘em.

  10. I think Bram's right about one thing. Nutter has done a better job of communicating what he wants and what he plans to do if he gets it. He has been in H'burg constantly meeting with members (all members) to discuss Philly's situation and his plan to deal with it. Pittsburgh has been less active and less consistent in its message. Also Pittsburgh's pension fund is in far worse shape than Philly's so it's not strange that Pittsburgh is being treated differently.

  11. You're wrong Ed. Pittsburgh has never gone to market on the garages. When the do there will be interest and 200 milion in net proceeds is not unrealistic. I think it will be higher.

  12. Lets be clear about one thing - what the State Senate did is bad for Pittsburgh, plain and simple. I want everyone to take a close look at who supported this. In particular, Jim Ferlo. Ferlo is a detriment to the City and the region and needs to be ousted. He criticizes the City at every turn and has turned the single greatest promotional event in Pittsburgh's history (the G-20) into a circu sideshow. Fortunately others around town are working hard to make this a success, promote Pittsburgh and help President Obama show the world what Pittsburgh has to offer. Jim Ferlo - not so much and I wouldn't want to be be ya next election.

  13. I would prefer to go it alone on this pension issue, because I don't have faith in the commonwealth. If we receive favorable changes to the language in the final bill, then the fallout from the horsetrading may not help us in the long run and potentially maim our metropolitan house and senate legislators. However...

    Regardless how one may feel about the issues facing cities, towns and boroughs throughout the commonwealth, Mayor Nutter is getting it done as far as state assistance. He works with the local private and public entities as well as the state legislators to ensure that our commonwealth is aware of Philly's needs.

    Whether by the laws enacted or the funding provided, Philly has been receiving state assistance for many of its self-inflicted problems. Pittsburgh has not.

  14. Are the citizens of ALLEGHENY COUNTY prepared to pay an additional 1 percent sales tax to fund the City of Pittsburgh Pension Systems?

    Is that better than paying increased property taxes?

    Is it fair that non-city of Pittsburgh residents pay a 1% surcharge for city of Pittsburg pensions ?

    Should the 1% surcharge go to any and all underfunded pensions within Allegheny County?

    Should every underfunded municipal pension in Allegheny County be combined and be supplemented by a 1% sales tax?


    The HUDDLER does not trust Harrisburg. The time to act is now. CALL YOU STATE HOUSE REPS TODAY!

    Stop the state take over until we can explore more options.

  15. Anon 9:06, there was a request for quotes or request for proposals back in January or February (it was in the paper). That may have been only for leasing, or not, but certainly the City went to market at least on that basis. I haven't checked since, so I don't know if the City has tried anything since. And remember, the 200 million in net means it needs to be much more in gross, to cover the outstanding debt. Maybe there will be interest in buying the City lots and the rights to put parking meters on every street the City owns. Which would be entertaining.

  16. "Can someone explain how this would be bad in the long run?"

    It increases benefits payed to retiring Police officers and Firefighters from 50% of their final pay to 68% of their final pay. Which means the City is on the hook for a helluva lot more money. The 28% funded becomes a lot less when the pension liability jumps from $800some million to over a billion.

    Yet the unions are not for it, because it only affects new hires. The 20 year vets get to retire at 50%, while the rookies going to police academy next month will get 60+% retirement benefits.

    Good job Harrisburg, way to fix a problem by imposing a bigger problem.

  17. Mayor Nutter, as someone stated already, does a much better job at communicating his message in Harrisburg and does not have City Council undermining him in the media or publicly. He has been a constant presence in the Capitol over the past month and met with pretty much EVERY legislator personally, not just the Philly delegation. He's even held press conferences at the Capitol to press his cause. That is not the case with Pittsburgh. Mayor Ravenstahl sent his chief of staff, who did a piss-poor job of it and who also lack basic diplomacy skills. The perception/opinion of the Pittsburgh Mayor's office/administration in Harrisburg is not a good one. Part of this is the Mayor's own fault with his early shenanigans and his approach to governing the city. He just doesn't garner the respect afforded not just Mayor Nutter, but many other elected officials across the Commonwealth. Ravenstahl is not being "punished" for Mayor Murphy's past actions, but rather his own.

  18. many years ago Sophie sold the water department and many of the parks facilities to bail out the pension fund...this is history repeating itself....sell the city's assets to cover our assests

  19. Ed - I think the RFP you are recalling was to conduct a feasibility study of leasing the garages, not to actually lease the garages.

    Setting aside the larger issue of how bad the bill is or is not for PGH, the "it's inequitable!" arguments don't impress me. So employees hired yesterday will receive different benefits than employees hired tomorrow. But if we don't make changes, then we don't make changes -- and I think it's pretty clear that we need to make changes. Otherwise we would not be in this mess.

  20. Mayor Nutter, as someone stated already, does a much better job at communicating

    That is such a weak excuse. Nutter does a better job of communicating? COMMUNICATING? Are you trying to claim that the state was unaware of our problems here in Pittsburgh? We had a STATE OVERSIGHT board! How about our state officials stop making excuses and start treating both cities in an equitable manner.

    You can't provide assistance to one city, while you turn you back on the other.

  21. "Nutter does a better job of communicating? COMMUNICATING?"

    Anon 1:43 - Someone is trying very hard to obliterate that discussion. Not surprising. It does sound by all objective measures like like Nutter spent more time personally in Harrisburg, met with far more legislators, and held press conferences there -- perhaps doing all this without irritating as many people. I think we all know politicians have egos and personalities and respond to that kind of stroking. Also, I'm not sure if Nutter and the Nutter machine invested monetarily in state figures, but last time I checked LR's considerable warchest remained exclusively in the service of LR.

    We've been assured multiple times through many elections (I grant it seems like too many) that Ravenstahl is "meeting constantly with our allies in Harrisburg". I think it's fair now to ask, who are our allies in Harrisburg? Do we have any? It doesn't seem like anybody at all is echoing the PGH position, including our own delegation. Or was the "meeting constantly with our allies in Harrisburg" line always just sop to the rubes to get through the news-cycle, it sounds like that's exactly what you're saying.

    That's one reason why I'm having a hard time rallying around the flag in indignant solidarity. Another reason is I can't see what good it will accomplish at this point.

  22. You think this city can't retain police officers now? Just wait, the city will pay for all of their training, they will spend a couple of years here, then take their city funded, tax dollar training, and their years of service, and move them to some suburb, (Portability of service) was sneakily written into this! Oh yeah, there is a whole lot more than just your taxes going up on the surface, the repercussions will be felt monetarily by this city over and over again on so many levels.

    And this is being rushed through, so that FILTHADELPHIA can hurry up and raise their sales tax?.....WAKE UP, WAKE UP WAKE UP!!!

  23. Bram, you may well be right (and I say "may" only because I can not remember what the RFP was for). Meanwhile, your 2:48pm comment strikes me as really correct. Every time Ravenstahl goes to Harrisburg to talk to our "friends", our "friends make negative comments to the media. That includes people like Ferlo and Frankel, to say nothing of Jane Orie.

  24. One can argue both sides of portability.

    Pittsburgh loses lots of cops as soon as they get their 20 years in, and these cops head straight to a second career for a second pension.

    Bill Mullen moved onto Sheriff
    Charles Moffat moved to County Superintendent
    most recent: Mike Scott moved onto Chief of Baldwin Boro

    This happens even more with rank and file officers.

    The burbs love experienced inner city cops.

    Solution? Commit to 5 or 10 years OR pay back what the city has invested.

    Some of the anons on here are always screaming about the free market.

    If you were a cop wouldn't you go where the money is ?

    Pension portability will benefit all.

    There are alot of public servants who hate their jobs, and do not leave due to pension issues.

    what plan does the mayor have other than selling our assets?

  25. "You think this city can't retain police officers now? Just wait, the city will pay for all of their training, they will spend a couple of years here, then take their city funded, tax dollar training, and their years of service, and move them to some suburb"

    You got that right. Many young guys I know on the force who have between 4-7 years on the job are already testing in other areas because of the low pay here and the pension crisis. Can you blame them?