Monday, August 24, 2009

What Is Pittsburgh's Proposed Pensions Solution? It's More Than Leasing the Parking Garages, Right?

Here is the actual problem that is causing Yarone Zober and the State Legislature to slap-fight:

"In the pension industry, when you're talking less than 50 percent, you're talking terminal illness," McAneny said. "The federal government classifies 60 percent as critical."

Pittsburgh has 28 percent of an estimated $899 million needed to meet long-term obligations. As a result, the city's system is slated for state takeover in legislation pending in the House. (Trib, Brad Bumstead)

Our 28% is a lot lower even than 50%, which is bad enough. Yet a state takeover would mean increased mandatory City payments into a state-controlled pensions fund. There seems to be a solid consensus that Pittsburgh can ill-afford that.

"My position has been consistent: I am willing to be part of a plan that helps Pittsburgh and its taxpayers," Mayor Luke Ravenstahl said. "I am unwilling to participate in a plan that requires massive tax increases or deep cuts to key city services without providing Pittsburgh with the true reform I have been lobbying for over the past three years.

"Pittsburgh cannot afford the so-called solution in the bills as they stand," he said. "The House bills in their current form must be defeated, amended or we must be allowed to opt out." (ibid)

The Mayor's 'willingness to participate' won't amount to very much if state government decides to go ahead with this, but this is the right position -- to the extent that it is a complete sentiment.

We need to hear a lot more about the "true reform" which Ravenstahl says he has been lobbying for in Harrisburg. I know it would probably involve calculus, but that is an important part of understanding why we apparently can not get what we need now -- and whether he is indeed asking for something viable and realistic.

(There is also the issue of whether his administration has in fact been lobbying much in Harrisburg. There seems to be little 3rd party verification of this.)

Right now, all we are getting is this:

Pittsburgh officials insist they could lease parking garages to bring in $200 million for the pension systems. (ibid)

By my math, 28% of $899 million is $252 million. If Administration officials are totally, completely correct about the parking garages, we will receive another $200 million, giving us $452 million, and our pensions will be funded at almost exactly 50% -- which is still less than "critical" and on the very threshold of "terminal".

And since this is a one-time cash infusion rather than a structural, sustainable budgetary change, that money is only going to be spent and disappear over time. And since asset valuations are supposed to decrease further in coming years due to a financial crisis that hasn't fully hit the books yet -- it's safe to say leasing the parking garages wouldn't get us remotely out of the woods.


Now, as I understand it, Pittsburgh's ACTUAL PENSIONS SOLUTION consists of the following:

1. Defeat this state takeover by any means necessary, which seems to include loudly hitching it to whatever else is unpopular about Harrisburg.

2. Lease the parking garages, which should get us through 2010 and the early part of 2011 without onerous tax increases on residents.

3. Engineer a five-seat swing for Democrats in the State Senate in Nov. 2010, giving that party control over that body -- the theory being that Democrats are ideologically more likely to support spending money on urban problems, and are of the same political party as most urban officials.

4. Hold on to the present slim Democratic majority in the State House of Representatives.

5. Also in 2010, elect a Democratic governor who is from Pittsburgh, ideally one who is close to Mayor Luke Ravenstahl.


Problems with this plan include: there are only five truly vulnerable Republican state senators, while there are also vulnerable Democratic incumbents -- there is only one Dan Onorato to run for Governor, while there is also one Tom Corbett -- and what I think people are overlooking: there are probably "Blue Dog" Democrats throughout the Legislature who will want nothing to do with altering payment formulas and amending things in such a way that bails out the state's biggest cities, or who will resent pressure to do so perhaps because they don't like us for some reason.

Oh, and there is only one shot at 2010.


  1. The problem with Luke's plan is that he does not have a viable alternative solution !!

    At least the state is making an attempt to fix this problem !!

    Where is our city leadership on this issue?
    Hellooooo Mr Mayor? City Council ?

    The only one that has a half of a clue is Michael Lamb, and his role does not include legislating fixes to the pension system.

    The HUDDLER would hope that if the Mayor and City Council had a problem with Harrisburg's solution, they would come up with their own plan, as an alternative.

    OPTING OUT IS NOT A SOLUTION !! The taxpayers have been screwed by these officials opting out of findind solutions year after year.

  2. Bram: True reform does not involve calculus. Ideal reform may only include addition and subtraction.

    Pay fewer. Pay less. Else, pay until empty then pay none.