Friday, September 11, 2009

Pensions: You're More Than Halfway There! *

*-UPDATE: Never mind. Guess we're resolved to play it by ear, and deal with problems as they will arise.

As you know, Pittsburgh can't realistically hope to make it to the level of 50% pensions funding in two years, considering the need to revise actuarial assumptions and asset valuations. Unless we can somehow "base year" those things.

Heaven help us all if you do try to do that!

What we need to do is give Pittsburgh's own plan a chance to work, but at the same time plan for the plan merely to pull Pittsburgh out of Level III Distressed Status, moving up a notch or two. We should adjust the bill's language to clarify some things, particularly the continuation of baseline human rights to collectively bargain with some organ. And finally, we should lock Pittsburgh in to joining the statewide pensions solution if and when its two year exemption fails to fulfill the mission of adequate funding.


The problem is, Pittsburgh's real pension obligations are likely to be so high in out years that even the yearly payments under legislation like this (more-so without it) will cause horrific curtailments, cutbacks and layoffs. And this would arrive just as the fruits of President Obama's largess and confidence, and a certain "trendiness", might actually be bearing fruit.

It is a fact that governments across the state will hit the very same wall because of these reality-making actuarial and asset reports. So if we want to put this problem behind us, and if we want our towns, cities and anchor-cities to have a legitimate shot at health, it would help if we also gave them a shot in the arm of some kind.

How about a revenue stream to kick off this endeavor? A modest one. I'm happy brainstorming for the next 48 hours and then letting Sen. Jane Orie (R-Pittsburbia) pick one off the chalkboard all by herself.

Personally, I think we should apply some sort of tax to certain large and profitable non-profits. Speaking only for Pittsburgh, these hospitals and insurers are by far our most profitable and sustainable endeavor, the reliable cash cow, the new steel -- remember they occupy more land than anything in Pittsburgh save for our rivers. Yet to our schools, our legacy debts and our aging infrastructure, this economic activity is totally segregated from the economy. If we seem out-of-balance, that's because it is. So although I think the highly profitable nonprofits are the way to go, the important thing to do is go.

Throw us some tools, in case our effort to our scale our way out of this oil well with our bare hands doesn't work out.


  1. If the Obama health care plan is put into place, these cash cows may morph into dogs.

    If this happens, the city will have to find another source of revenue...

  2. I don't consider that an awful point, Anon 1:28. However even if we get a good plan with a public option, it will take years for it to ramp up and effect the market. And I have nothing but confidence in UPMC's capacity to adapt to a changing game field.

    More importantly, however, if Obama delivers a health care plan, the general decrease of bankruptcies and financial misery that come with that should more than make up for any revenue-generating shortfall on the part of our profitable nonprofits.

  3. if Obama delivers a health care plan, the general decrease of bankruptcies and financial misery that come with that should more than make up for any revenue-generating shortfall on the part of our profitable nonprofits.

    Good point Bram, I just think focusing all our attention on one source of revenue is not the best long term strategy for the city.

  4. Bram:
    I am for all city employees paying 7% of their pay into their retirement.

  5. I am for Pittsburgh's exemption, and I am for the Senate taking a look at what the House did to "the language". It's always a little scary when all sides seem to be agreeing to use that word. I wonder what language the protesters wanted changed, and how much they changed it. If they essentially gutted the Senate's effort, they should send it back to the House with a duly outraged Mayor Nutter screaming at them.

    Anon 10:45, I have a feeling that gets to your point. Employees may always collectively bargain for higher gross pay -- to try to make up for it -- or additional benefits and protections, but the percentage they must pay into their public retirement plan is like their taxes, it is not a "working condition". I wonder if 7% is too high but I'm not an expert.

    Yeah, the ball is in the Senate's court in all kinds of ways. Why not strike while the iron is glowing?