Wednesday, October 13, 2010

Cheeseball Maneuver on Pensions Succeeds

Preliminary Vote to Reject Lease Deal Early Enables Final Action on Tuesday 10/19.

Yesterday, a shiny new pensions plan was introduced -- well, not terribly shiny, because we don't actually know what's in it yet (like how much needs to be borrowed, for how many years, what will be the interest, which parking facilities' prices will go up and by how much and why those and how under this framework are we to avoid the same problem with PMRS takeovers for lack of funding in the near-term future).

And the Council members who introduced it 24 hours ago chanted, "The lease deal is dead! The lease deal is dead!," with the fervent insistence of Dorothy repeating, "There's no place like home! There's no place like home!" in a bid to get the media to repeat it and make it closer to being so -- not to mention make the deal's stakeholders panicky and discouraged. This along with folksy arguments about the need to "clear brush" and "clean workbenches" and whatnot.

Am I wrong about any of that?

So they concocted this minute blitzkrieg not to pass their own plan (they're not remotely ready for that yet) but to get rid of the Mayor's plan -- which the public, at their righteous insistence, has been pouring over for months and months -- before the Mayor and the public can spend even 48 hours really looking into their own plan.

So is their new plan any good? Why are they acting so very much like they're afraid that the lease deal will start looking better and better once we find out about this new thing, and about the real economic facts surrounding everyone's pension plans? Surprise surprise, during today's discussion everyone talked a lot more about what's wrong with the parking lease than anything substantive about the "Council-Lamb" scrape-and-borrow approach.

Pretty gangster, guys. Pretty old-school. Not exactly good govern-minty at all. All I'm saying.

REMINDER: What we had forgotten to mention yesterday was this: today's vote is only a preliminary vote. Even by voting against the infrastructure lease now and putting all our faith in freshly squeezed unicorn's milk, the deed would need to be repeated on Tuesday -- and lots of things could happen. For example, the Mayor's office could return from China (like I said, pretty gangster you guys!), or the State could return with worse-than-hoped-for actuarial reports which would shake up the entire dynamic.


  1. If anyone besides Burgess was making that argument, they may have succeeded, because his (and your) point are very valid. He just can't convince anyone to do anything, because he acts like an ass.

  2. Adam - Councilwoman Smith was making the same argument. No one's listening or persuadable right now, because everyone's focused on doing what's popular (defeating a lease deal which the public knows for sure will bring pain) rather than doing what's right (acknowledging up-front that any plan which will actually make real progress solving the problem will bring real, felt pain, no matter when we decide to invent / examine such a thing).

    Right now 5 or 6 are comfortable that their scrape-and-borrow approach will purchase (literally, on our dime) two years of time before having to confront the state takeover again and/or face a whole new round of severe austerity measures. And those two years can come in handy to them individually for any number of reasons.

  3. The state takeover doesn't happen every year, or every two years

    Just on January 1, 2011

    The City could literally be at 0% funded Jan 1 2013 and the state would not take over the fund

  4. ANONYMOUS 2:11 - I am quite distressed to learn that technically, you are correct about Act 44, and that I was mistaken in passing on that misinformation.

    However Act 44 does require biennial reporting to the state into the future, and it remains very likely that it's the clear intent of the Legislature which mandated our deadline for 01/11/2011 to continue to act in that way if we cannot maintain minimal (50%) levels of funding into the future. They probably should for our own good.

    All the same, thanks very much for keeping this blog honest.

  5. what adam said.

    and the holier than thou polemics were pretty nauseating.

    as to councilwoman smith, she was saying that? all i heard were incoherent threats about what's good for the city and who's gonna show the public that.

  6. Well, let's face it. You could hold a holier-than-thou contest in City Hall and wind up handing out 11 platinum medals. 12 if I'm visiting that day.

  7. Bram: True about Smith, she did mention that all the plans were bad but we should keep them around so that they can be compared and contrasted. I think it would have been better if she talked before Ricky-Tikki-Tavi (see what I just did?), but assuming that council members change their mind based on what other members say is silly I guess.

    If you put aside the obvious reasoning behind what council did as outlined in your post, you could go on to the assumption that based on feedback and evaluation that the mayor's plan was so abhorrent to the population that they could never ever bring themselves to vote for it. I don't think I agree with Smith's "lets compare all the bad plans and pick the least bad", even if in reality that is the only option that will truly be valid.

    Burgess makes the point that not delaying will effectively be defaulting to the last option, and that is probably true. However, if the justification of the council is that they just cannot vote for a crappy plan as determined by their (voting) constituents, than that seems reasonable.

    The people get what they elect, and if the council members are going to go with the 98%+ will of their constituents, I can't fault them for not committing political suicide. The city and its residents are going to get the default plan, because the residents lack the backbone to do anything but bitch and moan because they don't understand the situation, and I don't expect political representatives to go in the completely opposite direction of those they represent.

  8. Bram,

    The city is required to do biennial reporting now so I'm not sure what your point is.

    But this deal went down today with one, count it, one vote in the affirmative. The city administration has refeused to discuss any proposal except this lease for 18 months. If council didn't kill it today the city would be talking about nothing else for another two weeks and those days are critical if the bond deal is to be a reality.

    And Bram, it's not that complicated. It's a bond deal. You borrrow what you need and you raise rates enough to satisfy the debt payments. Quit buying what the Rev is selling on this.

  9. Hang,in there Bram!

    I wish I had some of what Council's Smoking.


  10. Anon 4:53 - And then what happens in two years, when the money we raised from the bond (and by wiping out our reserve fund) is gone, the pension fund is back down to 40% or less, the state confirms this from our biennial report and says, "Whoop, NOW we take you over?"

    Take out another bond on top of the first, just two years later? Now your garages really are crumbling and we fix them how?

    At this point, if we aren't going to experience a serious injection of cash that puts us up to 60-65% funding, we really should dive right into PMRS. It's the drain we'd be circling around like it or not. Peduto's path is just a more direct, less expensive route to get there.

  11. And if that doesn't convince you, well, getting back to the subject of the post and of my perplexity, that's the exact kind of thing Pittsburgh could determine if we'd discuss the pros and cons of all the plans SIDE BY SIDE BY SIDE.

  12. One would think "borrow what you need" and "raise rates enough" are rather crucial terms to be specific about before deciding if that is a good plan.

    And one might suggest that we should be setting parking rates based on good parking policy, not exigent financial needs, but I guess no one wants to talk about that issue anymore--it is too easy to get the pitchfork crowd riled up on the subject of parking policy.

    Speaking of which, it would be one thing if Council tried to explain to the pitchfork crowd the merits of the best plan first, then bowed to public pressure when that didn't work. But some members of Council have been directly involved in summoning up and leading the pitchfork crowd from the beginning, so I don't think they can be excused.

  13. The prevailing wisdom in academia is that charging market rates is the best parking policy. UCLA professor Donald Shoup has led a crusade saying as much.

    Also other municipalities such as San Fransisco and Seattle have been raising parking prices and having quite a bit of successful. Additionally, the impact on drivers and on businesses has been minimal.

    Unlike these cities however, Pittsburgh was fortunate to actually get fair value to sell this parking asset, have private industry assume the risk, and perform the function that is avant garde parking policy.

    The mayor may not be a policy wiz, but its sad that the one time he really gets something right, it isn't even fully being examined.

  14. The only required rate increases in the plan suggested by Michael Lamb and introduced by Council this week are listed in the piece of legislation that went along with it:

    Meter increases only (no garages) and about a 1/3 of what they would have been under the mayor's plan.

  15. This whole concept that the city needs to consider all of the plans side by side is nonsense. The Mayor's plan has been in the public eye for months and its clear that City Council doesn't like it. Even if you think Council is bending to public pressure, there are legitimate reasons to oppose the Mayor's plan that you are glossing over without even a second thought. This blog has gone way down hill.

  16. there are legitimate reasons to oppose the Mayor's plan that you are glossing over without even a second thought.

    I agree, the fixation on the lease plan is a little disturbing.

  17. If you mean in terms of not covering unrelated issues, I sort of agree -- but I've always tended to tunnel-vision on those stories as they interest me. There's enough breadth out there without enough depth. Besides which this is the pension issue, the big kahuna.

    In terms of "fixating" on the lease ... it needs the help. It's been (understandably) unfairly ramrodded and it's a fun challenge to try and correct that.