Harrisburg: You've Got To Slow Down, Man.

I'm not talking about your budget, obviously. I'm talking about the municipal pensions crisis. So it's a little backwards.


State budget: all you have to do is decide on a number. Pensions: it's considerably more complex. You're going to jerk it up entirely if it's done fast and not right.

"Absolutely," Nutter said when asked whether he would like the House, if approved by the Senate, to take up the bill and make no changes.

"I would certainly hope the House would not make any changes primarily because of timing issues," Nutter said. (Trib, Brad Bumstead)

I'm glad things are working out well for Philadelphia, and I trust things are working out well for Philadelphia in a way that does not actually hamper the effort in the rest of the state

However, this is all new to Pittsburgh -- and no doubt to some of the rest of the municipalities as well. How many have seen the real numbers?

(Yes, I know, I know. We've all made bad choices for too long. It's embarrassing. Pittsburgh should have fixed this in the 1990's. We all could have fixed this sometime this millennium. We in particular might have worked on this more over the past three years. So thank you for taking this on, state government leaders who never get enough credit, and thank you Philly for your involvement, but seriously -- you need to slow down and incorporate some feedback -- not all feedback, but SURELY SOME OF IT -- from the actual Pennsylvania cities that are going to be most significantly affected. Because it will affect plenty of them BADLY WHEN THE BILL COMES DUE, and quite by surprise, and you will have another gnarly outrage on your hands, with nothing to defend you except...)

Mayor Michael Nutter wants the legislation to be approved without House changes so that city can begin collecting an extra 1 percent sales tax to help fund its pension system. Democratic Gov. Ed Rendell, a former Philadelphia mayor, is backing Nutter's effort. (Trib, Bumstead and Brandolph)

Ha ha ha, sorry no. Lay down the sack with the dollar bill on it.

No, Mayor Nutter, we are going to pass a good bill instead, a strong and sustainable pensions strategy -- now that we're all caught up on where you and key state leaders have been at.

From what I understand, H.B. 1828 passed the Senate and is holed up in the House "Rules Committee". Very good. How about a month or two? Time to craft some friendly amendments, that are up to speed, and save this initiative from being a total albatross for wide swaths of Pennsylvania. Let's get it done right, and get it done in 2009 -- but not at full ramming speed.

Speaking of Public Pensions...

I just happened to scoop up a copy of today's USA Today Money section, and hey, there's Gov. Ed Rendell at the top of the page, next to the headline, Do political donations win pension fund deals?

This being USA Today, he was surrounded by a giant green circle illustrating the $129 million that Blackstone (a private equity group) has earned in management fees from handling PA pensions juxtaposed with a tiny black dot illustrating the $11,000 that its chairman Stephen Shwarzman contributed to Rendell in 2002 and 2006.

The next two graphic illustrations of states and private equity firms (New York / the Carlysle Group and New Mexico / the Quadrangle Group) were significantly smaller and lower down on the page. $38.6 million generated for Carlyle by N.Y., for example.

Although the subheading reads, States, SEC scrutinize investment awards to some firms, the article is larded with such calming statements as:

Even in cases with no charges of illegality, watchdogs argue that the campaign contributions — known as pay-to-play — create conflicts of interest.

"The selection of investment advisers to those plans shouldn't be based on campaign contributions. They should be based on the merits," said Mary Schapiro, chairwoman of the Securities and Exchange Commission, which she said is probing potential pay-to-play cases "in multiple states." (UST, Kevin McCoy)

And:

The firm (Blackstone) has not been accused in the New York investigation. (ibid)

Just thought it was a strange coincidence, today. If Pittsburgh really is going to politically oppose this pensions takeover, maybe this is a little ammunition -- but then again it's a lot easier to rail against "Harrisburg" and "legislators" than it is to talk smack on "Gov. Rendell".

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?

A "Behind-The-Scenes", "In The Know" G-20 Conversation Event

.
This was my first experience with the Allegheny Conference.

I guess it wasn't strictly speaking a production of the Allegheny Conference of Community Development; officially it was a collaboration among the Greater Pittsburgh Arts Council, GloabalPittsburgh, Leadership Pittsburgh, the New Pittsburgh Collaborative, the Pittsburgh Urban Magnet Project, Global Beats and the Pittsburgh G-20 Partnership; with the G-20 Partnership itself being comprised of Allegheny County, the City of Pittsburgh, Visit Pittsburgh and the Allegheny Conference.

1/7 divided by 1/4 is 1/28, so you could say the Conference was only 3.6% responsible. However, Bill Flanagan of the Conference did most of the talking, and somebody he described as his boss was positively looming alone way up in the rafters at the back of the Pittsburgh Opera building, so I'm content to describe this as a Conference event.

##

Aradhna Dhanda of Leadership Pittsburgh delivered a very brief welcoming address. "Positive, motivation, energy, fun -- that's what this evening is all about." Also, we would be provided with "something fun -- things we would not otherwise know."

The cuisine was certainly fun-oriented: kielbasa and sour kraut, pirogi, black and gold tortilla chips and baklava. There was also a cash bar.

Carla Andrea Leininger of Global Beats and the Brazilian Radio Hour on WRCT 88.3 came on to moderate the discussion and facilitate audience questions-and-answers, Phil Donahue-style. She introduced both Craig Davis of VisitPittsburgh (left) and Flanagan (right).



As you can hear above, Flanagan pointed out toward the end of his opening remarks that yes, for a little while, the G20 Summit was "supposed" to alight in New York City. When that did not pan out, Pittsburgh was put on an "enormously short list" of alternate host cities.

"If it wasn't for the City and the County saying yes," Flanagan declared, "the G20 wouldn't have come here."

"We believe there are many, many stories about Pittsburgh that are going to come out of this," Flanagan said. "The opportunity," he clarified, would lie not so much at the G-20 Summit itself, but lies "from now until September 23rd."

Multiple editors from global publications such as the Financial Times, the Economist and Forbes Magazine are already in town doing research on Pittsburgh's economic story, he asserted. The Financial Times is planning something really special.

Davis later added that hosting the Summit would make his job easier at VisitPittsburgh. "If we can handle the G20," he anticipates being able to tell future conference-goers, "we can handle your little American Medical Association thing" to much laughter.

One reason Pittsburgh was given the opportunity to host the Summit is the David L. Lawrence Convention Center. "Somebody decided Pittsburgh needed a green convention center," remarked Flanagan wonderingly, and lauded that mystery person's "foresight and stick-to-it-iveness" back before environmentalism and green design became all the rage.

Another reason is Pittsburgh's economic transformation over the last 30 years, and he cited "three keys to success" which the G20 Parntership settled upon for the purposes of describing the region's success story when asked:

1) Building on the best of our past
a) Financial services, our #1 economic contributor
b) Business services
c) Our "historic strengths" in energy (we have 700 energy companies)
2) Adding new industries
a) Health care and the life sciences, our #1 employer
b) Robotics
3) Investing in infrastructure
a) Quality of life
b) The Cultural District
c) Green practices

If you'd like to get your organization's story out to the media, it'd be best to fit it somewhere into that paradigm, he advised.

What else. There will be hospitality desks at each hotel, and there is a need for translators, go check the website. Don't hold your breath trying to woo foreign delegations for special cultural welcome events. Downtown restaurants are implored to stay open for business. There is a rough estimate of $20 million in economic influx coming into the city/region for this event, likely more, though the costs portion of that audience question was not addressed. Flanagan wishes the media would stay focused on facts such as that 300 residents came out to brainstorm ideas, instead of getting distracted by "the stuff" they're focused on now. In the crowd I heard a rumor that the Consol Energy Center AKA Penguins hockey arena is in line to receive extra protection including security personnel and special fencing, considering its name may make it a target for some stuff.

Pittsburgh's Trafalgar? Waterloo? Thermopylae?

I've spent the day deep in thought about whether what happened yesterday in Harrisburg is good for the City.

House Bill 1661 would prevent any Pennsylvania county from carrying out a court-ordered property reassessment until June 30, 2011. (P-G, Tom Barnes)

Not that. That's just silly. I mean, why not vote to delay elections until everybody in the Legislature qualifies for a pension?

I mean this:

The Senate amended a House bill, proposing a state takeover of (public pension) systems with less than 50 percent of the assets needed to meet liabilities. Pittsburgh has money for 28 percent of $899 million in liabilities. (Trib, Bumstead & Brandolph)

Together with this new caveat:

Allows "severely distressed" plans to make reduced payments toward pension costs. It would mean a first-year payment under the bill of $36 million instead of $56 million for the city, Ferlo said. (ibid)

There are some mixed signals between the two articles as to whether or not that package is minimally tolerable for the City. Jim Ferlo seems to think so, whereas the Mayor seems far less enthused. (Jim Ferlo by the way has been getting a crazy amount of ink lately, he's like the authority on everything.)

But what really jumped off the page was this:

Referring to the proposed parking leases, Senate Majority Whip Jane Orie, R-McCandless, said, "I give this mayor a lot of credit for the way he has addressed this issue." (ibid)

Well that sounds -- what's the word I'm looking for -- unholy. But impressive. This could absolutely become one of the pillars of Ravenstahl's reelection bid (the others being: bringing the G-20 to Pittsburgh, his statement about PittGirl, and "look at those two chumps go at each other". Actually that's an attractive package.)

Finally, I'll just throw in this here at the bottom:


Finally, some direction! (pa2010.com)

G-20 Legislation Unveiled

Here is the bill making it illegal to wear a mask or hood for the purposes of concealing one's identity with the intent to commission an unlawful act: PDF.

Here is the bill making it illegal to possess tools or devices intended to obstruct people from moving freely, noxious substances, launching devices, and gas masks: PDF.

Here is the bill making it possible for Pittsburgh to borrow officers from other cities, though portions seem missing and it does not deal with insurance and liability: PDF.

Here are some news articles: Post-Gazette, Tribune-Review.

"I want to be supportive (of the mayor's bills) and at the same time give people the right to a peaceful protest," said Councilwoman Theresa Smith. "There's too much at stake here to be playing political games. (Trib, Adam Brandolph)

Aw, man! Again? Just once, I would like to hear somebody declare, "Now is the time to play political games!"

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.

6. PROFIT!

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.