Sunday, December 5, 2010

Pension crisis negotiations continue as council members demand ‘clarification’

Published in: The Globe
Originally published: November 9, 2010
By Kalea Hall and Katie Janicik 
Pittsburgh City Council and Mayor Luke Ravenstahl have yet to agree on a solution to the city pension deficit crisis. 
A bill was rewritten and voted to be amended and put on hold by City Council during the Nov. 9 meeting.        
The new bill allows Ravenstahl and the Pittsburgh Parking Authority to negotiate a transfer of the city's parking assets to the Parking Authority. The Parking Authority would then pay for them.
"I don't believe you can just sit down and change a plan and then decide you're not going to negotiate it," said Darlene Harris, Council President and District One Representative.

When the bill was first presented to Council, a debate arose about its wording. The bill was sponsored by Councilwoman Theresa Kail-Smith, Councilman Rev. Ricky Burgess, and Councilman Robert Lavelle.
The bill's first goal was stated for the Council to authorize the mayor and director of finance to be able to make negotiations with "various persons and or entities for the purpose of leasing parking assets owned or operated by the city or Pittsburgh Parking Authority."
Councilman Patrick Dowd was "deeply frustrated" by the bill's wording.
"I am opposed to holding this bill until we have some clarification as to who ‘various persons and or entities' are," Dowd said at the meeting. "With whom will our mayor and director of finance be authorized to negotiate with?"
Councilman Bruce Kraus and Councilwoman Natalia Rudiak agreed with Councilman Dowd that the bill was not specific enough. Rudiak, Councilman William Peduto, and Council President Darlene Harris all proclaimed that they would not vote for a bill that involved any type of leasing.
"I am not going to support leasing our public assets and you can bring it back in different legislation, but I am not going to support it," Peduto said at the meeting. "We have a plan that has been approved; the mayor did not veto it."
Last month, the council-controller plan was approved by City Council. The plan was devised by City Council and City Controller Michael Lamb as an alternative to fix the ailing pension fund. Under this plan, the city would sell its assets to the Pittsburgh Parking Authority in order to fill the pension fund by 50 percent by Jan. 1, 2011. However, the Parking Authority would be forced to use bonds to pay for the assets, forcing the Authoirty farther into debt. Due to this issue, the members of the Parking Authority Board voted against the bill.
Peduto said during the meeting that regardless of whether or not the mayor has yet to approve the council-controller plan, it was passed by the council and, can therefore, be administered, if not now, then in the future. He also said that there is a "state-administered plan that will take effect later this year, but will not [be] implemented until 2015."
"We can start working on these plans and try to figure out a way to do it or we can keep trying to bring back this lease," Peduto said.
Other members of Council expressed their concern that the bill was another option to lease the city's parking assets. They further clarified to other members that the mayor's plan is out of the picture after a majority of council voted against it, prohibiting the private leasing of the city's parking assets for the next 50 years.
"This is too little, too late," Rudiak said at the meeting. "We made our decision, we need to look for alternative solutions."
At the meeting, Kail-Smith said she wanted to make a compromise and felt that the city was very close to one.
"Everyone wants to see a solution here. Everyone wants to see the issue … resolved," Kail-Smith said.
In a meeting on Nov. 8, Ravenstahl attacked City Council's decision on what to do about the pension fund.  He also presented a proposed fiscal year 2011 budget which promises not to raise taxes or cut services until 2016.
"It remains true that our city cannot absorb the costs of [a] state takeover from 2016 and beyond," Ravenstahl said in a press release issued later that day.
Another press release issued by the mayor explains what will happen if a state takeover were to occur. According to the press release, under the state Act 44, the Pennsylvania Municipal Retirement System (PMRS) "will take over the pension fund next year unless the city deposits over $200 million into the fund by January 1, 2011." If PMRS takes over the pension fund, Pittsburgh will be required to make annual payments into the fund that average $121 million annually. That is 40 percent of the $450 million budget that the city is annually given. If the takeover occurs, by 2013, the minimum municipal obligation (MMO) payment will increase to $86.3 million. It currently sits at $45 million. In the year 2017, the MMO payment will increase to $127.3 million and in the year 2030, it will increase to $160 million.
Kail-Smith was surprised at how high the MMO payments would be if a state takeover were to occur, especially since she was previously "open to the idea of a state takeover."
"I don't think [a state takeover] means anything in the short term, but long term I think it could be devastating for the residents," Kail-Smith said.
City Council will be working with Ravenstahl in the coming weeks on a compromise.
"It's constantly changing as we go along here," Kail-Smith said.

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