Sunday, December 5, 2010

Pension still causes tension

Published in: The Globe
Originally published: October 19, 2010
By Kalea Hall and Katie Janicik 
Even with a collection of Pittsburgh firefighters at the council meeting on Oct. 19., fighting for Mayor Luke Ravenstahl's parking lease plan to be reconsidered, City Council effectively nixed the plan.
With an underfunded pension plan, councilmen are currently looking at the council controller plan or a state takeover, now that the mayor's plan has been killed.
"We need to reinvest in lots of things in this city, but we are not selling them. We should not be selling our soul and selling our city and selling our assets for 50 years. Now is not the time for threats. Now is the time to consider alternatives," Councilman Patrick Dowd, representative for District 7, said at the meeting.
On Oct. 13, the majority of City Council cast their first votes on  Ravenstahl's plan to lease parking lots and meters because members felt it was not right for the city of Pittsburgh.
 "Residents and small business owners expressed real concern about the increase in parking rates in the Downtown garages and in the business districts that the privatization plan would entail," said Councilwoman Natalia Rudiak, Zone Four Representative, in a phone interview.
The city of Pittsburgh has until the end of the year to collect $200 million for the pension plan.  If it is not able to come up with the money, it will face a state take over. 
"It is underfunded and we won't be able to meet our obligations," said Rudiak, in a phone interview."At the end of the day, every pension is legally mandated to pay its employees what its employees have legally earned."
The bills that council voted down in the mayor's plan "enabled the city to lease the street meters for the next 50 years."
According to Rudiak, the council used a financial adviser to make their final decision about the mayor's plan. For the past nine months, council had a study done on the data of the mayor's plan by a financial adviser. They also held public hearings in all parts of the city to hear the public's opinion about the plan. At the hearings, small business owners and city residents "had a real concern about the increase in parking rates, the very high increase of parking rates in the downtown garages and in the business district." Another study council did, Rudiak said,  "illustrated that we would lose billions of dollars over the next 50 years."
"All of these variables taken together, the majority of council decided to keep the public assets public and to look at another alternative for dealing with our pension fund," Rudiak said.
With the mayor's plan out of the picture, council is now considering two alternatives: the council controller's plan or a state takeover.
With a state takeover, the city will pay $30 million every year toward the pension fund. This will ultimately cause the city to raise taxes and cut services, according to Ravenstahl's website. It would also cause the city to lose control of the parking assets.
"The loss of control for 50 years is too long of a loss of control," said Dowd at the meeting.
If a state takeover occurs, it would result in a permanent loss of control over the pension, the Pennsylvania Municipal Retirement System (PMRS) will manage the pension fund.
"If PMRS comes in here... I am telling all of you that you will not be able to afford it," said Joseph E. King, president of Pittsburgh Firefighter Local No. 1. "You will not be able to afford to park at a meter or garage because of what we will have to pay."
Members of Pittsburgh Firefighter Local No. 1, Police Union president Dan O'Hara, and Allen Lazowski, chairman and Ceo of LAZ parking, attended the meeting to request that City Council table the mayor's plan to lease the city's parking assets, instead of throwing it away.
After a 7-2 vote, city council eliminated the plan.
"I really thought that we had convinced the majority of people to reconsider the plan," King said.
What several firefighters are concerned about is the need for bond issues.
"There is no plan that can guarantee revenue into the cities like the leasing plan," said Pittsbugh Firefighter Local No. 1 Trustee, Darrin Kelly. "The bond issues proposed by council and Controller [Michael] Lamb have not been thoroughly evaluated and most importantly have not had any public input."
The council controller's plan that was discussed at the post-agenda meeting on Oct. 19,  involves the city selling the $220 million of parking assets that the city owns to the Pittsburgh Parking Authority and "taking the proceeds from that sale and bolster the pension fund with them," according to Controller Michael Lamb.
The only problem with the plan is that the Parking Authority has yet to agree to it.
"This plan was done as an alternative to [the mayor's plan] and this plan certainly has more support by the public and city council and it remains to be seen if it will receive support from the Parking Authority," Lamb said, in a phone interview.
Lamb said that if the Parking Authority agrees to the plan they "would be given certain new abilities as far as rates go, and new revenue opportunities."
"We give them the ability to raise rates, not to just cover the debt service, but to cover the maintenance and the capital work that needs done on those garages, so it gives them that flexibility," Lamb said.
Pittsburgh Parking Partners CEO Peter Levin feels that the company's "proposal for a public private partnership with the city of Pittsburgh to invest in, refurbish, modernize and operate their parking assets, is still viable and warrants continued serious consideration."
"Our team has been clear about our intentions and the direction we want to go. We are committed to Pittsburgh, [and] we know we would do a great job in Pittsburgh, but the decision rests with Council," said Levin in a prepared statement.
Lamb said the council controller plan will be up for discussion in the upcoming week.
Rudiak said that the state takeover is not really a plan; it is what will happen if council does nothing to revive the pension fund by New Year's Eve.
"The city needs to find other revenue sources to be able to pay pensioneers for what they've worked for and what they deserve and what we are legally contracted to do," Rudiak said. 
Council is set to continue discussion over the pension fund issue until a decision is made.
"All of this debt is going to fall on the homeowners, employees and the businesses of the city. It's going to happen. When it does, somebody is going to be held accountable and I will tell you who should be held accountable is those nine people in there," said King after the mayor's plan was killed.

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