Oversight agency approves Pittsburgh’s amended 2014 budget with pension funding stipulation
A state-appointed financial overseer has approved an amended version of Pittsburgh’s 2014 budget and five-year financial plan after city officials agreed to a stipulation on funding pensions, officials said.
Nick Varischetti, who chairs the Intergovernmental Cooperation Authority, said the city projects an 8 percent market return on pension investments. The city agreed to pay the difference into the fund if investments earn less than 8 percent, he said.
“We’re taking them on face value that they will do that,” Varischetti said. “It was pretty much a technical adjustment to the budget.”
Former Gov. Ed Rendell formed the ICA in 2004 to assist the city and its Act 47 financial recovery team in resolving near-bankrupt conditions. The city was plagued with chronic budget deficits, underfunded pensions and crippling debt of nearly $1 billion.
Pittsburgh has about 62 percent funding to cover a $1 billion employee pension liability.
Officials, including Controller Michael Lamb, have repeatedly called for the city to lower its annual market projection and contribute more each year toward pensions.
Pittsburgh has met or exceeded the 8 percent return six times since 2002. In 2008 and 2011 the funds lost $98.7 million.
“We wanted to make sure the contributions to the pensions are significant enough that we are not going further and further into debt,” Councilman Ricky Burgess, who chairs council’s finance committee, said of the agreement.
The $479 million spending plan will contribute $25 million more to the pension fund than the law requires, the mayor’s office said. It has no new taxes for the seventh year in a row.
“We have worked hard to bring back financial stability and responsible fiscal leadership to city government, and this budget and updated financial plan does just that,” Mayor Luke Ravenstahl said in a prepared statement.
The budget also adds $25 million in capital spending. Last year’s budget totaled $470 million.
Bob Bauder is a staff writer for Trib Total Media. He can be reached at 412-765-2312 or email@example.com.