Pittsburgh City Council approves pension funding
The waiting game begins.
With about eight hours to spare, City Council on Friday approved a financing plan it believes will stop a state takeover of the city's underfunded pension system. But no one will know for months whether that effort, using parking tax, succeeds.
Council members appeared more exhausted than jubilant, acknowledging that even after a mad rush to finance a plan to fund municipal pensions to 50 percent of their obligations, they have more work to do to address the retirement accounts' long-term stability.
"This is possibly one of the most important votes this council has to make," Council President Darlene Harris said.
Councilman Ricky Burgess said it would only buy the city time.
"Fixing the city's massively unfunded pension is not the goal of this plan," Burgess said. "The ... plan may prevent state takeover for two years, if we got it right this time. In two years, our pensions' funding will likely be again below the 50 percent threshold, and will again face potential action by the Legislature."
Under state law, the city had until midnight to identify a way it could reach the 50 percent threshold. The state Public Employment Retirement Commission said it won't make a final decision on whether the city's plan worked until September.
If the pensions don't reach 50 percent funding, the Pennsylvania Municipal Retirement System will take over management of them. The pensions have about 30 percent of $1 billion needed for 8,000 active and retired employees.
After several stumbles, council this week decided to use a portion of the parking tax, which is expected to raise $47 million next year, for the pensions. Council said it would devote $13.4 million in revenue annually until 2017, and then boost that amount to $26.7 million annually. That would raise $735 million -- a present day value of $252.7 million -- to add to the pension funds, which have nearly $300 million.
Along with a one-time transfer of $45 million from a fund that can only go to debt or the pensions, city Budget Director Bill Urbanic said officials believe they crossed the 50-percent threshold.
In order to divert parking tax to the pensions, instead of the city's general fund, council approved budgetary changes that included moving $12 million from the reserve balance and additional money from the Pittsburgh Parking Authority to the general fund -- including money from parking meter rate increases that will take effect in June.
The Intergovernmental Cooperation Authority, which has overseen the city's finances since the state declared Pittsburgh financially distressed in 2004, approved the changes.
Mayor Luke Ravenstahl opposed the legislation but agreed to veto it immediately so council could meet the midnight deadline and try to make the plan work. Council's vote to override the veto was 9-0.
Ravenstahl warned Thursday he believes the pension funds could be bankrupt in a few years, putting out more money than they take in. In his veto letter, he underscored his objections.
"I continue to believe there are numerous potentially fatal flaws to this plan," Ravenstahl said. "In the spirit of cooperation, I have agreed to put my concerns aside and take the steps necessary to attempt to make this plan work."
