Wednesday, April 09, 2008
City Will Stay in Act 47, Wants More Help
As speculated in this blog on Monday, the state’s opinion on the City of Pittsburgh’s distressed status is one of “good job so far, but bad long term forecast” and the City is unlikely to emerge from Act 47. If it had, its tenure would have been the second shortest to the Borough of Ambridge, which came out after three years.
Originally those pushing for the removal of status wanted “clear and definable benchmarks as to what would be further required to have the status of distressed municipality removed” as stated in the resolution from this past November.
The public meeting instead became an opportunity for City officials to lobby the state for various remedies. The Mayor wants “debt and pension relief”; a City Council member wants to tax non-profits and help with pensions and debt too; yet another wants “regional revenue sharing” and mentioned pensions and debt. The controller likewise mentioned legacy costs.
As we pointed out back in 2003, Act 47 is tailored to small municipalities and not many of those had non-operating obligations to the degree Pittsburgh has—that’s part of the reason the state created the second oversight board, the ICA. But the Act 47 plan for Pittsburgh is not silent on these items: it points out that “the debt service on its outstanding bonds represents one of the single largest impediments to the City’s return to financial health and balanced budgets” and “the extremely weak funding status of the City pension funds threaten the ongoing stability of retiree benefits as well as the City’s finances”.
It is just that what the City is looking for—the state to assume responsibility for the pensions by folding them into the State Employees’ Retirement System or coming up with a new revenue source for these legacy costs—is quite different from the recommendations made by Act 47 (much of their proposed changes for pensions come from labor-management changes and debt paid down not by refinancing but by moving to pay as you go capital spending). The $10 million in gaming money the City is supposed to receive are to be applied toward legacy costs, and downsizing staffing levels to be more in line with better performing cities will help pension costs in the future. Changes to retiree health benefits like Scranton and Philadelphia have made would also help.
But if the City Council and the Mayor are expecting state taxpayers to bail out the City, they will be waiting for a long time. And for benchmarks? If the DCED secretary hasn’t crafted any yet, here are a few: the City should have to reduce per capita employment levels to national norms, reduce workers’ compensation costs, bring the pension funded ratio level up, and enact zero spending growth for the next five years. How does that sound?
Originally those pushing for the removal of status wanted “clear and definable benchmarks as to what would be further required to have the status of distressed municipality removed” as stated in the resolution from this past November.
The public meeting instead became an opportunity for City officials to lobby the state for various remedies. The Mayor wants “debt and pension relief”; a City Council member wants to tax non-profits and help with pensions and debt too; yet another wants “regional revenue sharing” and mentioned pensions and debt. The controller likewise mentioned legacy costs.
As we pointed out back in 2003, Act 47 is tailored to small municipalities and not many of those had non-operating obligations to the degree Pittsburgh has—that’s part of the reason the state created the second oversight board, the ICA. But the Act 47 plan for Pittsburgh is not silent on these items: it points out that “the debt service on its outstanding bonds represents one of the single largest impediments to the City’s return to financial health and balanced budgets” and “the extremely weak funding status of the City pension funds threaten the ongoing stability of retiree benefits as well as the City’s finances”.
It is just that what the City is looking for—the state to assume responsibility for the pensions by folding them into the State Employees’ Retirement System or coming up with a new revenue source for these legacy costs—is quite different from the recommendations made by Act 47 (much of their proposed changes for pensions come from labor-management changes and debt paid down not by refinancing but by moving to pay as you go capital spending). The $10 million in gaming money the City is supposed to receive are to be applied toward legacy costs, and downsizing staffing levels to be more in line with better performing cities will help pension costs in the future. Changes to retiree health benefits like Scranton and Philadelphia have made would also help.
But if the City Council and the Mayor are expecting state taxpayers to bail out the City, they will be waiting for a long time. And for benchmarks? If the DCED secretary hasn’t crafted any yet, here are a few: the City should have to reduce per capita employment levels to national norms, reduce workers’ compensation costs, bring the pension funded ratio level up, and enact zero spending growth for the next five years. How does that sound?
