City’s Dilemma—Loathing Privatization and Fear of Debt

City’s Dilemma—Loathing Privatization and Fear of Debt

Rarely in the annals of self-government has the elected government shown itself to be as inept as that in Pittsburgh. With a looming takeover of the pension funds by a state agency and pension funds with less than 30 percent of the money needed to meet obligations, the Council and the Mayor remain at loggerheads over a solution. The Council refuses to consider privatization or outsourcing and the Mayor will not consider a plan that involves borrowing more money.

To make the situation even more interesting some unions have actually supported a privatization plan, a virtual blasphemous act among organized labor, in order to ward off the state takeover. For some reason, union leaders fear the state managing the pensions more than their bête noir-privatization. One has to ask; why would that be?

Obviously, the relationship between the Mayor and Council is poisonous. There is no trust. Otherwise, they could come together on a plan to improve the City’s massively underfunded pensions. The Mayor’s position of not wanting to the City or its authorities to incur debt to resolve the plan is laudable. The Council’s abhorrence of privatization is ludicrous and detrimental to the City.

The problem is that an unwillingness to make the spending cuts necessary over the last five years, a too ambitious and wrongheaded approach to the bidding process to use parking garages as a way to raise money and Council’s obstinacy have combined to produce this preposterous stalemate.

Now the City has to swallow the bitter pill that is coming and begin planning where spending cuts are going to be made to free up money to meet pension fund obligations. If the City wants another solution they must look to filing for bankruptcy. In bankruptcy Pittsburgh could ask the judge to force unions to accept less generous retirement benefits than those called for in existing contracts. Some sharing of the pain is reasonable. Asking other Pennsylvania or U.S. taxpayers to provide money to meet excessively generous promises to unions is neither reasonable nor morally justifiable.