Hoping for a Miracle
Pittsburgh’s City Council and Mayor must be hoping for a miracle. They have rejected each other’s plan to avoid a state takeover of the City’s pension funds. As a result they are looking down the barrel of a financial howitzer in January if they cannot cobble together a plan to raise $220 million over the next few weeks. And even if the $220 million can be raised, the pension problem will still require bigger City contributions going forward.
Yesterday’s briefing by the Pennsylvania Municipal Retirement System officials pointed out just how massive the unfunded pension problem is and the staggering amount of money the City will have to come up with over the next 30 years-as high as $3.6 billion in one scenario.
And Council’s response? One idea is to renegotiate the terms of the rejected lease agreement offered by the LAZ-JP Morgan group: unlikely to happen because reopening the terms would require another bidding process. Otherwise lawsuits would be flying. Another idea is to sell parking meters to the Parking Authority, a plan strongly rejected by the Mayor. Yet a third idea is to have non-profits pay more in payments in lieu of taxes. Good luck with that one.
Indeed, the Council seems to be praying for a miracle. Having rejected privatization with such gusto and self-righteousness a month ago, they have boxed themselves in. There are no other good choices and the bullet will have to be bitten. There will be no bailout coming from the state; it has its own problems. And as we noted in a Policy Brief yesterday, the Pittsburgh school district will need more revenue soon as well. Pittsburgh taxpayers cannot be happy at the prospect of a double hit in their tax bills.
This is what happens when tough problems are kicked down the road year after year. Where has the Act 47 management team been for six years that it has allowed the City to get to this point?