Recall the 2010 debate in Pittsburgh over allowing parking garages, meters, and lots to be leased to a private interest in order to pay off Parking Authority debt and take the remainder and put it into the City’s three pension funds (if not, visit the 2010 Policy Brief archives or see this Brief for a summary) substitute Philadelphia and a municipal gas utility for Pittsburgh and parking and you have the tenets of the latest plan to fund municipal pensions.
Recall that Pittsburgh was ordered by the state to get their pension balance (assets to liabilities) to 50% or be taken over by the state. Philadelphia did not and has not faced a similar ultimatum: in fact, Philly received exemptions and permission to defer a portion of its minimum obligation and was allowed to add another point onto its sales tax rate to help fund pensions.
A tentative agreement with a sales price of $1.86 billion has been announced. According to the most recent Act 44 distress scores of municipal pensions (December 2012) Philadelphia was 50% funded giving them a rating of “moderately distressed” (same as Pittsburgh, though the funded ratio was 62% on that date).
