Pittsburgh’s Controller asserts in newspaper accounts that Pittsburgh has not sufficiently addressed its pension problems or reduced expenditures enough to warrant having state financial oversight of the City terminated. A sentiment shared by the oversight groups-the Intergovernmental Cooperation Authority and the Act 47 coordinator-and the Allegheny Institute.
The Mayor’s office fired back with its usual rejoinder claiming enough has been done and says the following about the pension situation, "The Controller knows all too well that the City’s inherited pension problem can only be solved at the state level." Okay, what is wrong with this statement? There are two huge obvious fallacies in one sentence.
First, the City did not inherit the pension problem. Who died and left the pension plans to the City in their will? Of course, this part of the spokesperson’s comment is nonsensical. Pittsburgh created the pension crisis through its own behavior of overpromising and underfunding the pension plans over the course of many years. Granted, the union favoring Act 111 binding arbitration law was a key factor in egregious contract settlements during the last thirty years.
However, the Act 111 problem was known about decades ago and nothing was done about it. How many mayors, city council members, state representatives or civic leaders went to Harrisburg to lobby heavily for reforming Act 111 to reduce the extraordinary advantage the public safety unions have in the contract bargaining process? It is safe to say not more than one or two and only after the City was declared to be in financial distress. Indeed, how many would stand up for reform even now? Act 111 reform has been and continues to be anathema to the unions and is a political non-starter in union dominated precincts across Pennsylvania but especially in Pittsburgh.
To further add to the silliness of the spokesperson’s response, she continued with the claim that only the state can fix the problem. How is that? The pension obligations were entered into by the City and it must deal with its self- inflicted wound by adequately funding the pensions, curbing all expenses and supporting meaningful labor regulation changes and lobbying for authority to offer 401(k) type plans to all unvested employees.
Still, the best thing it could do would be to adopt private sector growth enhancing policies in order to shore up and expand its tax base while keeping a tight rein on spending. The ability to generate additional revenues from real growth as opposed to more taxes and higher tax rates is crucial to solving the underlying financial problems in the City. Of course, what we see emanating from the City are a steady diet of policies aimed at top down directed economic development, cronyism, and forays into every progressive, anti-free market notion coming down the pike. Too bad. The controlling political powers never seem to get it.