Thursday, January 29, 2015

Editorial: Budget stakes get raised again in Harrisburg

Link: Budget stakes get raised again in Harrisburg [Daily News]

Editorial: Budget stakes get raised again in Harrisburg

Link: Budget stakes get raised again in Harrisburg [Daily News]

FOR WEEKS, WE'VE been exhorting the state to hurry up and pass House Bill 1848, which would give much-needed fiscal relief for Philadelphia's troubled city budget. So why are we relieved that House Speaker Keith McCall decided to delay a final vote on the bill for two weeks?

The bill, which originally authorized an increase in the sales tax and deferred contributions to the city pension fund, both necessary moves for the city to balance its budget, morphed - once the Senate got it - into one demanding major reforms to the Philadelphia pension system and public pension programs across the state. Suddenly, the bill that started out as first aid to the city came complete with a live hand grenade.

Actually, there is more than one grenade, though it's tough to figure out just how many in the 50-plus pages of amendments that include a code of conduct for public pension funds, provisions for the state to take over distressed pension funds, and a range of other provisions that analysts are still trying to interpret. (Find a summary of the amendments at www.philly.com/philly/blogs/cityhall/54767297.html).

Public pensions are long overdue for review and reform; underfunded pensions are at the heart of staggering budget problems not only around the state but in cities and states around the country.

But attaching such complicated reforms to what started out as a simple bill to help the city fill big holes in its five-year plan makes no sense - although stuffing bills with complicated amendments is a move familiar enough to those who regularly watch the legislative sausage being made.

The Senate's amendments have not only complicated the city's fiscal stability, but it will go a long way to complicating Mayor Nutter's next round of contract negotiations with city unions. That's because the bill mandates a benefit freeze for everyone currently in the city pension system, which is more than 65,000 people. It also mandates reductions for future hires.

There is still some debate about how this will impact members, but at the very least it will mean no rate increase for any employee, no matter the financial condition of the pension fund. The city must also redesign the plan for new hires and cut costs by 20 percent. The only way to make that happen is to move from a defined benefit plan to something more similar to a 401(k).

If those concessions aren't included in the new contracts, the state will pull the plug on the fiscal relief.

This essentially puts the unions in the position of having to make concessions on pensions or causing misery for the entire city- including layoffs for 3,000 union members.

The Senate's amended bill also forces the House Democrats to choose between backing organized labor or causing major pain for city residents by shutting down libraries, recreation centers and other essential services.

It's disturbing that something as overdue and complicated as pension reform has suddenly been thrown on the fast-track.

In this summer of high stakes, the stakes have been raised again: The city must wait even longer to learn the fate of its budget, and now, thousands of workers around the state must wait to learn the fate of their lives after retirement.

About this blog
Every year, city government spends slightly more than $4 billion. Where does all that money come from? More importantly, where does it go? Are we getting the most bang for our tax buck? “It's Our Money” is a joint project between Philadelphia Daily News and WHYY, funded by the William Penn Foundation, designed to answer these questions.

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