Tuesday, July 28, 2015

Pension problems, pension problems, pension problems everywhere

Councilman Goode wasn't kidding -- these pension problems are ugly. In Pittsburgh, Mayor Luke Ravenstahl is proposing to float a bond to bolster the city's pension fund, which only has 50 percent of the assests it needs to cover its obligations. The bond would be paid for by leasing a city-owned parking garage.

Pension problems, pension problems, pension problems everywhere

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Mayor Ravenstahl
Mayor Ravenstahl

Councilman Goode wasn't kidding -- these pension problems are ugly. In Pittsburgh, Mayor Luke Ravenstahl is proposing to float a bond to bolster the city's pension fund, which only has 50 percent of the assests it needs to cover its obligations. The bond would be paid for by leasing a city-owned parking garage.

The measure has met some resistance from Pittsburgh's City Council. A witness testified at a Council hearing that the proposal wouldn't raise nearly enough money.

Thomas Morsch, a consultant for Scott Balice Strategies, a Chicago-based financial advisory firm, said Council President Darlene Harris' plan to issue a $110 million bond, raise rates at Downtown garages and increase parking fines would be a "costly solution."

"We believe this would be a very risky approach to try and solve the pension problem," he said. "The parking rate increases would not be sufficient. We would have to look at other tax sources or new tax sources."

Ravenstahl's administration has been pushing back against the criticism. In a letter to Council, a city official dismissed other alternative proposals to use the parking assets to raise money for the pension fund.

City Finance Director Scott Kunka, who chairs the parking authority, said a plan Councilman Patrick Dowd and City Controller Michael Lamb pitched, to transfer ownership of some parking garages to the pension fund, is not feasible.

"We think it is innovative thinking, but the legal and financial constraints are probably insurmountable," Kunka said.

This debate should remind us that the fiscal problems Philadelphia faces are not unique, and part of the solution to the pension issue may involve partnerships with other governments, particularly larger cities like Pittsburgh and the state pension fund.

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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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