Pension puzzle

Philadelphia's ravenous pension fund will be the next mayor's greatest financial challenge. It eats an increasing portion of the city budget, leaving less money for police, parks, libraries, and other services.

The troubled pension fund is expected to consume 15.5 percent of the budget this year. The government's contribution has grown more than 160 percent since 2004, according to the city's financial plan, even as the share of obligations covered has dropped below 50 percent.

Mayor Nutter offered a partial solution when he proposed selling the Philadelphia Gas Works, which would have yielded a substantial infusion of cash and significantly reduced the burden of contributions. But Council killed the deal, making the next mayor's job even harder.

The bottom line is that the city and workers have to dedicate more money to the fund. Cutting future benefits and, to a lesser extent, more efficient management could also help.

Former City Councilman Jim Kenney notes the pivotal reality that getting employees to contribute more to the fund or alter benefits must be accomplished through negotiations. Criticized on the campaign trail for being too close to organized labor - and his push to distribute more pension benefits despite the fund's ill health - Kenney argues that his relationships with unions could help him solve the pension problem. His full answer to an Editorial Board questionnaire, along with those of the other candidates (except for Milton Street, who did not participate), is featured on today's op-ed page.

Kenney also proposes dedicating revenues that exceed projections to the pension fund, but significant surpluses seem unlikely in the next four years unless the city lowballs projections, creating other financial issues.

State Sen. Anthony Williams proposes a "dedicated revenue stream" for the fund, but not from taxes, the usual source of revenue streams. Rather, he supports public-private partnerships involving city assets such as PGW and the airport. The idea is vague but could be worth considering as long as any deals are transparent and beneficial to the city.

More straightforwardly, Former District Attorney Lynne Abraham says she would consider selling city assets such as PGW and parking facilities. She also proposes eliminating the mandatory pension bonuses supported by Kenney, a burden the fund can't afford.

Melissa Murray Bailey, the only Republican in the race, would add city-owned land to the mix of assets to be considered for sale.

Former PGW executive Doug Oliver notes that he supported a sale of the utility, though his promise to consider "all available options for funding the pension plan" is less helpful.

Former Judge Nelson Diaz, along with Williams and Kenney, promises to reevaluate pension fund management - a less discussed facet of the issue partly because it promises more marginal gains.

Making real progress on the city's pension problem will take major shifts in revenue, spending, and assets. Who in the race has the political skill and fortitude to make that happen is the question facing voters.