Control of the city of Pittsburgh's troubled pension fund now hinges on a political wrestling match between the state's southeast and southwest.
Heading into a possible state House vote Tuesday on new statewide pension rules with huge implications for both Pittsburgh and Philadelphia, Mayor Luke Ravenstahl yesterday wooed 11 representatives in his office to his position -- that the state shouldn't seize the city's retirement account for at least two years.
Otherwise, pension legislation "will force this city to make some very difficult decisions," he said. "It will be very difficult for us to look at those taxes and to look at those service reductions" needed to cover increased pension payments.
But Philadelphia powerbroker Rep. Dwight Evans warned that acceding to Mr. Ravenstahl's request would have near-apocalyptic effects on the state's largest city, which faces deadlines to deal with a critical cash-flow problem.
"The end result for Philadelphia will be catastrophic, and quite frankly for the entire southeastern Pennsylvania region," said Johnna Pro, Mr. Evans' spokeswoman. "Philadelphia would have to start laying off folks, closing health centers, reducing its trash collection. They will eliminate entire service departments. ... It's looking like about 3,000 positions."
Most ominous for Mr. Ravenstahl were the comments of a former Philadelphia mayor, Gov. Ed Rendell.
"I know the mayor has some good plans," Mr. Rendell said in Harrisburg, "but opening the bill for that amendment would open it up for other amendments and the bill could fall of its own weight. If the bill came to me in its present form, I would sign it."
The bill in question would allow Philadelphia to raise its sales tax by one percentage point to fund pensions, permit lots of municipalities statewide to ease potentially crushing retirement fund payments in coming years, and bring state takeovers of the worst-funded pension pools.
Mr. Ravenstahl didn't dispute that Pittsburgh's is the state's worst pension fund, holding just 31 percent of the $899 million it should to cover benefits due to retirees and current employees. But he has a plan to lease public parking garages, pump hundreds of millions of dollars into the pension pool, and make higher-than-required payments for years to come.
The city is putting $46 million into its pension fund this year, around $2 million more than the state-mandated minimum.
According to administration analyses released yesterday, state takeover would give the city two choices. It could immediately boost its payment to $75.9 million, and see it slowly rise to $78.2 million by 2017. Or it could opt for a ramp-up that would allow it to put in just $17.4 million next year, skyrocketing to $97.8 million by 2017.
Either of those scenarios would have the city on the hook for around $2.3 billion in payments into the state-controlled fund through 2037.
If the mayor can raise $200 million through a parking garage lease, though, the city's payment into its own fund would hover around $60 million a year until it started to rise in 2031, and would total around $2 billion through 2037. At that time, the fund would hold a healthy 85 percent of its ideal amount.
State Rep. Dan Frankel, D-Squirrel Hill, called the mayor's plan "something that is serious, and is realistic."
He said he wants the Pennsylvania Municipal Retirement System -- which would swallow the city's pension fund under the legislation -- to double-check the numbers.
Pennsylvania Municipal Retirement System Secretary James B. Allen said he may be able to tell legislators today whether the city's projections are realistic.
"My delegation is prepared to support the mayor's effort to exempt the city for the next two years to give the city a chance to demonstrate what's to me, and what's to my colleagues, a reasonable proposal from the city," Mr. Frankel said. "It's not a complete exemption forever. This is a two-year window for the city to perform as they represented to us today."
He acknowledged, though, that Philadelphia is desperate to move the legislation, so only very quick concurrence between House and Senate leaders would get the mayor a reprieve. The legislation has already been approved by the Senate, but it would have to vote again if there are amendments.
Philadelphia faces a deadline imposed by its state overseers to resolve a budget shortfall, one way or another. "We need the vote Tuesday," said Ms. Pro.
The state firefighters union has come out against the legislation, and Pittsburgh's union locals are uniformly opposed. Yesterday Mr. Ravenstahl was joined in his meeting with legislators by council President Doug Shields and Controller Michael Lamb, in a show of unanimity among the city's top officials.
That impressed Mr. Frankel, who was joined by representatives Frank Dermody, Bill Kortz, Jesse White, Matt Smith, Joe Preston, Dominic Costa, Paul Costa, Dan Deasy, Jake Wheatley, Don Walko, and an aide to Chelsa Wagner.
Mr. Rendell offered sympathy, but no promises.
"I would like the Pittsburgh problem [regarding the pension bill] to be cured, but I'm not sure it can be," said Mr. Rendell. "Once the bill is opened for an amendment about Pittsburgh, there could be an avalanche of other amendments."
