Yet another city pension solution fails
Flanked by Pittsburgh Controller Michael Lamb, left, and other council members, Pittsburgh City Council President Darlene Harris announces a plan that will avoid a state takeover of Pittsburgh's pension plan.
City Council members criticized Mayor Luke Ravenstahl for attending a promotional event on Tuesday instead of meeting with council members about the pension crisis. At the event, the mayor, center, watches youth hockey players A'sShon Burgess, left, 12, of Washington, Pa.; Ian Banks, 11, of Penn Hills; and Janelle Wakevicus, 8, of Brentwood help NHL facilities operations manager Dan Craig paint the net area on the hockey rink built in Heinz Field for the Winter Classic.
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Hope of resolving Pittsburgh's pension crisis faded to anger and disappointment Tuesday with Mayor Luke Ravenstahl pronouncing City Council's latest bailout plan seriously flawed and council members demanding he take a higher profile on a major issue.
Angry that they'd been talking to intermediaries instead of Mr. Ravenstahl in recent days, council members passed a motion compelling Mr. Ravenstahl's attendance at a 10 a.m. meeting today. They said they want to work through his objections to the plan or ask his help in quickly formulating another before a deadline Friday for state takeover of the pension fund.
Council on Tuesday unveiled a plan to dedicate revenue from 30 years worth of parking rate increases to the pension fund. They said the dedicated revenue stream, totaling more than $800 million over the three decades, would infuse enough value into the fund to avert a takeover.
Council members stressed that the plan would require the cooperation of Mr. Ravenstahl and of the Pittsburgh Parking Authority, which controls most of the parking garages and metered lots.
Hours later, Mr. Ravenstahl and his finance director, Scott Kunka, said they didn't believe the plan would work, partly because the parking authority, which has its own debt to pay and infrastructure to maintain, couldn't sign away years of revenue. Mr. Ravenstahl said he wouldn't support the plan but wouldn't oppose it, either.
"The future is just as gray now as it was two or three days ago," said Mr. Ravenstahl, who has warned that a takeover would have dire financial consequences.
The mayor's stance on the new plan infuriated council members, who said he was still wedded to a parking lease plan they rejected in October. Council also complained that Mr. Ravenstahl attended an NHL Winter Classic promotional event at Heinz Field on Tuesday but sent emissaries to the heated council meeting.
Council introduced four bills enabling the bailout proposal but postponed action until the meeting with Mr. Ravenstahl today. Council President Darlene Harris, Councilwoman Natalia Rudiak and City Controller Michael Lamb contended that kinks in the plan could be ironed out if the mayor and his team gave it an honest try.
"If the administration worked with this council and with the controller, we would have something within 48 hours. Wars are won in 48 hours," Mrs. Harris said.
Under state law, the pension fund, now 29.3 percent funded, must be at least 50 percent funded by Friday to avoid a takeover. Officials have said that $220 million was the sum needed to get to 50 percent.
In October, council rejected Mr. Ravenstahl's proposal to lease parking garages and meters to private investors for $452 million. Mr. Ravenstahl would have used at least $220 million for the pension fund.
Council since then advanced numerous alternatives for raising $220 million, but Mr. Ravenstahl declined to support them. He opposed some of those plans because they would have involved issuing new debt.
For months, council's focus has been on raising enough cash to avert a takeover.
However, with time running out, council members last week consulted the state about dedicating future revenue streams to the fund. The concept won approval of James L. McAneny, executive director of the state Public Employee Retirement Commission, the agency that enforces pension laws.
The plan called for the city and the parking authority to dedicate 30 years worth of parking rate increases to the pension fund. The money would total more than $800 million over the three decades, but the annual amounts would range from $7.8 million to $44.6 million.
The dedicated revenue would be on top of annual pension payments the city already makes. The city paid about $56 million into the pension fund this year.
The new revenue would flow from about a dozen parking garages, 30 metered lots and 7,000 on-street meters. The city owns one garage, five metered lots and the on-street meters; the parking authority owns the rest.
Council approved meter rate increases in October as part of a bailout plan that Mr. Ravenstahl opposed but didn't veto. Those increases take effect next year. The proposed increases in meter rates have not come to a vote by the parking authority.
The parking authority's cooperation would be critical, not only because it owns most of the garages and metered lots but also because it receives most of the revenue from city-owned street meters. Mr. Ravenstahl's cooperation also is key because of his perceived influence over mayorally appointed authority board members.
Mr. Kunka, who also serves as parking authority chairman, repeatedly said the authority could not sign away 30 years of revenues. He and Mr. Ravenstahl said they would work with the authority to turn over revenue to the city each year, but they predicted that the amount would vary annually.
Without the dedication of parking rate increases to the fund, Ms. Rudiak said, the bailout plan will die. She said the city needed a "specified, named, dedicated source of revenue" to satisfy Mr. McAneny and avert state takeover.
Although they can't agree on how, the mayor and most council members agree on the need to avoid a takeover, which Mr. Ravenstahl has warned would lead to dramatically higher annual pension payments that the city could make with only tax hikes, service cuts or both.
Under a takeover, the state would put the city on a strict, 30-year timetable for 100 percent solvency, with required payments reaching $160 million around 2030.
First Published December 29, 2010 12:00 am