House OKs bill for municipal pensions
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HARRISBURG -- The state House voted yesterday to approve legislation creating new procedures to aid underfunded municipal pensions across Pennsylvania but that gives the city of Pittsburgh a two-year window to improve the level of funding in its ailing pension plan.
The vote was 113-76. The bill, which is crucial to Philadelphia for solving its budget problems, still needs Senate approval.
House Bill 1828 retains a provision previously inserted by the Senate creating "Level 3 distressed municipal pensions," which would include Pittsburgh. Level 3 pensions are those funded at less than 50 percent, and Pittsburgh is now only 31 percent funded.
But the House agreed to Mayor Luke Ravenstahl's request that legislators give the city two more years to get its pension system better funded, such as by leasing parking garages to a private operator.
A version of the bill that the Senate approved a month ago didn't include that two-year relief. Mr. Ravenstahl had opposed a provision of the bill that let the Pennsylvania Employee Retirement Commission seize the city's pension system, as it would under the Senate-approved bill.
The House version of the bill, as Mr. Ravenstahl wanted, "includes a requirement that Pittsburgh's pension plans be administered by PERC if they remain in Level 3 distress two years following enactment" of the legislation, House Democrats said.
The bill also allows Pittsburgh to increase its parking tax to 40 percent (from 37.5 percent) only if it sells or leases "parking garages" rather than "parking facilities." Mr. Ravenstahl hopes to get $200 million from such a garage sale/lease to increase the funding of the pension plan.
However, House Bill 1828 still faces a long road. It must return to the Senate, which is controlled by Republicans, who might not go along with House Democratic changes.
The bill is especially important to Philadelphia, because it would allow the city to raise its sales tax to 8 percent (from the current 7 percent) to erase a budget deficit. The bill also allows Philadelphia to delay payments into its underfunded pension fund for two years, also to ease current budget problems.
Philadelphia Mayor Michael Nutter has been at the Capitol often lately, including yesterday, urging legislators to approve the bill.
Mr. Nutter said he's glad the House approved the sales tax increase and urged the Senate to do so early next week. If it doesn't, he said there will be "real" and "serious" consequences for the city, including laying off 3,000 city employees.
But Rep. Daryl Metcalfe, R-Cranberry, opposed the bill, saying higher sales taxes for Philadelphia and higher parking taxes for Pittsburgh are "the wrong approach for this state. It will hurt economic activity."
Rep. Mike Turzai, R-Bradford Woods, said Pittsburgh officials have been "irresponsible" over the last 20 years by not adequately funding the city's pension plan, and questioned whether that will change if they are given another two years to act.
The bill also would allow other municipalities with underfunded pension systems to delay their "minimum municipal obligation" payments to the systems for two years, to ease their budget problems.
First Published September 12, 2009 12:00 am