the Pittsburgh Problem (Scranton, Harrisburg, Denver: leasing, theater, taxi)

[pman]

well, pittsburgh's not alone but it's among the worst in its pension plan

He also made it clear that if his plan to lease parking garages to raise pension funds is thwarted, and Harrisburg doesn't expand the city's taxing power, a series of painful options may kick in, potentially including surcharges on parking garages, hospital beds or students....Even with the plan, there could be much pain, thanks to forced 1-percent-a-year spending cuts and a compulsory $10 million to $14 million boost in the city's contribution to its two-thirds-empty pension fund. Fail to find the money for the pensions, and the plan would force a tax hike...
Mr. Ravenstahl said he wished he could do more for city workers -- and expected to pay a price. "I have had lifelong friends that have threatened me because of my support for this plan, that they'll never support me again, politically."

Read more: http://www.post-gazette.com/pg/09169/978228-53.stm#ixzz0InbL8iKB&C

I guess they weren't friends after all. thoughts on the garage leasing or alternatives?
Read more: http://www.post-gazette.com/pg/09169/978228-53.stm#ixzz0InayvgPz&C
...

[BrianTH]

I actually support privatizing parking anyway, so I am easily on board with that particular idea.

Generally, I think Ravenstahl is right to support measures that don't just target residents (which, for what it is worth, is against our personal financial interests since we don't live in the City). The simple fact is that the City is an irreplacable resource for the entire metropolitan area, and we should share the burden of putting it on a sustainable financial path.

[Copanut]

Originally Posted by BrianTH

The simple fact is that the City is an irreplacable resource for the entire metropolitan area, and we should share the burden of putting it on a sustainable financial path.

Taxation without representation?

[Tallysmom]

Originally Posted by pman

well, pittsburgh's not alone but it's among the worst in its pension plan


Read more: http://www.post-gazette.com/pg/09169/978228-53.stm#ixzz0InbL8iKB&C

I guess they weren't friends after all. thoughts on the garage leasing or alternatives?
Read more: http://www.post-gazette.com/pg/09169/978228-53.stm#ixzz0InayvgPz&C
...

Because you guys are in the middle of this, and I'm not, I'm not sure I understand what it's about. Sort of like I've come into the middle of a conversation.

But I'm guessing it's the same problem we're having out here -- retirements and pensions of our public workers.

Even places that aren't strapped financially will be in a few years. One small city's manager told our CBS affiliate news that in two years their contribution to CalPers will exceed it's total fiscal yearly budget. And they are not alone.

This isn't sustainable. Companies long ago figured that out, which is why they moved from pensions to 401K contributory plans. It's going to be up to us to save for our retirement -- and if you think you can live on Social Security.... think again. It's only a small portion of what you are used to living on.

According to the info we get yearly, if Brent works till 67, we'll get a payment equal to 1/4 of what we pull in monthly. Which is peanuts.

So what the government will have to do is institute a two or three tiered system. Anyone 55 and over will be pensioned and anyone 50-55 will go into a part pension/part 401K type plan. And anyone below 50 will be strict 401K. And the pensioners will have to pay into some sort of health care plan -- not totally free.

Or ages that make mathematical sense.

That will guarantee really ticked off government workers.

I don't see a way around this. I realize when this stuff is brought up, the ones that don't want change bring up firefighters and police. I get that but for every one of them, there's 10 or so people that aren't laying their lives on the line -- office workers, maintenance people, managers.... government is a BUSINESS and paper-pushing is a business thing and government is a big paper-pusher.

[BrianTH]

Originally Posted by COPANUT

Taxation without representation?

User fees, actually.

But I do agree there is a fundamental democratic problem here, and I think there should be extensive integration at least between the City and the County.

[BrianTH]

Tallysmom,

The problem isn't so much going forward, as the legacy from the past. The basic issue is that back when Pittsburgh was a much more populous city (in the not so distant past), a lot of people provided services for that population in part in exchange for the promise of pensions when they retired. But then a lot of the working age population left, leaving behind the retirees. So, now the tax base and revenues from current services derived from the smaller working population are insufficient to pay for the promised pensions to those legacy retirees from a prior era.

Now if we could turn the clock back in time, you are right that the smart thing to do would have been to fully fund the promised pensions from contemporaneous taxes and revenues, which means the people living here in that prior era would have had to pay a bit more in taxes and fees. So, the fair thing to do would be to hunt down all those people who lived here for a while and then left, and require them to kick in something to help the City fund the pensions. But of course the City doesn't have the authority to do that, and that leaves everyone else fighting over who is going to have to absorb the hit caused by the City's inability to turn back time.

[pman]

city county merger is DOA. they should look at merging certain functions where efficiencies can be found but as a whole, not gonna happen. It's not even clear it's desirable.

Originally Posted by BrianTH

The problem isn't so much going forward, as the legacy from the past. The basic issue is that back when Pittsburgh was a much more populous city (in the not so distant past), a lot of people provided services for that population in part in exchange for the promise of pensions when they retired. But then a lot of the working age population left, leaving behind the retirees. So, now the tax base and revenues from current services derived from the smaller working population are insufficient to pay for the promised pensions to those legacy retirees from a prior era.

that exacerbated the problem but there is a problem going forward as well. pension funds guarantee a certain level of funding/services. If the cost of healthcare outpaces the estimated cost at the time the pension is earned, taxpayers foot the bill..taxpayes who also have to foot the bill for their own healthcare. worse, pensions require extra payments when cities (or companies) can least afford it (like now) whereas 401k's require no extra contribution. they are easier to plan and manage, esp for cities which generally have problems managing money. Pittsburgh and many other cities need to shift away form these plans lest the problem keep growing.

Originally Posted by BrianTH

Now if we could turn the clock back in time, you are right that the smart thing to do would have been to fully fund the promised pensions from contemporaneous taxes and revenues, which means the people living here in that prior era would have had to pay a bit more in taxes and fees.

except that pensions and other benefits were used to pacify powerful municipal unions without regard to how they woudl be paid for. citizens woudl be unwilling to pay the extram money that would have been required. FYI-the only two cities with fully funded pensions AFAIK are Detroit and Baltimore and you see where that got them.
FWIW this is goingn on across the state as well

City Council chambers, Councilman Darrell Clarke just introduced the Nutter administration's legislation that would change the city pension program to provide a lower level of benefits for new hired. Clarke stressed that he was introducing the bill on behalf of the administration.
The proposed plan would combine a traditional pension - at a lower benefit rate than current employees receive - with a 401(k) plan into which workers pay. Because today is the final Council session of the season, the bill could not receive final passage until fall. But if it were to pass, any workers hired after July 1 would be retroactively subject to the terms.
The legislation introduced today is needed to amend city law. But any change to worker pensions would also have to be approved by the city's four municipal unions, whose contracts expire June 30. Union leaders yesterday criticized the proposal.

PhillyClout

[Katiana]

I have mentioned this multigovernment taxing district on this forum before, but no one seems to take any notice of it. Such a district wouldn't solve the problem of the parking garage attendant's pensions, and I agree with Brian about privatization in that case. However, a district like this would help with the problem of city residents paying to keep up all the many city-owned facilities in Pittsburgh, some of which get heavy use by suburbanites as well.

:: Welcome to SCFD: Making It Possible ::

:: Welcome to SCFD: Making It Possible ::

(Note: two different pages from the SCFD website)

I personally have benefitted from a lot of SCFD offerings, the community theater in my little burb is a recipient.

This is a great form of intergovernmental co-operation. Before the SCFD, the Denver Public Library wasn't letting non-residents inside. They would check your ID at the door.

BTW, to answer COPANUT's concerns, everyone in the 7 counties that are the taxing district had to vote on this issue before it passed.

[BrianTH]

Originally Posted by pman

city county merger is DOA.

Maybe so, but something like that is the only real way to deal with the democratic problem caused by a large number of people making use of the City as a resource without actually living there. So if all such measures are impossible, then this is a problem without a solution.

pension funds guarantee a certain level of funding/services. If the cost of healthcare outpaces the estimated cost at the time the pension is earned, taxpayers foot the bill..taxpayes who also have to foot the bill for their own healthcare. worse, pensions require extra payments when cities (or companies) can least afford it (like now) whereas 401k's require no extra contribution. they are easier to plan and manage, esp for cities which generally have problems managing money. Pittsburgh and many other cities need to shift away form these plans lest the problem keep growing.

A few things need to be distinguished. First, health benefits and pensions present very different issues. It is true that health benefits have been subject to unsustainable rates of increase, and that is a problem our whole society is going to have to deal with. Pensions, on the other hand, haven't really been subject to the same dynamics.

Accordingly, it is entirely possible to fully fund (within a reasonable margin of error) a defined benefit pension plan. And I think we have been way too hasty to conclude that defined contribution plans (like 401Ks) are a better idea than defined benefit plans in all cases.

In any event, the problem in this case was not the fact that the pensions in question were defined benefit plans. Rather, the problem was that they were originally not funded pensions, and instead were pay-as-you-go plans. Pay-as-you-go plans are in fact highly subject to failure if expectations about future revenue growth prove incorrect, and unfortunately that is what happened in this case.

except that pensions and other benefits were used to pacify powerful municipal unions without regard to how they woudl be paid for. citizens woudl be unwilling to pay the extram money that would have been required.

Of course we can never know what bargain would have been struck if Pittsburgh had been prohibited from using pay-as-you-go pension plans. For example, maybe it is true the citizens would have refused to pay more in taxes and revenues, but in that case it also may have been true that they would have received fewer services in return. The basic fact is that all sides of those negotiations signed off on kicking the can down the road to the future citizens of Pittsburgh, and then many of them left before the bills came due.

FYI-the only two cities with fully funded pensions AFAIK are Detroit and Baltimore and you see where that got them.

I think if you include cities smaller than Pittsburgh, there are many with pension plans which are either fully funded or close to it. In any event, obviously far more is going on with cities like Detroit than just pension issues.

FWIW this is goingn on across the state as well

It is certainly going on in Philly as well. But I recall reading that something like 75% of the underfunding of Pennsylvania municipal pensions was in Philly and Pittsburgh, and that many of Pennsylvania's second-tier cities were around 80% or higher (I believe Scranton, however, was also down there with Philly and Pittsburgh).

[BrianTH]

Originally Posted by Katiana

I have mentioned this multigovernment taxing district on this forum before, but no one seems to take any notice of it.

For what it is worth, I have noticed. Unfortunately, there just seems very little possibility of getting this sort of reform through the political process around here. I actually wonder if the ultimate result will be some sort of forced consolidation driven at a higher level (namely state or federal).