Thursday, September 06, 2007

Act 205, Act 47, Act mouthwash ...

Why did Bob O’Connor want to be Mayor? Why does Pat Dowd want to be on City Council? The answer, of course is that both people, and also Luke Ravenstahl and Mark DeSantis and Bruce Kraus, Len Bodack, Ricky Burgess and the rest of the universe of locally elected city officials or candidates love the city and want to do right by it, as they understand “right”.


The more I read about the pension issue, the more depressed I get. I have to say I think there are two camps in this debate, the merely deluded and the seriously delusional. I’m not taking bets that we are not all in the second category. And this is one of those things where just screwing in one CFL will not do a damn bit a good.

The fairly new blog 414Grant Street seems interested in addressing Mark DeSantis’s policy suggestions on a policy level (if not entirely politely). I think this debate will be peripheral to the results of the election, but it is damn interesting, and I, for one, would like to play along. 414 asserts that the state is not keeping up with it’s aid for the pensions, as promised in Act 205 of 1984. Now, I looked for a while tonight and couldn’t really find any articles on Act 205 of 1984. It is hard for me to believe that the state said “put in as little or as much as you like into your pension funds, and we’ll make up the difference”. Even if they did say something like that, we shouldn’t have been stupid enough to believe them.

Chris Briem alludes to 1984 in a 2005 opinion piece he wrote about the last Mayor’s race. He talks about how Act 47 seems to have little to do with and does not try to alleviate the pension crisis. Chris even mentions the 400 million dollar shortfall figure we still hear today, which scares the crap out of me because I suspect that figure is badly out of date.

So 414 tells us we should blame the state for the pension crisis, that we should not take any steps to even attempt to solve it ourselves, that the state is obliged to help us and other distressed municipalities. We’re told:
“Pittsburgh did not get into this mess by itself, Mr. DeSantis, and it cannot afford to get out of this mess by itself. The Pennsylvania Public Employee Retirement Commission (PERC), which oversees revenue from the Act 205 charge on foreign insurance companies, must be held accountable for coming forward with serious reform proposals to ensure that truly distressed pension funds receive the help they so desperately need.”

Actually, if Chris Briem is to be believed, we are partly to be blamed for this problem, by letting pension contributions slide over the years in the first round of businesses closings and population fleeing-s (and that’s not even looking at the collective bargining agreements agreed to over the years). That's what happens when you are supposed to balance your budget with a shrinking tax base, you hide the shortfall where people won't notice for a few years. Chris also mentions that currently the state system contributes money based on the number of city employees, so as we had rounds of layoffs, we made things a lot worse (decreased the state contribution, increased our liability). Actually, the PERC 2006 report on pensions on the PERC website does say Act 205 needs to be updated. I’m sure all those suburban republicans and rural republicans and democrats are going to get right on that, because their constituents are aching to pay more taxes to help union retirees from the cities (since PERC is currently funded with taxes on out of state insurance companies, perhaps they can be jacked up, since they won't pass the additional charges on to us...right?) .

Plus 414 takes the Ravenstahl line that Casino revenues have already been spent, in the future, on city services. We’re told:
“Any money that is diverted to pensions, be it casino revenue or non-profit contributions, is money that will then not be available for essential city services – like street paving or cleaning; vacant lot cleaning; the hiring of police officers, fire fighters and paramedics; building demolition; and other important activities that keep Pittsburgh functioning. And that is money that is counted on, every single penny of it, to fund the city’s general fund expenditures for the next five years and counting.”

This is pretty crucial. The Ravenstahl administration is chafing under Act 47. But they are told that if they can pull off five years of budget surpluses, they will be free of Act 47. So of course any additional contributions to the pensions are seen as counter productive. They reduce the chance the city will be back on its own, to borrow and spend as it sees fit.

414 finishes with: “Real leadership, Mr. DeSantis, would be holding Harrisburg accountable for the mess it created.”

Neat trick if you can pull it off. But since legislators like Jim Ferlo and Lisa Bennington have districts that include vast swaths of suburbs, you can’t even count on Pittsburgh legislators to take the blame for or help with the pension mess, as if any politician would ever assume blame for problems anyway.

Now, to be sure, the DeSantis proposal is a band aid. The kind of money we are talking about will need state aid. It’s just that unless we show ourselves willing to shoulder part of the pension burden, I can’t see the state legislature lifting a finger for us. They probably feel they were already overly generous with Act 47.

Then there's health care for retirees and current employees. Good thing no one votes based on candidates' actual policies...

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