By Bill Vidonic
The Pittsburgh Tribune Review
PITTSBURGH, Pa. The Pittsburgh firefighters union on Tuesday asked an Allegheny County judge to force the city to somehow boost funding of its pension by year’s end to avoid a state takeover of municipal retirement accounts.
“Let’s get this damned thing done. Because if we don’t get it done, we’ve all failed,” said Joseph King, president of International Association of Fire Fighters Local No. 1.
Under state law, the city needs to put about $220 million into the pension funds by Dec. 31 to raise the funding level from 27 percent to 50 percent of the $1 billion needed to cover obligations for 8,000 city employees and retirees. Otherwise, the Pennsylvania Municipal Retirement System will begin managing the funds. A takeover, officials warn, will lead to sharply higher annual pension payments.
Among the options the union presented to Common Pleas Judge Michael E. McCarthy: Force the city to lease parking facilities in exchange for the needed money or borrow it through a tax anticipation loan, which the union’s lawyer said would require a property tax increase.
“The mayor is absolutely adamant against any property tax increases that are implied in the action taken by the fire union today,” spokeswoman Joanna Doven said. “We’ve had a solution on the table that would have worked. City Council still has time to do the right thing.”
Mayor Luke Ravenstahl proposed a 50-year lease with a private company that would have raised $452 million. City Council rejected that plan and has offered several ideas to generate an upfront payment.
The current pension system, City Councilman Bill Peduto said, “is one of the worst-administered plans in the state of Pennsylvania. If it can get better administration from the state, we should be doing it. It’s hard to defend our plan right now, from the way it has been administered for decades.”
King and union attorney Joshua M. Bloom said neither Ravenstahl’s office nor City Council played a role in the lawsuit, which claims moving control of the pension to the state would violate the firefighters’ contract.
According to the union’s complaint, the city’s second-class code “provides that the care, management and control” of the firefighters’ pension be “exclusively performed by a local board of managers, which include city officials as well as members who are directly elected by the city firefighters and beneficiaries of the fund.”
Under a state takeover, firefighters would lose control of their pension funds and their voice on what should be done with their investments, Bloom said.
Also, he said, a takeover would force the city into bankruptcy, unable to make annual pension payments topping $100 million.
“This issue is a ticking economic bomb that must be immediately defused before it is later detonated,” Bloom wrote in the complaint.
Bloom acknowledged that the union’s suggestion to raise taxes would be an unpopular one.
“Respectfully, city residents should call their council representatives and ask these two entities to get together to solve this problem,” Bloom said.
Robert Strauss, a professor of economics and public policy at Carnegie Mellon University who has studied the city’s pension funds, said that under state law, “the authority of the mayor to negotiate with police and fire is unaltered by a state takeover of those retirement plans, and the benefits of retirees and current employees are entirely protected and, moreover, they are financially secure.”
McCarthy set a Dec. 20 hearing on the complaint.
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