FOR IMMEDIATE RELEASE
State Rep. Jewell Williams D-Philadelphia www.pahouse.com/williams

Evans and Williams: Legislation to stabilize city's pension,
finances doable despite Senate changes

HARRISBURG, Aug. 27 – Legislation intended to stabilize Philadelphia’s underfunded pension system and shore up the city’s general fund is on track for a vote in the state House, despite widespread changes to the bill made by the Senate.

State Reps. Jewell Williams and Dwight Evans, both D-Phila., co-sponsored the bill (H.B. 1828), which they said is critically important to the short- and long-term fiscal health and viability of the city of Philadelphia. It provides for municipal pension changes and authorizes a five-year temporary 1 percent increase in the local sales tax. The measure passed the House on Aug. 5 in a vote of 112-85.

Two weeks later, on Aug. 26, the state Senate used the bill as the basis for pension reform that includes all communities in Pennsylvania. Because of the changes, the bill must be reviewed and voted on again in the House before being sent to the governor.

"The bill now has statewide implications, but the bottom line is that Philadelphia will have the ability to help itself," said Williams, chairman of the Philadelphia Delegation. "We’re reviewing the changes to see the impact, but at this point I don’t foresee problems winning passage of the bill in the House."

"I would have preferred we deal with the statewide pension issues in a separate piece of legislation," said Evans, chairman of the House Appropriations Committee. "Having said that, I’m pleased we’re still able to meet our objective of helping Philadelphia even though the legislation was changed."

House Bill 1828 would permit the city of Philadelphia to:

• utilize a 30-year amortization period for its pension fund instead of a 20-year period;
• defer a portion of city pension contributions in fiscal year 2010 and fiscal year 2011;

• defer $150 million of more than $447 million in city pension contributions in fiscal year 2010;
• defer $80 million of more than $538 million in city pension contributions in fiscal year 2011;

• repay deferred amounts with interest in total by fiscal year 2014;

• repay the entire $230 million deferral amount in fiscal year 2013 and fiscal year 2014;
• pay 8.25 percent interest on the amounts deferred during fiscal year 2010 through fiscal year 2014; and

• increase the sales tax by 1 percent for five years and earmark revenue from the increase to city pension payments.

The measure would provide a total of $700 million in new revenue and savings over the life of the city’s five-year plan by authorizing the city to take actions to manage its pension obligations and to impose a temporary sales tax increase.

Williams said that without H.B. 1828, the city would be faced with no choice but to dig deeper and make painful cuts in programs and services. According to the mayor’s office, these actions would require eliminating nearly 1,000 positions in the city's police department and 200 in the fire department, closing two health centers, reducing trash collection from weekly to two times a month, and closing entire service departments, including Parks and Recreation, libraries, Planning and Commerce.  

"Thousands of workers commute to the city each day for their job; they will be affected," Williams said. "Thousands of conventioneers and tourists visit Philadelphia each year; they will be affected. Thousands of people from the region spend evenings and weekends in the city enjoying the art museum, the zoo, Fairmount Park, the Kimmel Center, the Italian Market, the Constitution Center, and the Liberty Bell; they will be affected. Thousands of college students are enrolled in the 26 colleges and universities in the city; they will be affected. And hundreds of vendors who provide the city with supplies and services will no longer have any business opportunities with the city; they too will be affected."

Philadelphia is the only city in the state that is both a municipality and a county. As such, Philadelphia taxpayers must pay for both municipal services, including police and fire departments, streets and recreation, and state-mandated county functions, such as courts, child welfare and mental health/mental retardation services. This affects Philadelphia’s ability to respond to this economic crisis in a manner not experienced by other cities, Williams said.

He added that the city, under the leadership of Mayor Nutter and Philadelphia City Council, has worked responsibly and aggressively to respond to the fiscal crisis, but the magnitude of the problem is hard to fully grasp.

Williams said Philadelphia had to close a $2.4 billion hole in its budget and five-year plan. Through a series of actions, the city has reduced this deficit by $1.7 billion.

Some of these actions included:

• stopping wage and business tax reductions;
• increasing a wide variety of fees and fines;
• eliminating nearly 1,100 full-time and 2,000 part-time positions;
• reducing overtime citywide and reduced the number of city vehicles by 335;
• enhancing delinquent tax collection efforts;
• deactivating five engine and two ladder companies in the fire department;
• reducing library services from six days to five days a week;
• mandating five furlough days for exempt employees; and
• stopping longevity and pay increases for civil service employees.