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House passes pension bill

Sales tax authority approved for Philly; Pittsburgh gets extension; funds statewide get help

HARRISBURG, Sept. 11 - House Democratic leaders today said passage of an amended statewide pension reform bill is the first step in a larger effort to shore up municipal pension plans across Pennsylvania including those in Philadelphia, which is facing financial collapse, and in Pittsburgh, where the retirement system is only funded at about 30 percent.

The measure, House Bill 1828, passed by a vote of 113-76, and is expected to help Philadelphia strengthen its underfunded municipal pension system and stabilize city finances by allowing the Nutter administration to implement a 1 percent sales tax in the city. Separately, Pittsburgh will be given two years to boost the funding level in its municipal pension plans to 50 percent before a state takeover. For other municipalities, the legislation allows fund managers to implement new strategies in an effort to recover from the losses that occurred when the financial markets collapsed. For example, the legislation would allow municipalities to decrease their pension contributions to 75 percent and to increase the percentage by which the actuarial value of assets can vary from 20 percent to 30 percent.

"Passing this bill will help meet Philadelphia’s urgent and immediate crisis, and it gives us breathing space to take a hard, measured look at the larger issue of underfunded municipal pensions across the state," said Speaker of the House Keith McCall, D-Carbon.

House Bill 1828 originally was intended only to shore up Philadelphia’s underfunded pension system and stave off the city’s financial collapse. However the state Senate made substantive and complicated changes to the language and merged it with an existing bill to create new rules for 3,100 municipal pension systems across Pennsylvania. The new version drew concerns from a broad constituency, including police and firefighters, as well as the city of Pittsburgh, the attorney general and municipal officials.

"This amended bill now provides critical pension relief to thousands of municipalities across Pennsylvania, including the city of Hazleton, which I represent," said Majority Leader Todd Eachus, D-Luzerne. "It also preserves important protections for our police, firefighters and other first-responders, who protect us every day, while also protecting the interests of taxpayers."

The latest version of the legislation provides specific measures meant to give municipal pension managers flexibility in the near future as they attempt to recover from losses attributed to the country’s financial crisis. In addition there are stronger reform measures in the bill. Language considered by police and firefighter unions to be a threat to collective bargaining was taken out of the legislation.

"I think what we have here is a good start," said Dwight Evans, D-Philadelphia, chairman of the House Appropriation Committee. "Our goal was to give Philadelphia the tools it needs to help itself in terms of its finances. Even with all the debate over the language, we never lost sight of the fact that the original intent was to help Philadelphia."

State Rep. Jewell Williams, the bill’s prime sponsor, said it is imperative for the Senate to recognize the work that went into the legislation and approve it quickly so it can be signed by the governor. Without the legislation, Philadelphia will be forced to implement a wide-ranging cost-savings program that will include laying off 3,000 employees, including police officers, limiting trash collection and closing down entire departments.

"We’ve all had a chance to weigh in on the legislation and, for now, we have a bill that provides help to Philadelphia and to other communities," said Williams, who is chairman of the Philadelphia Delegation. "We can always come back and take a second look at the broader issue of underfunded pension funds. Right now, though, there is no second chance for Philadelphia. I urge the Senate to act quickly on behalf of the citizens of our state’s largest city."

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