The City of Pittsburgh has revised its employee pension program. But whether the moves were prudent remains an open question, concludes an analysis by the Allegheny Institute for Public Policy.
It was in December that outgoing Mayor Bill Peduto signed ordinances that eliminated a pension reduction for some city employees, modified the employee contribution rate and extended the number of years that the city will dedicate parking taxes to those pensions.
All this said, new ordinances return and/or add more city employees to the pension plans’ liabilities, increasing them from $87.9 million to $96.9 million, based on an actuarial analysis. And they assume a robust recovery in post-pandemic parking tax revenue to meet the pledged contribution to the pension plans.
But do remember that the 2010 ordinance states that the city’s full faith and credit are pledged to meet the parking tax obligation. “That means other sources of tax or non-tax revenue may be called upon if needed,” Montarti says.
“If the city can reach an 80% funding ratio without the inclusion of the parking tax pledge, then it is possible that the dedication of the revenue to the pensions may end earlier than 2051, based on language in the new ordinances,” he says.
“Why not wait until the pension funding ratio was further into that range or, even better, actually met the level of ‘no distress’ (of 90 percent or above)?” Montarti asks. “What if the stock market underperforms and the city’s pensions lose ground?”
Author(s): Colin McNickle
Publication Date: 3 Feb 2022
Publication Site: Trib Live