Council to use parking meters in plan to help pension fund

This year, students might feel the effects of the city’s pension-funding plan — at least… This year, students might feel the effects of the city’s pension-funding plan — at least when they park on the street.

City Council waits on Mayor Luke Ravenstahl to sign off on a parking meter increase that would remedy budget losses due to pension funding. Council dedicated a portion of the parking tax, $13.4 million, to increase pension funding levels to above 60 percent. To make up for this money loss to the budget, Council has proposed an increase in meter prices. The actual amount that meters could potentially increase will not be set until the plan is finalized.

Councilman Bill Peduto and budget director Bill Urbanic made the announcement during Tuesday’s Council meeting. They outlined where the city is financially and how they plan to achieve long-term stability.

“The purpose of the meeting was to show that the city can get by without the meter increase, but barely,” Peduto said.

Urbanic said that the increase in potential parking-related fees through a Parking Authority payment would be $1.3 million in 2011 and $8 million between 2012 and 2015.

The increase has been passed by Council and has the support of the City Controller, but the plan next needs the approval of the mayor’s office, Peduto said.

The mayor’s office did not respond to several calls for comment over the past three days.

In their presentation to the Council, Peduto and Urbanic emphasized how the city could balance funding debt and pension.

Peduto said there is a window between 2012 and 2017 during which balancing the budget and pension solution could get difficult.

“During these six years we have additional payments into the pension plan, but our debt payments are about the same,” he said. “These are the years where it will be a challenge to meet revenue projection and have the money to do the capital budget.”

For 31 years, a portion from the city’s parking tax will be dedicated to the pension fund in order to increase levels to 60 percent.

Under Pennsylvania Act 205, the city was required to fund more than 50 percent of its pension by the end of 2010. Late last year, the fund was only about 30 percent funded, and it took a last-minute rush and veto override by Council to push through a plan that dedicated 31 years of parking tax revenues to the pension fund.

If the state government had taken over the city’s pension, it would have meant increased, mandatory contributions from the city that could have resulted in service cuts and tax increases for city residents. A report from the Pennsylvania Municipal Retirement System — which manages most municipal pensions in the state — estimated that contributions to the pension fund might have reached a quarter of the city’s budget in that situation.

Pittsburgh is one of a few municipalities in Pennsylvania that manages its own fund. Most of the municipal pension funds are run by the state’s retirement system.

The current plan will exceed the 50-percent threshold and also meet the annual $80 million in benefits the city pays out.

“We will still have money to fix roads, buy equipment, preserve our parks and keep recreation centers opened,” Peduto said.

The city covered the $13-million budget gap for this year using reserve funds, explained Councilman Patrick Dowd.

“We may not need the parking revenue for this year since we have a general fund that has a sufficient number of dollars,” Dowd said. “But we need to make sure use of that fund does not continue and we think the mayor can negotiate a rework of funds.”

Dowd assured the public that there will be no budget shortfalls in the future because of the plan.

“Typically we haven’t had budget shortfalls,” Urbanic said. “We’ve made our budget since 2004. We always had a positive operating result.”

The balance between debt payoff and money toward pensions can be be done without significant tax increase or significant cuts in the funds the city receives, Urbanic said.

Urbanic described the city’s current annual debt payoff plan as a “cliff,” meaning that the amount the city pays will drop significantly after about a decade.

“We owe $87 million until 2017. We pay that until 2017 and by 2018 it goes down a little bit and then by 2019 the payments go down a lot. In 2024, the debt will be paid off completely,” he said. “In the years later is when we will put more money into the pension.”

Once the debt payoff goes down, the payment to the pension fund will double to $26 million.

Peduto remained hopeful about Pittsburgh’s finances.

“We need to make sure that we understand that there is an opportunity here, an opportunity to use what we have done in the past month to move towards financial future,” Peduto said.