Kevin's Remarks on His Plan to Solve the City's Pension Crisis
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Wednesday, September 9, 2009
SOLVING PITTSBURGH’S PENSION CRISIS
Kevin Acklin | Remarks as Prepared for Delivery
[See the press conference video of these remarks. Read the official press release.]
Good morning. Thank you for coming out today.
Over the last few weeks, we’ve seen an important, and potentially city-altering, debate unfold over the future of Pittsburgh’s pension fund. The State has proposed taking responsibility of the fund and placing it under strict oversight.
I’ve spoken with colleagues in Pittsburgh and in Harrisburg, elected leaders from across the state and members of the House and Senate, and I’ve urged them to resist a state takeover of our pensions. If the state took over the responsibility of governing our pension fund, it would be yet another assault on our autonomy as a city. It would be a catastrophe not just for our budget, but for all the working men and women who rely on their pension checks and on vital city services to live their lives, like my grandmother who lives off of the pension my grandfather earned as a battalion chief in the Pittsburgh Fire Bureau.
Thanks to the work done by our state legislators and some of Pittsburgh’s strongest unions, the legislature looks like it’s ready to pass the bill with a temporary exemption for Pittsburgh. Under legislation now before the state house, Pittsburgh will have two years to bring the pension fund to the critical 50% solvency level, or face the state takeover.
Make no mistake: this new round of legislation won’t solve our problem; it will only give us two more years to solve a problem we have not solved, and in fact have barely even addressed.
A Crisis of Leadership
Five years ago, the pension fund was 44% funded. Today, it’s 29% funded. This problem has been getting worse and worse, and for three years before this moment of crisis, we’ve heard almost nothing from our Mayor about how he’s going to fix it.
Two years ago, when he was first running for re-election, Mr. Ravenstahl repeatedly claimed that we needed the state’s help to solve our problem.
One year ago yesterday, Mr. Ravenstahl testified before a joint public hearing of the Senate Urban Affairs and Housing Committee and told state legislators that he supported a state takeover of the pensions. When questioned, he told them he didn’t care what the plan looked like, as long as the pensions were taken over by someone else:
“We're open to whatever makes sense and whatever is most manageable on your side... But I think clearly what I will say is that some sort of consolidation, I think, has to happen.”
I don’t know why or when the Mayor changed his mind, but I do know that when I’m Mayor, I’ll work for the people of Pittsburgh every day, and I’ll never play politics with their retirement, their fire houses, their community centers, or their neighborhoods.
Privatization Will Not Work
Now. If the legislature votes as we expect them to, the City of Pittsburgh will have to pump $189 million into the pension fund over the next two years, or face a state takeover.
Privatizing the city’s parking assets will not fix the problem. In fact, it won’t even come close.
A study conducted at Carnegie Mellon University earlier this year concluded that Mayor Ravenstahl’s plan to privatize the City’s parking garages would, after all debt repayments, yield only $71 million. That’s not even half of what we need.
Privatization of public assets like parking garages is not a good idea, and not a good solution to our pension crisis. Other cities that have privatized their garages have encountered problems with the companies contracted to manage them and with the residents who have to use them. In Chicago, parking fees have skyrocketed. Some rates have tripled. Most experts say the same thing will happen here.
The parking assets are a secure source of income for the city of Pittsburgh for years to come. We can not trade in long-term stability for short-term gain. Especially a short-term gain that will pay for less than half of what we need to bring the pension fund back to solvency.
The Acklin Plan for Pensions
We need bold new thinking and clear-headed financial planning to solve this problem. And we need a leader who’s committed to solving it. That’s why I’m running for Mayor, and that’s why I’m proposing my plan to make the Pittsburgh pension fund 50% solvent in two years.
The solution starts with the Urban Redevelopment Authority, an integral tool in the economic development of our city, but one that over time has grown so large that it is crowding out potentially beneficial investments from private developers.
I propose today that we redefine the size and scope of the URA, re-focus it toward neighborhood investments and community development, and divest a portion of those assets to be placed immediately into the City’s pension fund.
The URA, as of December 31st, has at least — at least — $417 million in total assets. $225 million of those are liquid assets in cash and investments.
Let me put that into perspective for you: the City of Pittsburgh’s entire operating budget for 2008 was $424 million. Nearly identical to what the URA is worth. I’ve always thought of the Twin Cities as Minneapolis and St. Paul — but here we have Pittsburgh and the URA.
Now, the URA has played an important role in the redevelopment of the City of Pittsburgh, a job that should never be overlooked. But Mr. Ravenstahl and I disagree on where the development of the future should take place in our city. Mr. Ravenstahl has sided with big, corporate developers, and I say it’s time to go back to the neighborhoods. Back to places like Carrick and Sheraden, Beechview and Brookline, Homewood and The Hill, The North Side and the South Hills.
Saving the Pension Fund
The re-shaping of the URA is only a small part of my economic development plan, and in the coming weeks I will unveil that plan in its entirety. But today, we focus on saving the pension fund.
If we divest less than half of the URA’s assets and devote them to the pension fund, which is what I am proposing, we could avoid a state takeover, put the pension fund back on the path to financial success, and ensure the retirements of Pittsburgh’s hard working men and women. We would immediately return the pension fund to fifty-percent solvency, and the URA would still have more than half of its assets to work with.
My plan would be the first serious, substantive effort in more than a decade to address our city’s most pressing financial problem. It would take the first step toward the important goal of refocusing development on our neighborhoods. And it would stop a potentially catastrophic state takeover of Pittsburgh’s pension fund without privatizing any city assets, without costing us any good union jobs, and without raising any taxes or cutting any services.
Thank you. I will take your questions.
Good morning. Thank you for coming out today.
Over the last few weeks, we’ve seen an important, and potentially city-altering, debate unfold over the future of Pittsburgh’s pension fund. The State has proposed taking responsibility of the fund and placing it under strict oversight.
I’ve spoken with colleagues in Pittsburgh and in Harrisburg, elected leaders from across the state and members of the House and Senate, and I’ve urged them to resist a state takeover of our pensions. If the state took over the responsibility of governing our pension fund, it would be yet another assault on our autonomy as a city. It would be a catastrophe not just for our budget, but for all the working men and women who rely on their pension checks and on vital city services to live their lives, like my grandmother who lives off of the pension my grandfather earned as a battalion chief in the Pittsburgh Fire Bureau.
Thanks to the work done by our state legislators and some of Pittsburgh’s strongest unions, the legislature looks like it’s ready to pass the bill with a temporary exemption for Pittsburgh. Under legislation now before the state house, Pittsburgh will have two years to bring the pension fund to the critical 50% solvency level, or face the state takeover.
Make no mistake: this new round of legislation won’t solve our problem; it will only give us two more years to solve a problem we have not solved, and in fact have barely even addressed.
A Crisis of Leadership
Five years ago, the pension fund was 44% funded. Today, it’s 29% funded. This problem has been getting worse and worse, and for three years before this moment of crisis, we’ve heard almost nothing from our Mayor about how he’s going to fix it.
Two years ago, when he was first running for re-election, Mr. Ravenstahl repeatedly claimed that we needed the state’s help to solve our problem.
One year ago yesterday, Mr. Ravenstahl testified before a joint public hearing of the Senate Urban Affairs and Housing Committee and told state legislators that he supported a state takeover of the pensions. When questioned, he told them he didn’t care what the plan looked like, as long as the pensions were taken over by someone else:
“We're open to whatever makes sense and whatever is most manageable on your side... But I think clearly what I will say is that some sort of consolidation, I think, has to happen.”
I don’t know why or when the Mayor changed his mind, but I do know that when I’m Mayor, I’ll work for the people of Pittsburgh every day, and I’ll never play politics with their retirement, their fire houses, their community centers, or their neighborhoods.
Privatization Will Not Work
Now. If the legislature votes as we expect them to, the City of Pittsburgh will have to pump $189 million into the pension fund over the next two years, or face a state takeover.
Privatizing the city’s parking assets will not fix the problem. In fact, it won’t even come close.
A study conducted at Carnegie Mellon University earlier this year concluded that Mayor Ravenstahl’s plan to privatize the City’s parking garages would, after all debt repayments, yield only $71 million. That’s not even half of what we need.
Privatization of public assets like parking garages is not a good idea, and not a good solution to our pension crisis. Other cities that have privatized their garages have encountered problems with the companies contracted to manage them and with the residents who have to use them. In Chicago, parking fees have skyrocketed. Some rates have tripled. Most experts say the same thing will happen here.
The parking assets are a secure source of income for the city of Pittsburgh for years to come. We can not trade in long-term stability for short-term gain. Especially a short-term gain that will pay for less than half of what we need to bring the pension fund back to solvency.
The Acklin Plan for Pensions
We need bold new thinking and clear-headed financial planning to solve this problem. And we need a leader who’s committed to solving it. That’s why I’m running for Mayor, and that’s why I’m proposing my plan to make the Pittsburgh pension fund 50% solvent in two years.
The solution starts with the Urban Redevelopment Authority, an integral tool in the economic development of our city, but one that over time has grown so large that it is crowding out potentially beneficial investments from private developers.
I propose today that we redefine the size and scope of the URA, re-focus it toward neighborhood investments and community development, and divest a portion of those assets to be placed immediately into the City’s pension fund.
The URA, as of December 31st, has at least — at least — $417 million in total assets. $225 million of those are liquid assets in cash and investments.
Let me put that into perspective for you: the City of Pittsburgh’s entire operating budget for 2008 was $424 million. Nearly identical to what the URA is worth. I’ve always thought of the Twin Cities as Minneapolis and St. Paul — but here we have Pittsburgh and the URA.
Now, the URA has played an important role in the redevelopment of the City of Pittsburgh, a job that should never be overlooked. But Mr. Ravenstahl and I disagree on where the development of the future should take place in our city. Mr. Ravenstahl has sided with big, corporate developers, and I say it’s time to go back to the neighborhoods. Back to places like Carrick and Sheraden, Beechview and Brookline, Homewood and The Hill, The North Side and the South Hills.
Saving the Pension Fund
The re-shaping of the URA is only a small part of my economic development plan, and in the coming weeks I will unveil that plan in its entirety. But today, we focus on saving the pension fund.
If we divest less than half of the URA’s assets and devote them to the pension fund, which is what I am proposing, we could avoid a state takeover, put the pension fund back on the path to financial success, and ensure the retirements of Pittsburgh’s hard working men and women. We would immediately return the pension fund to fifty-percent solvency, and the URA would still have more than half of its assets to work with.
My plan would be the first serious, substantive effort in more than a decade to address our city’s most pressing financial problem. It would take the first step toward the important goal of refocusing development on our neighborhoods. And it would stop a potentially catastrophic state takeover of Pittsburgh’s pension fund without privatizing any city assets, without costing us any good union jobs, and without raising any taxes or cutting any services.
Thank you. I will take your questions.
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