Pittsburgh City Council President Darlene Harris Tuesday introduced a resolution that would direct additional parking-fee revenue into the city’s pension fund to help boost its funding level and ward off a potential state takeover.
The bill would allocate revenue from parking-meter increases approved last month and fee hikes for parking violations to Pittsburgh’s retirement fund until Jan. 1, 2041. The violation fee increases are already in place. The meter increases will take effect in March. The City Council approved the meter-fee increases on Oct. 26.
A second resolution would authorize the city controller to establish a present-value calculation for the future revenue pledge from the city to the pension fund for a period of 30 years.
If approved, Controller Michael Lamb would present those projected values to the pension fund’s board at its Dec. 9 meeting.
Pittsburgh’s pension fund is less than 30% funded and needs an injection of about $200 million to reach 50%. Pennsylvania will place any municipal pension fund that is not at least 50% funded on Jan. 1 into the state-run Pennsylvania Municipal Retirement System. That would force Pittsburgh to make higher minimum annual pension contribution payments as the city uses an 8% assumed rate of return on pension investments. PMRS uses a lower, 6% assumed rate of return.
Lamb said the parking revenue-allocation plan could be part of a solution for the retirement fund, as it would generate $100 million to $150 million of anticipated revenue, and not the full $200 million.
While the strategy involves pledging a revenue stream as opposed to infusing the fund with a $200 million payment, Lamb said the state would view the allocated future revenues as an asset to the fund.
“Since they’ve basically putting a term of years on there, we’re going to be able to calculate a present value of that future revenue,” Lamb said. “And that present value would be an asset to the fund.”
Joanna Doven, spokeswoman for Mayor Luke Ravenstahl, said the plan does not give the retirement fund what it really needs — a large initial payment.
“We could apply those high [parking] rates to the pension fund, but without a one-time cash infusion our pension fund is never going to grow to any kind of sustainable or acceptable level,” she said.
According to a PMRS report compiled by the Cheiron actuarial consulting firm, Pittsburgh’s minimum contribution under retirement system would increase by $41 million to $86 million in 2013 from this year’s $45 million minimum payment. The minimum contribution would grow to $127 million and $160 million in 2017 and 2030, respectively.
The City Council last month rejected Ravenstahl’s plan to privatize Pittsburgh’s parking assets.
The mayor does not support an earlier proposal from the council, which involved the Pittsburgh Parking Authority issuing $220 million of bonds to purchase city-owned parking assets and the city using those sale proceeds for the pension system.