PA Mayors, Lawmakers Lobby For Municipal Pension Reform

By Andrew Staub | PA Independent

During the almost 10 years that Rick Gray has served as mayor of Lancaster, the city’s annual pension costs have exploded from $2 million to more than $6 million.

There’s a practical cost to those rising expenses, Gray said Tuesday.

“It means less police, less firefighters, roads that aren’t paved as well,” he said, while visiting the state Capitol to lobby for reforms to the municipal pension system.

Gray supports a bill moving through the state House that would put newly hired municipal police officers and firefighters into a cash-balance plan instead of the traditional pension system. The new plan would be comprised of mandatory employer and employee contributions, and include an employer–guaranteed interest credit.

Current employees would retain their existing benefits, but they would be frozen at current levels. The legislation would apply to all municipalities with full-time public-safety personnel, except for Philadelphia.

State Rep. Keith Greiner, the Lancaster County Republican sponsoring the bill, said it will give local government officials a tool to combat rising expenses.

“They’re looking for a hand up, not a handout, so they can control their municipalities’ pension costs,” Greiner said.

Mayors such as Gray have been calling for help from state lawmakers for a few years now. The pleas have only grown after Auditor General Eugene DePasquale released a report earlier this year that found municipalities across the state have nearly $8 billion in unfunded pension liabilities.

York, a city of 43,000 in south-central Pennsylvania, has stood as a prime example of municipal pension woes. As of earlier this year, it was dealing with more than $64 million in pension debt.

So York Mayor Kim Bracey was “thrilled” when Republicans in the House State Government Committee on Tuesday approved Greiner’s legislation and set it up for a floor vote.

“We have only ever asked for the tools needed to control the spiraling costs,” she said. “We are not asking for any funding, only for needed structural reform.”

Greiner’s bill would allow employees to receive an interest rate credit of up to 4 percent, but any earnings above that would be used to pay down a municipality’s unfunded liability, the lawmaker said.

Republicans might have to act alone to shepherd change through the General Assembly. The legislation passed the House State Government Committee in a 16-10 vote, with all Democratic members voting against it.

“We totally get that many cities are facing big problems with pension costs and we’ll keep working with the mayors, city councils and others to find a long-term solution,” said Bill Patton, a spokesman for the House Democratic Caucus. “But we won’t support a plan that would break contractual promises made to public workers, including police and firefighters. The workers who faithfully contributed to their pensions all along did not cause pension fund imbalances and they should not lose their retirement security to fix a political problem.”

State Rep. Daryl Metcalfe, the Republican chairman of the State Government Committee, said municipal pension reform does not have to be a partisan issue. Gray also lamented the lack of bipartisan support.

“I’m a Democrat, and I find it disheartening that it appears the Democrats in this building aren’t really addressing much of what the problem is at the local level,” Gray said.

Officials from the Fraternal Order of Police and the Professional Firefighters Association did not immediately return messages seeking comment, but state Sen. John Eichelberger, R-Blair, said public-safety unions could even deter Republican support.

Eichelberger is sponsoring his own municipal pension reform legislation that would put new public-safety hires into a defined-contribution plan.

“We are losing police and firefighters all across the state, and we’re losing them because we can’t afford to maintain the numbers we’ve had in place for years,” Eichelberger said.

Just like reforming the state’s pension systems, changes to municipal retirement plans have been a slog.

Yet Gray saw hope in Tuesday’s committee vote.

“As I said, it’s one step forward,” he said. “It’s a long and winding road, but at least we’ve gotten a move on.”