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Mayor May Try Leasing Garages To Fund Pensions

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Aug 26, 2009 7:30 pm US/Eastern

Mayor May Try Leasing Garages To Fund Pensions

PITTSBURGH (KDKA) ― The state is poised to take control of Pittsburgh's woefully under-funded pension system.

It's a move that could mean major tax increases and layoffs, but Mayor Luke Ravenstahl says he has a plan to avoid it.

Mayor Ravenstahl confirmed to KDKA's Andy Sheehan Wednesday afternoon that all the city-owned parking garages will go out to bid next month.

Generation upon generation of police officers, paramedics and firefighters have served the city with promise of a pension, but over the past three decades the funds have shrunk to alarming levels and are now less than 30 percent funded.

Now, the city must come up with the money quickly to shore them up.

"These aren't scare tactics. This is the reality of the situation," said Mayor Ravenstahl. "This will have to happen. We will either have to raise taxes or we'll have to layoff a significant amount of people."

The city has only $250 of the $900 million needed to meet its obligations.

A bill that is passing the state legislature demands a state takeover of the funds and mandates much higher contributions, which paints the city into a corner.

"We need to come up with an influx of money, the only solution I've identified is leasing these garages," said Mayor Ravenstahl.

The Mayor's Office has decided to pull the trigger on the plan, which he has been floating for months – the leasing of all the city-owned parking garages to a private operator.

It's a contract that could generate $200 million or more.

He says that kind of cash infusion into the pension would take the city off the critical list, avoid a state takeover and go along way to making those plans solvent.

Those bids will determine if the plan is a go and union leaders say it's a better plan than layoffs and crippling tax increases.

"I'd rather look at that than look at the other alternatives, because they're really not alternatives," said the city's Fire Union President Joe King.

But even supporters, like City Controller Michael Lamb, are warning that those who park downtown will feel the bite.

"Rates will go up for the consumer," he said. "No question about it."

The city needs to get a good offer to lease the garages and any plan must be approved by City County. But the city also needs some flexibility from the state to put this plan into work.

(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)

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