Senate OKs Philly Budget Relief Bill
HARRISBURG - The state Senate on Wednesday approved a bill that would overhaul state laws governing municipal pension funds and generate $700 million to avoid massive layoffs and service cuts in Pennsylvania's largest city.
The 38-9 vote followed brief statements by senators who supported the measure, which would require House approval before it could be sent to Gov. Ed Rendell to be signed into law.
A spokesman for House Speaker Keith McCall, D-Carbon, said the House is unlikely to convene this week. House members need time to review the complicated municipal-pension changes in the Senate bill, spokesman Bob Caton said.
Both the Senate measure and a bill that the House passed earlier this month would give Philadelphia officials tools they have sought to balance the city's budget -- the authority to increase the local sales tax from 7 percent to 8 percent for five years and permission to defer a portion of the city's pension contributions.
The House bill dealt exclusively with Philadelphia's problems. The Senate legislation will affect all of Pennsylvania's more than 3,000 municipal pension funds, setting up a system that combines relief measures with regulatory intervention, including a state takeover of funds with the most serious financial problems.
In Philadelphia, Mayor Michael Nutter's administration expects to raise $580 million from the sales-tax increase. That would be combined with about $120 million in net savings from extending the amortization of the pension funds from 20 years to 30 -- another provision in the bill -- to avert implementation of a contingency plan that called for laying off 3,000 city employees and curtailing vital services in a matter of weeks.
The Senate bill would require Philadelphia to freeze pension benefits for existing employees, adopt a plan for reducing the cost of benefits for new hires by at least 20 percent and appeal any arbitration decisions that conflict with that plan.
If the city fails to comply with those conditions, the state would revoke its authority to raise its sales tax. If Philadelphia fails to repay the $230 million in deferred pension contributions, plus interest, by 2014, the state treasurer would withhold the unpaid amount from other state aid and deposit it in the city's pension account.
Leaders of the city government's labor unions have sharply criticized those provisions as unfair interference with employees' collective-bargaining rights.
Rendell, a Democrat who wrung contract concessions from the unions during his two terms as the city's cost-cutting mayor in the 1990s, agreed that some of the provisions in the Senate bill should be left to collective bargaining "under normal circumstances." But he urged the House to act quickly.
"If the state of Pennsylvania is being asked to pass this enabling legislation, I think the state Legislature has the right to put conditions in that will ensure the long-term viability of pension funds going forward," Rendell said.
"This bill is something that I would sign simply because the alternative for Philadelphia is so consequential and so disastrous that there's no alternative," he added.
Nutter said he hoped the House would approve the Senate bill without changes.
The former Philadelphia city councilman, who has personally led the city's lobbying team on the bill, said he accepted the Senate amendment as part of the compromises that legislating requires.
Stay With Fox 29 News and MyFoxPhilly.com for more on this developing story.
