Pittsburgh has unfunded pension liabilities totaling $718 million. Those liabilities are a black hole that will continue to grow unless the structural issues are addressed.
Sadly, Pittsburgh agreed to put off addressing the real issues and instead floated a 30-year bond.
Please consider Pittsburgh Deal to Fund City Pensions Put in Park
Pittsburgh’s city council nixed a deal this week to lease its parking assets to a consortium led by J.P. Morgan Chase & Co. Instead, the council is proposing that the city’s parking authority issue a 30-year bond and pay it off with parking-rate increases. Part of the proceeds would go to the pension plan.
Mayor Luke Ravenstahl said Friday that he was opposed to that proposal. The city pension plan, which had an unfunded liability of $718 million as of August, could fall into state hands without additional funding.
J.P. Morgan Asset Management and LAZ Parking offered the city $452 million to operate garages, lots and 7,000 metered street spaces for 50 years.
, who runs J.P. Morgan’s infrastructure-investments group, said the consortium might amend its offer. “Clearly, we were disappointed,” he said. “But we believe it’s still a viable option.”
Anyone who proposes a 50-year deal that does not address underlying structural needs is a fool or a charlatan.
Thus, Mark Weisdorf is no friend of Pittsburgh. Instead he is looking out for the best interest of JP Morgan.
However, the same thing can be said about the nonviable solution Pittsburgh came up with. Floating 30-year bonds to fund liabilities without addressing the root cause of the liabilities is just as stupid, if not more stupid.
I have seen no discussion of the real issue: The pension plan of Pittsburgh is not sustainable, nor are public union wages and services.
Pittsburgh is bankrupt, as are many cities in the nation. It is foolish to enter into 30-year or 50-year deals to stave off the inevitable.
Neither the JP Morgan solution nor the action taken by the city council is viable. Pittsburgh kicked the can down a 30-year road, at taxpayer expense, in an asinine attempt to keep the ball in play. The decision cannot and will not work.
The correct decision was to admit bankruptcy of the plan and address the structural issues of untenable union wages and benefits.
Mike “Mish” Shedlock
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