'Why have city officials in recent years worked so hard to keep the pension plan solvent after earlier decades of underfunding?' PhillyJoeD asks. 'To avoid a tough choice.'
One thing we’re not hearing much about in this spring’sis the city budget’s largest single expense: pension funding for 30,000 former city workers and their survivors.
If the city keeps putting aside roughly that much money over the next two mayoral terms — and if investment markets recover — the city hopes it will have enough to pay all future pensions by 2033. If the city succeeds, the minimum annual city payment to the plan would then drop to around $200 million a year under state rules.
But she warned that the city’s credit rating will drop and its borrowing costs rise “if the city is unable to continue to fund its pensions” at the current high level, or if other spending gets out of control.— slightly better than New Jersey’s state pension plan, slightly worse than Pennsylvania’s, and far below its annual budget target of gaining 7.4%.
He noted that part of the money directed to the pensions comes from the extra 2% Philadelphia shoppers pay in state sales taxes — money split with the city’s public schools, which could be diverted to other uses only by changing state law, Bielli said. The rest was negotiated in collective bargaining union labor contracts with city workers’ unions and can’t be changed without the unions’ agreement.
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