SENATE DEMOCRATIC WRAP-UP FOR THE WEEK OF
September 14, 2009

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            The Senate unanimously passed Senate Bill 535, which would create an adult mentored hunting program to encourage more people to try hunting.

            Modeled after the 2005 youth mentored hunting program, the new program would give adults interested in hunting with an opportunity to hunt for one season with a reduced-cost apprentice license.

            The bill now is now in the House Game and Fisheries Committee.

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By a vote of 32-17, the Senate passed a bill that addresses shortfalls in municipal pension systems and allows Philadelphia to raise its sales tax from 7 to 8 percent to fill a $700 million budget shortfall.  House Bill 1828 also allows Philadelphia to change how it accounts for city employee pensions and gives Pittsburgh two years to bring its pension system funding ratio to 50 percent.

In August, Senate Republicans amended to bill to address pension shortfalls in municipalities across the state but some of the changes and drew objection from police and fire unions that said its provisions would restrict collective bargaining rights.  Many of those provisions were stripped in the House.

The measure that passed the House and Senate keeps a Senate provision creating “Level 3 distressed municipal pensions” which include Pittsburgh.  Level 3 pensions are those funded at less than 50 percent, and Pittsburgh is now only 31 percent funded.  Pittsburgh will get two years to better fund its pension system by leasing parking garages to a private operator.  It lets the city increase its parking tax to 40 percent (from 37.5 percent) if it sells or leases “parking garages” rather than “parking facilities.”

In Philadelphia, Mayor Michael Nutter and City Council agreed to a five-year budget plan in June, and the plan was approved by the non-partisan Pennsylvania Intergovernmental Cooperation Authority (PICA) in July.  But PICA’s unanimous approval was contingent on the state legislature passing enabling legislation.  Without such legislation, Philadelphia was facing closure of 53 libraries and parks along with layoffs of more than 1,000 of police officers and firefighters. 

While the new law allows the city to impose an increased sales tax and defer pension payments, it requires the city to meet the payment schedule or it will no longer be eligible for state grants and assistance except in cases of assistance necessary for the public safety and health 

The bill also addresses Philadelphia’s controversial Deferred Retirement Option Plan (DROP), including rules about when and how they can be implemented, and requiring certain levels of interest to accumulate of employee pension contributions.

For Pennsylvania municipalities, the bill creates three levels of distress based on funding ratios:

·         Level 1 – between 70% and 89% funded

·         Level 2 – between 50% and 69% funded

·         Level 3 – below 50%

            Each level will receive a set of remedies in order to help improve municipal pension plans.  All distressed municipalities will receive a more lenient pension payment schedule, use of a new “smoothing” technique to adjust for market cycles, and special taxing powers to provide for increase earned income taxes or property taxes for as long as the pension plan is distressed. Level III municipalities must also establish a revised benefit plan for new employees.

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