Welcome to a special edition of Northeast Notes. For weeks, Philadelphians have voiced concerns about the possibility that hundreds of our police officers and firefighters would be laid off and numerous city services would be reduced or halted if the city did not receive much needed aid from the state. Can you imagine our streets with 1,000 fewer police and firefighters and garbage pick up twice a month? Can you envision all of our libraries being boarded up? Neither can I and now, thankfully, we don’t have to. Despite several setbacks, the Senate has finally passed legislation that would avert this crisis. I’m pleased that this legislation is finally in place and that it protects collective bargaining rights for our unions. Please feel free to contact me if you have any questions on this legislation and its impact on you and your family.

Bill Soundly Addresses Philly
Fiscal Issues

The Senate on Thursday approved legislation that would address the City of Philadelphia’s fiscal issues and avert the closure of city services and layoffs of emergency responders.

Finally, this legislation will provide the relief Philadelphia needs to move forward and staves off implementation of any doomsday scenario. It avoids massive layoffs and keeps valued city services open, while offering solid good-government pension reform.

Under House Bill 1828, Philadelphia will have the authority to increase its sales tax by 1 percent for five years, make payments on pension obligations over 30 years, and defer a portion of the city’s annual pension payments for two years, which the city will repay with 8.5 percent interest. If Philadelphia fails to repay pension deferments, it would receive a tough penalty and state funding will be withheld.

If signed into law, this fiscal plan will avert the city’s last-resort plan to lay off hundreds of police officers and fire fighters, close all libraries and recreation centers, close two city health centers, and eliminate almost 3,000 positions, according to the mayor.

Losing hundreds of police officers and firefighters would have been devastating to our city. Their presence on our streets is invaluable, which is why I’m glad that they will continue to keep us safe, and the pensions they earned will be protected.

The unions, which were dissatisfied with an earlier version of the legislation because it harmed collective bargaining rights for working Pennsylvanians, now fully support House Bill 1828 in its current form, including the Pennsylvania AFL-CIO, Fraternal Order of Police, International Association of Fire Fighters (IAFF) and American Federation of State, County and Municipal Employees (AFSCME).

We’re facing unprecedented economic times, but workers shouldn’t be punished for the worldwide recession, poor investment decisions, or an employer who failed to make consistent, level contributions. This current legislation ensures that union bargaining rights are not harmed and that municipal retirees and current workers will get the pension benefits they worked hard to build over many, many years.

The legislation gives Pittsburgh and other Pennsylvania municipalities the opportunity to address their own financial woes by reorganizing their pension systems as well.

It also includes several significant pension reforms for municipalities statewide, including guidelines for municipalities that choose to implement Deferred Retirement Option Program (DROP) and banning elected officials from participating in DROP. The bill contains significant restrictions on pay-to-play and ethics requirements for pension plan administrators to ensure that pension consulting contracts are not given to the highest campaign donors.

The measure also requires Philadelphia to certify that it needs the sales tax increase each year as part of its five-year plan.

Once Gov. Ed Rendell signs House Bill 1828 into law, I will draft a resolution to create a Special Senate Select Committee to review municipal finances and pensions as described in the bill.

This committee would monitor the cities’ use and implementation of their new financial plans, including Philadelphia’s use of the sales tax increase. It’s another necessary step toward making sure the new systems in place are working and to provide solid accountability for taxpayers.

The bill now goes to the governor who is expected to sign it into law.