The city faces an increase of $1.7 million to meet its minimum pension obligation, City Council learned Thursday. The total pension cost is $3.8 million.
Council, and Mayor Gabriel J. Campana and his administration, discussed solutions on how to provide for the pension fund but also reported that the city faces more increased expenses - such as an estimated $500,000 more for health care, an 11-percent jump.
The pension increase, provided by Mockenhaupt, an actuarial firm, drew frustration.
"You either raise taxes or cut expenses," Councilman Randall J. Allison said. "It's mostly personnel but, at some point, everything is going to be on the table."
Earlier this week, Campana said to meet rising city expenses he would consider outsourcing positions and would find other ways to cut costs.
"The sky is not falling," Campana said, but he warned: "This unsustainable trend must reverse, or the city could face a similar fate to Altoona, Reading and Scranton - all of which are in financial distress."
Campana said city health care costs are expected to increase by as much as 11 percent and unions remain unwilling to concede on the slightest bit of deductible.
"Many of us mayors feel like we're on an island ourselves," he said.
Others on council listened as city Finance Director William E. Nichols Jr. shared stark realities of cost increases and how the rate of return on investments was less than satisfactory.
"We've got to find a way to pay for it," said Councilman Jonathan Williamson, chairman of the finance committee.
Williamson noted how some police officers at the time of retirement are at a base income of $70,000, which would mean they receive half that amount, or $35,000. But some officers have accrued significant overtime expenses, bringing their retirements to more than $50,000.
The state also has eliminated $850,000 that had been given as relief for police officers in early (drop) pension programs. Drop pensions are awarded to officers who are basically retired but continue to be employed and receive a pension each year.
Councilman N. Clifford "Skip" Smith pointed toward the dismal rate of return on investments compared to certain money market funds and other kinds of higher yield investments. He wondered why the municipalities continue to invest and receive low interest returns, saying they might put it in a bank's certificate of deposit.
Councilman Don Noviello said he believes reform won't happen until the lack of accountability, not only in Harrisburg but among voters, is restored. Noviello suggested the public ask their state legislators and candidates seeking office hard questions related to issues such as what they would do regarding pension reform and not accept platitudes leading up to elections.
Councilwoman Bonnie Katz said she didn't think the city was in as bad a financial shape as some others are, although the pension costs are "astronomical," she said. But, she added, "these are legacy costs happening all over the country."
Council President Bill Hall said all issues related to municipal pensions are forwarded to and go before the state treasurer's office, a position up for election this year.
"Keep an eye on that and you might see a candidate with a plan ... proposing pension reform."
