Allegheny County's pension fund crisis could leave taxpayers on the hook

Allegheny County is facing a major financial crisis that leaders are unsure how to address. 

On the back of last year's 36% property estate tax increase, the county is looking at a $1.4 billion hole in its pension fund. And it may fall on the taxpayer to fill it. 

Pension fund explained 

For decades, county workers have paid into a pension plan with the expectation of a steady income in retirement. 

But a consultant report says the plan is underfunded to the tune of $1.4 billion, and county leaders must take immediate action to fulfill that promise. 

After kicking the can down the road since 2004, the report says it's time to pay the fiddler. To make the pension plan solvent, the county needs to come up with $100 million per year for the next 20 years to meet its obligations promised in contract talks years ago.  

The Allegheny Institute, a conservative think tank, has been warning that this day would come for more than a decade. 

"Politicians can make promises on pensions and other post-employment benefits," Eric Montarti of the Allegheny Institute for Public Policy said. "And when the bill comes due, they're typically not around in office, and then we have to pick up the tab."

Outgoing Allegheny County Councilman Pat Catena says the pension liability has been an issue for years, but the county has mostly turned a blind eye. The report says former Allegheny County Executive Rich Fitzgerald did increase employee contributions to 11 percent a year and reduce retirements for new employees, but those measures have fallen short. 

"There's more than enough blame to go around," Catena said. 

What comes next?

The report is a warning, not an order. But currently, the Allegheny County District Attorney's Office is suing the county over the underfunded pension, and a judge may demand action.  

The report recommends an "everything on the table" approach: possibly increasing employee contributions, reductions in county departments and even another tax increase over last year's big jump. There seem to be few good options. 

"We need to get our hands around this to see exactly what needs to happen," Catena said. "I wish I had a good solution. I wish I could think out of the box to come up with something that will solve this. I mean, it might be a variety of things that need to be done." 

This full report will be released sometime next week, and Allegheny County Controller Amy Weiss Clements is expected to address the findings.