The most recent person to retire from the Easton police or fire department went at age 54 with a pension of $67,000 a year for the next 30 years, said Easton Mayor Sal Panto.
“I call him my $2 million man, because that’s what it’s going to cost the taxpayers,” said the mayor. “His spouse gets 100 percent if he dies.”
Panto joined the mayors of Bethlehem and Whitehall to explain the need to reduce the burden of pensions and binding arbitration on municipalities, during the monthly meeting of the Great Lehigh Valley Chamber of Commerce board of governors Monday afternoon in Hotel Bethlehem.
The mayors’ message: “The hell with politics, it’s time to tackle this problem.”
The chamber is part of a statewide organization called Coalition for Sustainable Communities, which is lobbying the state Legislature to rein in the high cost of public employee pensions and labor contracts resolved by skyrocketing arbitration settlements.
That action means going up against unions representing police and firefighters, which some politicians are reluctant to do.
“The politics of this are not good,” said Bethlehem Mayor John Callahan. “Nobody likes to fight with the FOP, nobody likes to fight with the firefighters union. This is not anti-police or anti-fire. We like these guys.””
But he added the costs municipalities are paying for pensions and arbitration simply are not sustainable.
In 2003, said Callahan, Bethlehem paid $1.2 million to fund its police and firefighters’ pensions. Ten years later, in 2013, he said it will be $7.7 million. “Every city has a similar growth curve.”
“Fifty-five percent of my budget is on police and fire,” said Callahan. “And it’s much higher in many of the other cities. We have been starving every other department in the city to keep funding those two departments.”
Offering another example of costs, Callahan said: “When I started in Bethlehem as mayor, I was the 17th highest employee in City Hall. I’m now 54th. Forty of the 54 highest paid employees are police and firefighters.”
In 2008, said Panto, Easton contributed $600,000 to pensions. “This year, it’s $1.5 million,” he said. “Next year, it’s $3.7 million.” He said that’s forcing him to propose implementing a commuter tax: “All people coming into our city to work will pay .75 percent if approved by city council. I don’t want to do that, but there’s no place to get an additional $1.5 million. It just doesn’t exist in our city.”
Panto said unions consider the benefits “entitlements” their people have earned and deserve. “It’s hard to go against public safety employees,” he acknowledged.
“Collectively, they are extremely strong in Harrisburg.” He added: “Politicians don’t look at the long term, they look at the political term.”
Panto said Harrisburg lacks courageous leaders. “No one wants to talk about the important issues in this commonwealth, not the governor, not the Legislature, not the Senate. They just want to keep kicking the can down the road. Local communities can’t kick the can down the road. We have to fund our pensions.”
The coalition argues that arbitration “should remain part of the municipal/labor toolkit” but must be based on a municipality’s ability to pay. It maintains municipalities have seen increasingly expensive binding arbitration decisions go against them for many years.
Callahan said even arbitrators are beginning to realize there will be no police or fire departments if the problem is not resolved and municipalities are left bankrupt. He stressed he respects the work police and firefighters do, but they have to understand their benefits must be in line with municipalities’ ability to pay for them.
The coalition argues that if something isn’t done, all Pennsylvania municipalities face employee layoffs, cuts in services and/or tax increases.
Forty-six percent of state residents live in “financially stressed” municipalities, according to the coalition, and that number is expected to grow if Harrisburg does not take decisive action soon.
Whitehall Township Mayor Edward Hozza said township officials should not delude themselves into thinking this is only a city or borough problem. He said Whitehall’s taxes already have been increased to come up with an additional $500,000 for police pensions.
Hozza was applauded when he announced he believes Whitehall is the first municipality in the Lehigh Valley to implement a defined contribution plan for all new employees, under a Teamsters contract with clerical and public works employees.
Hozza said Whitehall is starting to outsource work as townships employees retire to reduce pension costs. He said the number of township employees has been reduced from 128 to 114 since he became mayor. “We’re all working smarter. And every employee in the township, except police, is working under no salary increase this year.”
Said Hozza: “I congratulate the chamber for taking this bold step.”
Said Panto: “This is common sense legislation.”
Said Callahan: “Inaction is not an option.”