Allegheny County officials are considering a sales tax hike to help dig the county out of a pension fund crisis.
Decades of poor investments have led to Allegheny County’s pension fund being on the brink of insolvency. Officials are now considering a sales tax increase to help solve the problem. The issue caused the Allegheny County District Attorney to call on County Council members to demand the immediate resignation of all members of the county’s retirement board.
In July, the county’s retirement board revealed that the fund was $1.4 billion short due to bad private equity investments and decisions by past board members that have caused the problem to snowball.
The county has estimated that to overcome the shortfall, it will need to raise $100 million per year for 20 years beginning in 2028.
Beyond a sales tax increase, another option for county leaders is requiring county employees to chip in 14.5% of their income towards the pension fund. This would almost certainly go over poorly with county employees, who are already paying 11% toward the fund.
Actuaries estimate that increasing employees’ payment would take 150 years for the fund to become healthy again, which is pushing county leaders to look towards the sales tax increase as a path forward.
However, the county lacks the authority to increase the sales tax to the level needed to fund pensions. They will have to look to Harrisburg for help. Local officials are also asking state lawmakers to loosen pension laws to allow Allegheny County to contribute more money to the fund without those contributions needing to be matched by county employees.
County officials have begun having conversations about the options on the table to save the pension fund.
“I’m not sure of the exact timing, but we are starting to have the conversations with the stakeholders,” said County Treasurer Erica Rocchi in a recent statement.
Earlier this week, Allegheny County District Attorney Stephen A. Zappala Jr. called on County Council members to demand the immediate resignation of all members of the retirement board amid the crisis.
Zappala has also made calls for the state to take over the county’s pension system and accused local officials of mismanaging the fund.
The district attorney encouraged current and former board members to speak with him about the pension board and what he alleged were “‘pay to play’ politics with political contributions from its investment advisors.”
The Allegheny County Retirement Board is scheduled to meet next in November, when the board is expected to discuss the employee contribution rates to the pension fund.
