Eachus, Barletta, and Pensions

Pensions and retirement monies are touchy subjects. Messing with them is tricky. A mistake can mean people's savings are wiped out. Those with a 401(k) can track their investments and have some control over where and how the money is invested, or at least a choice of funds. Those with traditional pensions are dependent on those who collect and invest the money.

While this is a little out of my geographic area, the topic is one that is sure to be in the news over and over again.

Pensions are a timely topic in Hazleton, and a source of friction between Hazleton Mayor Lou Barletta and State Rep. Todd Eachus (D-116).

The most recent episode started in 2003:

But in 2003, when Hazleton started purchasing insurance and buying back vacation and sick days from retirees with pension money, the Auditor General's Office declined to clear the practice in advance.

By going ahead with the practice, the city gambled, Eachus said. In 2006, the Auditor General's Office performed an audit that called the practice improper.

Eachus can't understand why the city didn't stop then, although Barletta told him he had limited options for balancing the budget without spending pension money.

From the pension fund, the city transferred $429,000 in 2007, $462,000 last year and will transfer $500,000, according to this year's budget (Jackson 6/29).

There are a few possible solutions:

To stave off bankruptcy, the city must win an appeal to Commonwealth Court or persuade the state Legislature to enact a law removing Hazleton's obligation.

Two years ago, a bill to rescue Hazleton sailed through the state Senate but died in House Finance Committee without a vote.

Barletta said the bill would have to be reintroduced this year, and he said he has worked with House Majority Leader Todd Eachus, D-Butler Township, to revive the bill. (Jackson 6/24)

The bill was written in such a way that it only applied to Hazleton. In 2007, Barletta asked specifically for Eachus to help move the bill along and Eachus wrote a letter to the chairman of the committee where the bill was parked, asking that it be moved along (Tarone, 10/08).

It isn’t the first time Barlett and Eachus have reached different conclusions on public finance. From 2005:

The City of Hazleton will unilaterally exempt Social Security and pension income from the new Emergency and Municipal Services Tax.

Mayor Lou Barletta and City Administrator Sam Monticello announced the decision Monday afternoon.

“We had our solicitor review the situation and investigate how the city could handle it,” Barletta said. “That's not the way the law is written, and I don’t think it’s clear whether it’s correct or not under the law. But that’s what our suggestion is.”

“We’re doing this on our own,” Barletta added. “We’re not going to wait for Harrisburg to confuse the matter any more.” (Tarone, 2/16)

Later in that article:

Saturday night, state Rep. Todd Eachus, D-116, said he wasn’t certain of what “income” was, as defined under EMST -- though he added it was “not the intent of” legislators to include Social Security and pensions.

The current situation has led to an exchange of letters between the mayor and the state representative, and interviews with the local paper. Written earlier this week:

"When's the city going to get it?" Eachus said in an interview Wednesday. "I want to be helpful to the mayor, but in the end he has to be responsible to the city."

Eachus said the mayor and the city council that approved the budget containing the withdrawals are responsible for the obligation.

"While I'm happy to try and find the legislative solutions, (the mayor) is asking me to change the law because he broke it," Eachus said. (Jackson 6/29)

Sources:

Jackson, Kent, and Tom Ragan, “Eachus, Barletta at odds over pension obligation,” Citizen's Voice, The & Sunday Voice (Wilkes-Barre, PA)-June 26, 2009

Jackson, Kent, “Hazleton loses appeal in $2.5M pension case,” Citizen's Voice, The & Sunday Voice (Wilkes-Barre, PA)-June 24, 2009

Tarone, L. A. “News,” Standard-Speaker (Hazleton, PA)-October 8, 2007

Tarone, L. A. “News,” Standard-Speaker (Hazleton, PA)-February 16, 2005