Jun 27, 2014 3 min read

Pennsylvania’s auditor general released a report this week raising concerns about Washington’s distressed pension status while also praising city leaders for taking corrective measures to improve its financial situation.

The audit made available to the public Wednesday found Washington’s firefighter pension fund to be “severely distressed” even after city officials implemented an additional 0.15-percent wage tax in 2009 for both residents and people working in the city.

However, Auditor General Eugene DePasquale said the decision to increase the Act 205 earned income tax to 0.635 percent in 2011, along with changes to the firefighter pension age eligibility, have stabilized the situation. He added the city’s overall pension fund was considered “minimally distressed” by the end of last year.

“Unfortunately, nearly half of the municipal pension plans across the state are classified as distressed and, based on our recent audit, Washington City’s plan is among them,” DePasquale said. “However, it appears that city officials are taking decisive steps to address the crippling debt of its distressed employee pension plans.”

DePasquale was in Washington Wednesday to release the audit’s finding and meet with the Observer-Reporter’s editorial board on a variety of topics. He said his office plans to review the city’s most recent pension figures in a subsequent audit to determine what progress it is making to address long-term funding.

Washington Mayor Brenda Davis acknowledged the report but noted it was completed in 2011 and much has changed since then.

“There’s finally some light coming our way in this tunnel,” Davis said. “What we’re doing is working, and we’re keeping a close eye on it.”

She said the contract negotiation with the firefighters union in 2011 led to them pushing back age eligibility requirements for retirement. Firefighters must work 20 years in the department as in previous contracts, but they cannot retire and collect their pension until they turn 53. She did not say if city leaders hope to receive more concessions from both the police and firefighter unions as negotiations are set to begin for their next contracts in 2015.

She said the pension fund has been “consistent” in recent years, but called for state lawmakers to allow third-class cities such as Washington more flexibility in finding sustainable funding. Davis said she hopes the city will be able to remove the wage tax in 2019, about eight years earlier than expected, but likely will need other revenue sources after that time.

“We’re sustaining our obligations and services … but we do need some changes from a higher level than local government,” Davis said.

When the tax was enacted, the city’s pension account was only 63 percent funded. Earlier this year, the account was 70 percent funded, allowing the city pension status to be upgraded from moderately to minimally distressed.