Pension fund drove Prichard to bankruptcy

PRICHARD'S SECOND bank-

ruptcy filing in 10 years was inevitable.

For starters, the municipality faces an overwhelming and on-

going crisis in its pension fund. Also, sales tax revenue is down about 8 percent and the recession has hit Prichard's government hard.

Unlike Prichard's bankruptcy filing in 1999, systemic corruption and misconduct in city government are not an issue this time. Indeed, just a couple of years ago, Prichard Mayor Ron Davis and city officials were being praised for getting the city out of bankruptcy sooner than its recovery plan had called for.

But today, Prichard can't pay its pensioners. The city also has cut important public services such as the municipal jail and library operations. Occasionally, trash builds up in the streets because the city's reduced workforce falls behind in collecting it.

The bankruptcy is a sad development for the people whose retirement checks have been cut off, the citizens who are seeing services reduced and the elected leaders who worked so hard to bring Prichard back. Nevertheless, the filing was necessary.

The city's biggest problem is the pension fund. Attorneys representing Prichard say the fund takes in $35,000 in each month in contributions, but must pay $160,000 to current retirees. When the stock market was booming, higher investment earnings helped make up the difference. The city has put extra money in, but can't afford to do that any longer.

As with so much else that's wrong with Alabama, the Legislature has too much power over Prichard's affairs. The pension fund is covered by state law, which limits what city officials can do to deal with the shortfall.

Mayor Davis says the law governing the fund was amended some 15 times during the 1960s and 1970s, always at the expense of the municipal government. Now, attorneys say $16.5 million is needed to balance the fund.

In bankruptcy, pensioners likely will receive no checks or reduced checks, and Prichard will again deal with the negative publicity and stigma that comes with another filing.

In the long term, things should get better for the city as the economy improves. And, too, a proposed motorsports park could provide jobs and a stronger tax base for the area.

Regardless, the pension fund must be restructured, and that will be difficult with so much control placed with the Legislature by Alabama's 1901 Constitution. Here again is an example of why constitutional reform is so badly needed — because it hurts ordinary citizens right along with local governments.