Oversight board likely to reject Pittsburgh's proposed budget

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The state-picked Intergovernmental Cooperation Authority is poised to reject Pittsburgh Mayor Luke Ravenstahl's $453.8 million budget because it doesn't go far enough to cut costs and includes a tuition tax that may not be enforceable, officials said this morning.

The mayor's administration responded that it is cutting costs, and said the ICA hadn't raised concerns in talks even yesterday.

The ICA's five-member board is scheduled to meet at 8:30 a.m. tomorrow and Executive Director Henry Sciortino said he's going to "recommend that they reject the budget and send it back" to the city for what would likely be a six-week scramble to rewrite it before a Dec. 31 deadline.

He was joined at a meeting with the Post-Gazette editorial board this morning by ICA Chair Barbara McNees and board member Matthew Simon. They said the budget presented by Mr. Ravenstahl doesn't take into account millions of dollars in savings that can be had by implementing changed recommended in studies by consultants paid for by the authority on city public safety functions, and by merging the city's financial management system on to Allegheny County's computing platform.

"If you keep the inefficient operations going, and keep feeding them with more money, you're never going to get efficient," said Mr. Simon, former president of Point Park University.

Any tax increases, such as the 1 percent college tuition tax Mr. Ravenstahl has proposed, he said, "have to be something that is legal and that is enforceable."

Authority officials questions whether Mr. Ravenstahl's proposed unique-in-the-nation tax could be implemented, and overcome likely court challenges from colleges and universities, in time to help finance city operations next year.

Mr. Ravenstahl has said the tuition levy could raise $16.2 million, of which $15.2 million would go toward increased payments into the city's ailing pension fund, and $1 million would go to the Carnegie Library of Pittsburgh in return for keeping branches open.

Authority officials said the city really only needs to boost pension contributions by $10 million to comply with a recovery plan passed in June, and it could find that amount through pursuing known savings opportunities, like improving paramedic service billing, ending the outsourcing of payroll functions, collecting fines for fire code violations and making building inspection more efficient.

"This is a year when all of us, organizations and businesses, are balancing our budgets through cost savings," said Ms. McNees. The city should pursue "cost cuts, more efficiencies, more shared services" before raising taxes.

Mr. Ravenstahl's office had no immediate comment.

"We're very surprised to be hearing these concerns today, relative to cost-cutting and efficiencies, as these were never concerns of theirs yesterday or when they gave conditional approval of the budget" in late October, said mayoral spokeswoman Joanna Doven. That's when the ICA gave the budget a tentative approval but asked for details on new revenue sources and progress on accounting software improvements.

"We've continued to cut costs wherever possible," Ms. Doven said, citing a no-new-debt policy and a health insurance deal that shaved $17 million over three years from anticipated costs.

She said the administration is working closely with the ICA on putting the city's accounting on the county's computers, but details of a proposed contract with software firm Oracle "have not yet been worked out to the point where the ICA would recommend that we enter into that agreement."

She said city lawyers believe the tuition tax is enforceable, because state law permits municipalities to place levies on "privileges" like pursuing higher education. "If the ICA has a better idea" for securing the city's financial future, she said, "then we'd love to hear from them."

Pittsburgh Council members seemed divided on how to proceed.

Pittsburgh Council President Doug Shields said it's not council's job to fix the budget Mr. Ravenstahl presented. "Hey, I'm getting ready for Thanksgiving. I hope the mayor's working on his deal."

But Finance Chair William Peduto said he'll write a replacement for what he called the mayor's "illegal plan" to tax tuition. "I'm not waiting for the mayor. I intend to have a budget out this week, and presented to council the next two weeks in resolutions."

If the city does not have a budget that meets the approval of the ICA and the separate, state-appointed Act 47 recovery team by year's end, sanctions including the seizure of some revenue and the withholding of state funds could be invoked.

Rich Lord can be reached at rlord@post-gazette.com or 412-263-1542.


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