Oversight board OKs Pittsburgh's 2014 budget

Adhere to the plan, panel warns Peduto

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A state board charged with overseeing Pittsburgh's finances approved the 2014 budget Monday, reiterating some requirements that incoming Mayor-elect Bill Peduto abide by the city's amended recovery plan.

The Intergovernmental Cooperation Authority, whose five members are appointed by the governor and state Legislature, controls the release of the city's gaming revenue and must approve the city's budget annually. The board, which is short a member because former board chair Dana Yealy resigned, gave unanimous approval to a $481 million operating and $52 million capital budget.

The budget that received the ICA's stamp of approval included several amendments from the Peduto administration, which sought to restructure some departments and beef up others. The changes, however, were cost-neutral.

The ICA put conditions on the approval of the budget, including that it must adhere to the blueprint created to get Pittsburgh back on financial track that was created in 2009 as a part of the city's participation in a state program for financially distressed cities called Act 47.

That requirement was spurred by a proposal from Mr. Peduto last month to alter the city's pension law to allow some longtime employees to retire early, a centerpiece of his plan to bring fresh faces into city hall. The foundation-backed initiative will open many jobs to national searches.

But Nick Varischetti, the ICA board chair, objected to the proposal because he believes it violated the amended recovery plan, which prohibited "pension enhancements." Mayor Luke Ravenstahl also threatened to veto the program.

Mr. Peduto's team is now working on an alternative proposal that will involve buyouts, rather than reducing the city's pension requirements, and will introduce it next month. It would give some employees the opportunity to retire and be paid two and a half weeks' worth of salary for every year of service, a benefit that would be capped at a year. This would mean an employee with 20 years of service would get a full year's salary.

The new administration will have until March 31 to further amend the budget, but Kevin Acklin, who will be Mr. Peduto's chief of staff, said he does not anticipate any more budget amendments unless they're required for the buyout program.

Either way, Mr. Acklin pledged to work with both state overseers -- the ICA and the two-member Act 47 team -- to make changes to the budget.

"If we're going to propose amendments, we're going to do so in the spirit of cooperation with ICA and Act 47," he said.

In other business, the ICA released $2.5 million in gaming money that will help bolster the city's pension fund.

Moriah Balingit: mbalingit@post-gazette.com, 412-263-2533 or on Twitter @MoriahBee.

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