Pittsburgh wants release from financial oversight

Share with others:

Print Email Read Later

Pittsburgh's Act 47 team has moved to close a turbulent chapter in the city's history, saying the city has made enough financial progress to warrant at least partial release from about eight years of state oversight.

Pittsburgh would lose its designation as a financially distressed city -- and shed one of its two oversight boards -- if the state concurs with the recommendations of Act 47 coordinators Jim Roberts and Dean Kaplan.

The two asked the Department of Community and Economic Development to pull the plug on their work because of progress the city has made with cash flow, legacy pension and health care costs, debt, capital planning and its credit rating.

"After weathering a deep recession while preserving its operating balance and reserves, the financial outlook for the city of Pittsburgh is positive," the coordinators said in a letter to DCED Secretary C. Alan Walker.

Release from Act 47 would be a huge political victory for Mayor Luke Ravenstahl, who faces reelection next year and has argued that the city has earned the right to go its own way.

"We couldn't be more excited and pleased," Mr. Ravenstahl said of the coordinators' recommendation. He called the financially distressed label a "dark cloud" hanging over a city that's progressing on many fronts.

Even if Pittsburgh becomes the seventh municipality to emerge from Act 47, the 25-year-old law intended to help financially troubled communities, the city would continue dealing with another oversight board. So far, there has been no move to dismantle the five-member Intergovernmental Cooperation Authority.

"One step at a time," Mr. Ravenstahl said.

The coordinators' recommendation is the first step in removing the city from Act 47. DCED will hold a public hearing on the recommendation -- likely this month -- and then Mr. Walker will render a decision.

Release from Act 47 would signal Pittsburgh's vitality, reassure investors and restore the city's collective-bargaining prerogatives. Since 2004, Act 47 has limited compensation to union workers.

The coordinators' recommendation drew a mixed reaction at city hall.

"The mayor, the council, the Act 47 coordinators, along with the ICA, all worked cooperatively to create this moment of success for the city," said Councilman Ricky Burgess, chairman of the finance and law committee and a mayoral ally.

Controller Michael Lamb, a likely challenger to Mr. Ravenstahl next year, contends that the city's financial position isn't as rosy as the coordinators portrayed. For example, he said the city has not yet developed a plan for long-term solvency of the pension fund or adequately dealt with growing operating expenditures.

Together, he said, the Act 47 team and ICA have kept the city on financial track. If one of those safeguards is removed, he said, the city may suffer.

"I believe this administration can use all the oversight it can get," said Mr. Lamb, who has criticized Mr. Ravenstahl's budgets and pointed out problems at the Bureau of Building Inspection, Equal Opportunity Review Commission and other departments.

Mayoral spokeswoman Joanna Doven said Mr. Lamb's comments were a disservice to those who have worked diligently to shore up city finances. She said credit goes to Gov. Tom Corbett, former Gov. Ed Rendell, state lawmakers, the state-appointed overseers and "our hard-working employees, who have shared and adopted Mayor Ravenstahl's vision of a financially secure city through tough decisions and good management practices."

Another prospective mayoral candidate, Councilman Bill Peduto, said he was surprised with the coordinators' recommendation and disagreed with it.

"It's a precarious time to rush to this decision," he said.

While an effort to remove the city from oversight was expected this fall, conventional wisdom held that Mr. Ravenstahl or a friendly council member would lead the charge.

Mr. Ravenstahl said the coordinators' recommendation is "third-party validation" of the city's stewardship. In an interview, Mr. Roberts said he and Mr. Kaplan made the recommendation independently, not at the request of city officials.

The city entered Act 47 in December 2003 amid deep financial problems that caused layoffs, budget cuts and the closing of pools and recreation centers. In 2004, the state created the ICA, partly to prevent the city from easing its financial crunch by enacting commuter tax.

The groups have had complementary roles. The Act 47 team monitors the city's compliance with its amended recovery plan, which city leaders adopted in 2009. The authority approves city budgets and must sign off any time the mayor or city council propose significant budget variations.

Both groups have prodded the city to address legacy costs, improve capital costs and enact a new financial management system.

Mr. Roberts and Dana Yealy, chairman of the ICA, agreed that the city still has much to do to. That is why, Mr. Yealy said in a statement, the ICA and city must continue their partnership for now.


Joe Smydo: jsmydo@post-gazette.com or 412-263-1548.


You have 2 remaining free articles this month

Try unlimited digital access

If you are an existing subscriber,
link your account for free access. Start here

You’ve reached the limit of free articles this month.

To continue unlimited reading

If you are an existing subscriber,
link your account for free access. Start here