Pittsburgh mayor warns of stark budget times

City continues to work on 5-year recovery plan

In an ominous financial address Tuesday, Mayor Bill Peduto attempted to drive home what he believes to be the gravity of the city's financial problems, saying it's falling $60 million short of what's required to keep up with its capital, operational and pension needs while it's projected to collect less in property tax revenue than anticipated.

"It's vastly different from what we've been told," he said before city council. "There have been certainly times when we've looked at the problems we've faced and we've looked at it through the lens of politics instead of looking at it through the lens of reality."

Mr. Peduto's address comes as the city continues work on its next five-year financial recovery plan, a blueprint intended to further stabilize the city's finances. It's required to produce the plan because it's under financial oversight through the state Act 47 program for financially distressed municipalities.

Gov. Tom Corbett said earlier this year that the city would remain in the program for the time being, an announcement that followed months of lobbying by Mr. Peduto, who believed the city was not ready to be free of oversight.

City council must approve the plan and is expected to begin work on it soon.

The mayor hearkened back to a decade ago, when as a council member he voted to put the city in Act 47, a move that portended massive personnel cuts, the permanent shuttering of some city pools and an overall downsizing of city government. The city has made great strides since 2003, when it operated hand-to-mouth with barely enough cash to pay the bills.

Under the administration of Mayor Luke Ravenstahl, it ran operational surpluses but also underinvested in capital needs -- such as roads, bridges and buildings -- to keep the city in financial check.

Mr. Peduto claimed the previous administration used "smoke and mirrors" to paint a rosy picture of the city budget. It understaffed some departments and included a $2 million line item of state funds that did not exist after 2006.

Further strain came to the budget in the last year. Following a county wide reassessment that raised the assessed values of city properties, the previous mayor dropped the tax rate to compensate in an effort to keep tax revenue roughly the same. But the city ended up collecting less than it projected, a difference that was made up because other tax revenues performed better than expected.

The city's required pension payments also will rise next year, a consequence of a change made by the outgoing pension board in December.

Act 47 co-coordinators Dean Kaplan and Jim Roberts said Mr. Peduto's decision to hire more police officers also will be costly.

"They're looking to put more cops on the streets," Mr. Kaplan said. "None of these are bad public policy objectives."

"They're just expensive," Mr. Roberts said.

The mayor declined to give many details of what he would like to see in the Act 47 plan, using the opportunity instead to drive home the gravity of the problem. He hinted service cuts may be a necessity and said he wants to avoid raising taxes.

"We've already maxed out those credit cards," he said in a news conference following the speech.

But he said the city will fix it "the Pittsburgh way."

"We address things head on. We don't hide things under the carpet," he said. "We address them under light and we address them in a way that the community has a voice."

There was sparse turnout, however, at a meeting hosted by the coordinators that was intended to elicit input from the public about how the city should move forward. Only about 15 people attended, and when the pair finished their presentation and opened the floor to comment, no one stepped up to comment. The meeting started at the same time the puck dropped for the final game of the second-round playoff series between the Penguins and the Rangers, thinning the crowd.

The mayor's message was met with agreement in some corners and skepticism in others.

Ralph Sicuro, vice president of the union representing Pittsburgh firefighters, suggested the mayor may be posturing as the city heads into negotiations with his union and the police union this year. The firefighters union sued the mayor and the governor earlier this year, saying the city was improperly kept under Act 47.

"The fact that there's a deficit on the verge of the two biggest contract negotiations? It could be a coincidence," he said.

Mayoral spokesman Tim McNulty responded by saying the numbers presented by the mayor are "unassailable."

"It won't be easy, but everyone needs to take part in saving Pittsburgh," he said.

Moriah Balingit: 412-263-2533. First Published May 13, 2014 12:05 PM

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