City Council gives preliminary approval to a new five-year financial recovery plan

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Pittsburgh City Council gave preliminary approval to a new five-year financial recovery plan Wednesday, but members stressed that endorsing the plan doesn‘‍t commit the city to following through with the property tax increase it recommends.

The plan, which is required because the city operates as a financially distressed municipality under the state’‍s Act 47, projects the city could face a budget deficit of $21 million by 2018. The plan’s authors say one reason for the financial shortfall is that the city cut taxes too much in 2013 after the countywide property reassessment, and one way to eliminate that deficit would be to restore part of the property tax millage.

Council gave preliminary approval to the recovery plan on a 7-0 vote after members added 17 amendments to it, most of them money-saving ideas for the city to look at. Councilwomen Theresa Kail-Smith and Darlene Harris abstained until the Act 47 staff reviews the amendments.

In addition to the revenue shortfall that the tax cut created, the five-year plan said pension costs for the city will increase substantially.

The plan also recommends bond issues of $25 million each in 2015 and 2017 to help the city make long-delayed capital improvements to roads, bridges and buildings.

Councilwoman Natalia Rudiak, chairwoman of the finance committee, said council will continue to work closely with the administration of Mayor Bill Peduto to review ways to cut costs or increase revenue. She stressed there remains “lots of work to be done” before the city adopts a budget at the end of the year.

“This commits us to dealing with these problems,” she said after the meeting.

Approving the five-year plan doesn’‍t automatically commit the city to raising taxes to plug the gap.

“We absolutely have to close the gap, and [the five-year plan] provides us steps to do that,” she said. “Raising taxes is still a possibility. It’s clearly on the table, but it’‍s one option.”

Other council members said the hope is to find alternatives to increasing taxes.

“[A tax increase] is in the preliminary plan, but that doesn’t mean it will be in the final plan,” Ms. Kail-Smith said.

Councilman Dan Gilman, who was on the council staff of Mr. Peduto before his election as mayor, said the city had adopted “about 20 percent” of the two previous five-year plans.

“The hope is we can find other ways for revenue enhancements,” he said. “The bottom line is we have to pass a balanced budget by the end of the year, and we will do that. But we still have options we can use to get there.”

The amendments council added to the plan Wednesday included items such as studying whether the city should go back to operating its own asphalt plant; whether delinquent taxes should be collected internally or by a private contractor; and whether the city should establish a public safety complex for training and administrative offices rather than having them scattered throughout the city. The amendments also require the city to begin accepting credit cards for all payments and develop a regular street-sweeping plan.

The plan is scheduled for a final vote Tuesday.

Ed Blazina: or 412-263-1470. First Published June 18, 2014 12:00 AM

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