Financial overseer, Pittsburgh settle $18.2 million worth of old differences
August 17, 2016 12:10 AM
Pittsburgh Finance Director Paul Leger (left) talks with interim ICA director Renny Clark in city council chambers Tuesday during a meeting to approve an agreement to settle a lawsuit through transfer of $18.2 million to the city.
A bitter, years-long dispute between Pittsburgh and its state-appointed financial overseer over millions of dollars slated for the city’s pension fund led to a lawsuit and a lot hard feelings.
But a settlement approved Tuesday that frees up more than $18 million from the Pittsburgh Intergovernmental Cooperation Authority for the city’s retirement account ended the lawsuit and, officials hope, will be a turning point in the relationship.
“Our goal is to collaborate with the city,” said ICA chairwoman B.J. Leber. “I think this gives us the opportunity to strengthen the city’s finances.”
The ICA board approved the settlement that will distribute about $18.2 million in gaming funds to the city in two payments: the first, a $7 million deposit to the city’s General Fund; the second, an $11.2 million payment to the city’s comprehensive pension fund. The money is to be released within 10 business days.
The city in July 2015 sued the ICA to force the release of casino-related revenue the authority received for distribution but instead withheld. The ICA releases the gambling money, about $10 million a year, to help the city to reduce its debt or stabilize its pension funds, or for any other purpose the ICA deems to be in the city’s best interests.
The ICA’s disbursements varied wildly over recent years, from a low of $635,130 one year to a high, during the 2013-14 fiscal year, of $15.7 million, according to audits.
“It’s been an awful long struggle, and it is vindication of the taxpayers that they got the money that was due to them,” said city finance director Paul Leger.
The ICA board approved the settlement by a 3-1 vote, with Michael Danovitz as the lone board member in opposition. Board member Nicholas Varischetti was absent. Voting in favor were Ms. Leber, Paul Harper and Esther Barazzone.
There was little discussion before the settlement was passed.
Mr. Danovitz told the board he was in opposition because, “This settlement does not address the deficient funding in the pension fund at all. I believe that ... funding upwards of $46 million per year needs to be addressed as part of any settlement, and until it’s addressed I’ll continue to vote no on this issue.”
Ms. Leber said she agreed that the money being released in the settlement wasn’t enough to fix all of the issues with the pension fund, but it was a start.
“I think it’s important to have the money to get to the city,” she said. “We felt the decision made today was the best use of those dollars.”
The ICA was created in 2004 by the state Legislature to keep tabs on the city’s finances as it entered the Act 47 program for distressed municipalities. The authority has exclusive control over money the city receives for hosting Rivers Casino.
The ICA under former executive director Henry Sciortino had sparred with the city over implementation of a new payroll system. This year investigators have been reviewing Mr. Sciortino’s handling of public funds and disclosures during his 12-year tenure. Under Ms. Leber and new executive director G. Reynolds “Renny” Clark, relations have improved.
“With the approval of this settlement agreement, the ICA, the city and the Act 47 team are now able to move forward in a cooperative manner with the shared focus of bringing the city back to a solid financial position,” Mr. Clark said in a statement.
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