Peduto pushes for Pennsylvania cities to unite

Coalition of leaders would deal with financial struggles

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The political equivalent of 120 messages in bottles left Pittsburgh Council Finance Chair William Peduto's office last week.

Mr. Peduto on Wednesday sent letters to top officials at every other city in the state saying, basically, that they'd better unite their municipal islands against a rising tide of red ink.

"We need statewide reform and we need it now," he wrote to mayors, council presidents, and some top finance officials. "The future of your city will be contingent on tax reform, pension reform, and health care reform. ... [W]e need to be unified to create a new agenda for older communities throughout Pennsylvania."

The timing was driven by politics. "It has to be this year, because this year is the governor's race, and there needs to be an urban agenda on the table for these candidates to discuss," he said in an interview.

The reception seemed positive.

"I was very impressed and very pleased," said W. Michael Donovan, Allentown council's finance chair. "Maybe there needs to be health care purchasing that [would] be done statewide."

"If there was some type of a coalition," said Scott Andrejchak, finance director of Clairton, "we would probably want to look strongly at joining."

Pittsburgh's financial struggles are well known, from its layoffs in 2003 to its Act 47 distress plans to last year's failed bid at a tuition tax to fund pensions.

Though there's now money in the bank, big problems remain, and some have gotten worse. Whereas 28 percent of the budget was devoured by pension, health insurance and workers' compensation costs in 2005, next year that's projected to be 32 percent -- fully $143 million out of $447 million in total spending.

The city's ability to raise money is constrained by state law, and Mayor Luke Ravenstahl is building a coalition of local leaders that may make the case in Harrisburg for tax changes.

Mr. Ravenstahl said Friday that he hadn't read Mr. Peduto's letter, "but I support that approach, and it's one that I think will be necessary in order for us to be successful."

"While we didn't send a letter, per se, we've been doing that sort of outreach and work for the past couple of years," especially on pension issues, he said.

The terrible trio of stagnant revenue, unfunded pension obligations and rising health insurance premiums identified in Mr. Peduto's letter affects cities differently.

Mr. Andrejchak said that while Clairton has developed a well-funded pension plan since it went into distressed status 22 years ago, it struggles with declining revenue and health insurance bills that rise 15 percent a year "if you're lucky."

The northwestern city of Franklin is fiscally stable, said its Finance Director Cheryl Carson, but the health insurance bill "went up 26 percent this year, so that hurts."

Allentown's revenue has wilted during the recession, and its pension fund "dropped precipitously" when the stock market fell, said Mr. Donovan.

Nearby Bethlehem has stayed "in a pretty good financial position," said its council Finance Chair William Reynolds, but pension and health insurance costs are eating into its finances. "I personally share a lot of concerns that other cities do as far as finding other ways to share the burden, especially with some of our newer, wealthier townships" that surround the city, he said.

Mr. Reynolds applauded efforts of the Pennsylvania League of Cities & Municipalities to advance the urban cause in Harrisburg, but said its message hasn't been heeded. Legislators have "been less than willing to try to consider some of their ideas," he said. "A lot of them represent a lot of the residents ... that work in cities, but live outside in the suburbs" and don't want to be taxed to solve urban problems.

Mr. Ravenstahl is trying to work with neighboring suburbs, heading the Congress of Neighboring Communities, or CONNECT, a fledgling organization of the city and some three dozen municipalities that may take its priorities to Harrisburg. Council is due to vote this week to seek state funding for CONNECT.

Mr. Peduto, meanwhile, wants to "get 20 to 30 local, elected officials from around the state" to start building an agenda. He'd try to build the ranks from there, find shared problems and mutually agreeable solutions, and talk statewide strategy.

"I've been in city hall for too long not to realize that the problem is not getting any better," he said. "We've got to work together if we're going to solve this."

Rich Lord: or 412-263-1542.


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