Pittsburgh Mayor Luke Ravenstahl warned Thursday that the city may be headed for tax increases or service cuts because city council failed to heed concerns about what he considers to be holes in the 2011 budget.
The budget was based on increased revenues from the parking authority. However, that money hasn't materialized, and Mr. Ravenstahl said he's concerned about having sufficient funds to run the government for the rest of the year.
He asked council to respond to his concerns in writing by next Friday.
"Without the funds from the parking authority, the council plan will force the city to come up with millions of dollars in tax increases or service cuts," he said in a letter addressed to council President Darlene Harris and Councilman Bill Peduto, the body's finance chairman.
In a statement, Mrs. Harris said that council's budget was approved by the city's state-appointed overseers and that Mr. Ravenstahl won't have to wait until next Friday for a response.
"The mayor and I have a standing meeting every Monday at 3:00, and I look forward to meeting with him," she said.
The debate over the operating budget is an extension of last year's battle over a pension bailout.
Concerned about rate increases that would have been included in the deal, council rejected Mr. Ravenstahl's plan to lease parking garages and meters to investors for 50 years. Under the lease, investors would have been responsible for capital upgrades to parking facilities, and the city would have received upfront revenues of about $450 million -- enough to wipe out parking authority debt, bail out the pension fund and provide money for other projects.
Instead, council passed its own bailout, shifting $735.7 million in parking tax revenue from the operating budget to the pension fund over 31 years. To shore up city finances, council also demanded that the parking authority increase its annual payment in lieu of taxes from $1.3 million last year to $2.6 million this year and about $9 million for 2012. Council intended for the extra money to come from meter and rate increases more modest than those Mr. Ravenstahl proposed in his lease plan.
Mr. Ravenstahl expressed concerns about council's revenue assumptions last year, and his office has renewed the complaints in recent weeks, saying the diversion of parking tax money for the pension fund has hamstrung the city's operating budget and left no money for capital projects this year.
Council members already have blamed potential revenue shortfalls on Mr. Ravenstahl, saying he controls the parking authority board that hasn't yet raised garage rates or otherwise made a move to generate additional funds for the city.
However, in his letter Thursday, Mr. Ravenstahl said council hadn't provided direction on how the authority should try to meet its own obligations while giving extra help to the city.
Joe Smydo: 412-263-1548.