Ravenstahl's budget for 2012 contains no tax hikes nor layoffs

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Mayor Luke Ravenstahl on Thursday said his 2012 budget will include no tax increases and no layoffs, while maintaining current service levels and providing funds to cover city council's pension bailout.

Mr. Ravenstahl said he'll also allow for the possibility of floating a bond issue next year so the city could invest more money in paving and other capital projects.

"It's a good budget. It's a solid budget," Mr. Ravenstahl said.

The city received welcome budget news Thursday. It's receiving $26 million in pension aid from the state this year, not $16 million as expected, city Controller Michael Lamb said.

Officials weren't sure why the city and other municipalities were getting extra money this year.

The state provides the aid to reimburse at least a portion of municipalities' pension costs. The additional aid frees up $10 million in city money that officials can save, spend on general purposes or sink into the pension fund.

Mr. Ravenstahl will deliver his 2012 budget to the Intergovernmental Cooperation Authority, a state-appointed financial oversight board, today. Overseers and city council must approve the budget by year's end.

The city has not increased taxes during Mr. Ravenstahl's five-year tenure. He's never proposed an increase in real-estate taxes. He proposed a tax on university students at one point but withdrew the proposal.

Mr. Ravenstahl has prided himself on incurring no new debt while paying down debt the city incurred under other mayors. He said that stewardship now would allow the city to borrow money without unduly adding to its debt load.

Mr. Ravenstahl's advisers and council members quarreled this year over how much money was available for capital projects. The mayor's office said council's pension bailout left little money for capital work -- and that some of council's neighborhood projects had to be put on hold as a result.

The bailout uses more than $735 million in parking tax money over 31 years, including about $13.4 million this year and in 2012. Council has been demanding that the parking authority turn over more meter revenue to the city to help offset parking tax money diverted for the pension bailout.

The parking authority traditionally gives the city a $1.3 million subsidy. After increasing parking meter rates, council demanded that the authority turn over $2.6 million this year and $9.3 million in 2012 and annually thereafter.

The authority, so far, has refused to cooperate, and council has worried about filling a hole in next year's budget. But Mr. Ravenstahl said he has a plan.

"From our perspective, there really isn't a hole," he said, noting that the pension bailout boosted the fund's solvency level from 29.3 percent to 62 percent and at the same time potentially reduced the size of the regular, annual cash payments that the city must make to the fund in coming years. The city contributed about $58 million to the fund last year and will contribute about $63 million, including the parking tax portion, this year.

City Councilman Bill Peduto, the body's finance chairman, said he doesn't want the city to reduce the size of those regular annual payments, even if it's able to do so. He said reducing the payments would risk letting the fund's solvency level slip again.

Also, regardless of how Mr. Ravenstahl plans to offset diversion of the parking tax revenue, Mr. Peduto said, he wants the parking authority to turn over additional meter revenue to the city.

Joe Smydo: jsmydo@post-gazette.com or 412-263-1548.


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