Pittsburgh City Council is poised to vote down legal and spending changes required by the Act 47 economic recovery plan and thrust the city's budget situation into new and unexpected chaos.

	Darrell Sapp, Post-Gazette Pittsburgh Councilman William Peduto, seated, listens to comments from Jack Shea, of the Allegheny County Labor Council, on the Act 47 recovery plan. In the background is Councilman Jim Motznik, council's president pro tem. Click photo for larger image.

Without the recovery plan fully in place, it is unclear how the city can balance its 2005 budget, which is at least $77.5 million underfunded, or exactly what taxes it would charge its residents and businesses next year.

The move could also put into limbo the state budget aid approved just 10 days ago to help the city hold off bankruptcy.

The 11th-hour rejection of the plan would be a coup for municipal labor unions, which have lobbied against the deep personnel and spending cuts in the recovery plan for months.

"Do what's right," the president of the city firefighters union, Joe King, told Councilman Doug Shields just after council's meeting yesterday. "You've got to hang in there, buddy."

Shields has long been part of a slim 5-4 majority that has supported the recovery plan, but yesterday he switched sides. He said his opposition stemmed from the Pittsburgh tax reform package the Legislature approved Nov. 21, and that was signed into law by Gov. Ed Rendell yesterday, Shields said the package does not do enough to cure the city's fiscal ills.

The package authorized a $52 yearly occupation tax and a new 0.55 percent business payroll tax. But it kept the 50 percent parking tax in place through 2006; shifted wage taxes to the city from the Pittsburgh Public Schools; barred the city from petitioning for commuter wage taxes for seven years; and did not address the city's long-term debt problems.

Shields said disappointment with that package, not lobbying from labor unions, made him switch. Shields, the longtime chief of staff to former Councilman Bob O'Connor -- a possible mayoral candidate next year -- said his old boss had nothing to do with the switch, either.

	Darrell Sapp, Post-Gazette Pittsburgh Councilman Doug Shields, left, talks with Joe King, president of the Pittsburgh Firefighter's Union, after council President Gene Ricciardi recessed yesterday's meeting. Click photo for larger image.

"I'm not making a political vote here today. I'm making a vote on what I think is right and wrong. This plan is wrong because it's setting the city up for failure and the key issues were never addressed," Shields said.

The governor's office and others in Harrisburg pleaded with Shields to reconsider, saying the spending cuts in the Act 47 plan were essential to fixing the city's budget.

"The governor phoned council members last week, urging them to get behind the spending cuts, and he's again encouraging them to do it," Rendell's spokeswoman Kate Philips said.

"The state held up its part of the bargain by finding new revenue for the city, but unfortunately, five council members won't keep their end of the bargain," said Sen. Sean Logan, D-Monroeville.

Rep. Dan Frankel, D-Squirrel Hill, said the budget package, while not perfect, was the best compromise the city could get.

"It was all predicated on council being responsible and implementing the Act 47 recommendations -- this is a slap in the face at the very hard work we accomplished," Frankel said.

Rep. Tom Stevenson, R-Mt. Lebanon, said, "Right now, City Council is impeding the financial recovery of the city. It's best for them to do the right thing and approve those spending cuts. They should follow through and make them."

If Shields sticks to his guns and council does not implement the rest of the recovery plan, it is unclear how the city will pay its bills next year.

Council can adopt the new occupation and payroll taxes the Legislature approved, but it cannot use them to balance the budget without approval by the city's fiscal oversight board. The board required council to approve the Act 47 cuts and can keep the new funds in escrow until it complies.

"If they want to do that and put us into bankruptcy, they can do that," Shields said of the board.

Board chairman William Lieberman would not comment yesterday, saying he did not want to interfere with council deliberations.

The Legislature also cut city business privilege taxes by two-thirds and eliminated mercantile taxes next year, cutting off $35 million in city tax revenues that were supposed to be replaced by the payroll taxes.

Additionally, Act 47 team co-leader Jim Roberts last week threatened to sanction the city and cut off its state funding if council does not implement the recovery plan.

Act 47 plan supporters, including council members Alan Hertzberg and William Peduto, said the city may be forced to raise property or wage taxes to balance the $425 million budget for next year, though they said they would not support those tax hikes.

Peduto estimated property taxes would have to jump 2.76 mills to fill the new budget hole, which would equal $276 more in taxes on a house valued at $100,000. He said he was "disgusted" with the five council members opposing Act 47 and doubted whether they could balance the budget without it.

"I don't think they know what they're doing," Peduto said.

City Council approved the overall Act 47 recovery plan in June, but still needed to approve some 30 legal changes necessary to implement it. The changes include spending cuts -- such as privatization of the city garage and elimination of the Engineering and Construction Department -- increased fees for swimming pools and ballfields, and the sale of the city asphalt plant.

Council was scheduled to take final action on the Act 47 changes yesterday. Shields was one of five councilmen who voted to tentatively approve the changes last week.

After Shields said he was switching sides, council President Gene Ricciardi used a parliamentary maneuver to hold off a final vote. He recessed the meeting indefinitely.

That gives Ricciardi and other Act 47 supporters, including Rendell and Murphy, a few extra days to lobby Shields or others to change their votes. Besides Shields, the other Act 47 opponents are Len Bodack, Twanda Carlisle, Jim Motznik and Luke Ravenstahl, who largely opposed the plan due to their support of city unions.

"We got to where we are today on the backs of everyday persons," Carlisle said. "I have to support the unions and the people, and not Act 47."

Shields, who joined council in January after working for O'Connor for 10 years, left open the possibility that he could change his mind again, but he made it a tall order.

"Unless somebody comes in here with a whole different plan, dispatched by the state, I don't see me changing a vote," he said.