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Mayor urges council to accept recovery plan
Ravenstahl: rejection would lead to 'chaos'
Thursday, June 18, 2009

Pittsburgh Mayor Luke Ravenstahl asked City Council to unite behind a painful fiscal recovery plan yesterday, avoiding what had seemed a sure no vote.

He also made it clear that if his plan to lease parking garages to raise pension funds is thwarted, and Harrisburg doesn't expand the city's taxing power, a series of painful options may kick in, potentially including surcharges on parking garages, hospital beds or students.

He sought to take one option off of the table, even though it is the "fail-safe option" in the plan crafted by state-paid lawyers and accountants under Act 47 for distressed municipalities.

"I will not raise any tax that will solely be levied on this city's residents," he said. He does support boosting the $52-a-year tax on people who work in the city -- whether they live there or not -- to $145.

Until yesterday, the mayor hadn't fully endorsed the 300-page plan crafted by the team that has watched over city spending since 2004. He urged council to follow him.

"City Council has a responsibility now to stand up, to make a tough vote, to make a tough decision, and to really continue the financial recovery of the city," he said. Rejection "would really put this city, as far as I see it, into chaos."

Council was poised to reject the plan on a tentative vote, for fear of tax hikes and wage caps. But after talking about it for six hours, council voted to postpone its first vote until Wednesday.

The administration and the Act 47 team want the plan passed by June 30. Otherwise, the mayor said, the state could withhold millions of dollars in aid, freeze employee wages for two years, or just quit controlling city finances, allowing budget-busting police and fire union contract awards.

Even with the plan, there could be much pain, thanks to forced 1-percent-a-year spending cuts and a compulsory $10 million to $14 million boost in the city's contribution to its two-thirds-empty pension fund. Fail to find the money for the pensions, and the plan would force a tax hike.

That's what Mr. Ravenstahl wants to avoid by leasing the Pittsburgh Parking Authority's garages to a private operator for decades. A consultant is studying the feasibility of a lease.

"It's getting more and more real to me as we continue to look at these difficult issues," Mr. Ravenstahl said. Though the analysis isn't done, he thinks it could bring in "hundreds of millions of dollars" to the pension fund over years.

He said council members who are skeptical about privatizing the garages will have a choice: "Either you're going to monetize parking garages, which is what I support, or you are then going to be compelled to raise property taxes."

Mr. Ravenstahl would like state approval to boost the $52 levy, or expand a payroll tax on for-profit businesses to include hospitals and universities, but that would require General Assembly approval. "Harrisburg is not likely to do what we'd like them to do," warned city Controller Michael Lamb.

The mayor unveiled yet another set of options. One is a $10 million boost in the water rates charged to big tax-exempt institutions, which already pay higher rates than others.

Another is a $5 charge on all-day parkers, most of whom are believed to be suburbanites, which could yield $10 million. A $25 fee on hospital admissions could net $5 million. A $50-per-semester college student fee could bring in $3 million.

"There's a school of thought that we're already able to charge these as user fees," said Finance Director Scott Kunka.

Mr. Ravenstahl made the case that council must approve the plan by June 30, the eve of the first salvos in the six-month arbitration process with police and fire unions.

International Association of Fire Fighters Local 1 President Joe King argued that there is "not a time limit placed upon you to pass this ordinance."

"Why are they pushing so hard to extend it beyond June 30?" Mr. Ravenstahl asked. "Because it puts them, and their bargaining position, in a much stronger position" because their contracts might not be capped by a plan passed after arbitration starts.

Several council members are worried that the Police Bureau could lose talented employees if raises are capped at a $1,000 bonus next year, then 2 to 3 percent thereafter, as the plan says.

Mr. Ravenstahl said he wished he could do more for city workers -- and expected to pay a price. "I have had lifelong friends that have threatened me because of my support for this plan, that they'll never support me again, politically."

Mr. Lamb said the plan could be amended to allow higher raises in return for bigger employee contributions to the pension fund.

Council members seemed keen on rewriting the plan, but Mr. Ravenstahl warned them that they might be headed down a "slippery slope. ... You're going to have 10 things you want, so is he, so is she."

Council appears intent, though, on crafting a slew of changes and filtering them through its Finance Chair William Peduto. Members could seek guarantees of state help, elimination of work rule changes that irk unions, and softening of pay caps.

"We will have an amended plan to you by the end of next week," Mr. Peduto told the Act 47 team co-leaders James Roberts and Dean Kaplan. The two can reject any changes.

Members had been bitter because they believed the mayor was trying to make them take the political heat for the plan, and last week criticized him while he vacationed in North Carolina. He gave it back, asking whether they'd cancel their usual multi-week August recess.

"I think that council is faced with a tough decision," Mr. Ravenstahl said after leaving the meeting. "They're looking for, perhaps, scapegoats or excuses. My appearance, or lack thereof, last week was an excuse. They don't have that excuse anymore."

Rich Lord can be reached at rlord@post-gazette.com or 412-263-1542.
First published on June 18, 2009 at 12:00 am
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