Allegheny County controller cites growing debt payments

Some officials say positive trends overlooked

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It's the same headline every year: Allegheny County is deep in debt, stuck with a stunted savings account and still reliant on one-time budget fixes.

And to look at the annual financial report released Thursday by county Controller Chelsa Wagner, 2012 was no different. Debt in the county has risen to $860 million, she reported, and for the first time in at least four years, the county is paying more in loan interest than in principal.

"We can clearly see the trend," Ms. Wagner said at a news conference. "I don't think anyone needs to be an accountant to conclude that it is not a good deal for the taxpayer."

Controller: Growing debt is county's top financial challenge

Allegheny County Controller Chelsa Wagner talked about the challenges posed by growing debt payments. (Video by Nate Guidry; 5/2/2013)

But county leaders say Ms. Wagner overlooks the positive trends shown in her financial report: a savings account that's growing, if still gaunt; a financial rating that has remained respectable; and a commitment from county Executive Rich Fitzgerald to cut out financial foolery that has made ends meet in the past.

Like beauty, a good budget is in the eye of the beholder.

"This is a good story," said Jennifer Liptak, Mr. Fitzgerald's chief of staff. "We're looking at our debt, what our priorities are ... this is a very large government, with a lot of things that need to be maintained."

Allegheny County spent $1.5 billion last year, with nearly 60 percent going to health and welfare services. The county's fortunes rise and fall with federal and state funding, which make up nearly two-thirds of the county's revenue, and stinginess in Harrisburg has prompted paucity on Grant Street.

In her report, Ms. Wagner criticized the lamentable state of the county's fund balance, an accumulation of money carried from one year to the next to pay for unexpected emergencies, which held $12.2 million at the close of 2012. Financial planners say the county should have about $40 million in the account.

That's true, Ms. Liptak said in a news conference Thursday afternoon. But she noted the county doubled the fund balance from a year ago, adding $6 million -- "which is huge," she said.

As for the debt, she and county manager William McKain say this year's spike of nearly $90 million in new borrowing is an aberration, the result of the county squeezing two years' worth of new loans into one. Financial analysts in New York have lauded the county's sensible debt load, they said.

Then again, the two administrators couldn't promise they wouldn't push the debt load higher next year.

"It is a balancing act," Mr. McKain said on debt. "We do have roads and infrastructure to maintain."

If this all sounds familiar, that's because it is. Carnegie Mellon University economics professor Robert Strauss heard the same story of daunting debt and sparse savings from the county all the way back in the late 1970s, when the steel boom began stuttering to a stop.

For his part, he thinks the county's pensions may be in even worse shape than budgeters expect, and he fears Mr. Fitzgerald's crusade against property taxes and the ongoing reassessment may hurt him in the long run.

With positive signs from the budget, Ms. Liptak believes the story is different this time. But Mr. Strauss -- and history -- would advise you to expect the same headline next year.

"We're getting older, and the story doesn't change," he said.

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Andrew McGill: or 412-263-1497. First Published May 2, 2013 4:15 AM


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