State should re­move city from fis­cal over­sight, Pe­duto says

Pittsburgh Post-Gazette - - Front page - By Adam Smeltz

Pitts­burgh has cut the city work­force, over­hauled its fi­nan­cial prac­tices and swung to a bud­get sur­plus.

Now it’s time for the city to exit the state over­sight that be­gan in 2004, Mayor Bill Pe­duto said Mon­day, an­nounc­ing that he would seek to end Pitts­burgh’s distressed sta­tus a year ahead of sched­ule.

De­part­ing the Act 47 pro­gram hinges on whether City Coun­cil will so­lid­ify sev­eral fis­cal re­forms for the long haul, such as care­ful debt man­age­ment and caps on pen­sion en­hance­ments, Mr. Pe­duto said in his an­nual bud­get ad­dress. He also high­lighted hopes to col­lab­o­rate with UPMC, High­mark and ma­jor uni­ver­si­ties on af­ford­able hous­ing and other pri­or­i­ties.

“If we’re go­ing to get out of

Act 47, there is no Act 48. So we don’t want to see the fail­ures of our past be­come pat­terns in our fu­ture,” Mr. Pe­duto said later. He ad­vo­cated cod­i­fy­ing prac­tices to “guar­an­tee that the city’s fi­nances will be more than just sus­tain­able, that they’ll be strong through 2030.”

Pitts­burgh was fac­ing a nearly $100 mil­lion struc­tural deficit in 2003 when Mr. Pe­duto, then a coun­cil mem­ber, sug­gested ex­plor­ing the state’s Act 47 pro­gram for distressed mu­nic­i­pal­i­ties. Although the prospect di­vided coun­cil, the city ul­ti­mately agreed to an eco­nomic re­cov­ery plan un­der the pro­gram.

The city work­force has since shrunk 26 per­cent amid a va­ri­ety of belt-tight­en­ing mea­sures. State over­sight pro­vi­sions fea­ture the In­ter­gov­ern­men­tal Co­op­er­a­tion Au­thor­ity, a mon­i­tor­ing body that can over­rule city bud­get pro­pos­als.

Re­mov­ing the city from Act 47 would dis­solve that out­side con­trol. In a let­ter Mon­day to Gov. Tom Wolf and Den­nis Davin, the state sec­re­tary of com­mu­nity and eco­nomic de­vel­op­ment, Mr. Pe­duto said end­ing the distressed sta­tus would be con­di­tional on coun­cil’s amend­ing the city code with the new fi­nan­cial safe­guards.

“There is lit­tle doubt that Pitts­burgh has trans­formed its gov­ern­ment and in­sti­tu­tions in many great ways, in­clud­ing fi­nan­cially,” Wolf spokesman J.J. Ab­bott said in a state­ment. He said Mr. Davin would work with the city through Act 47 pro­cesses.

The next step is a pub­lic hear­ing, find­ings from which will go be­fore Mr. Davin, DCED spokesman David M. Smith said. At that point, he said, Mr. Davin will have 60 days to make a de­ci­sion on the city’s re­quest.

As of Mon­day, a hear­ing had yet to be sched­uled. City Coun­cil­woman Natalia Ru­diak called it nec­es­sary to en­shrine the pro­posed safe­guards, which in­clude stan­dards for fund balances and re­al­is­tic rev­enue pro­jec­tions.

“These are best prac­tices that we have learned through the Act 47 process,” said Ms. Ru­diak, who chairs the coun­cil fi­nance com­mit­tee. She wants to see a coun­cil vote on the pro­vi­sions this year, she said.

Most were a col­lab­o­ra­tive ef­fort be­tween coun­cil and the Pe­duto ad­min­is­tra­tion, “although [that de­tail] was not men­tioned in the mayor’s ad­dress and prob­a­bly should have been men­tioned,” Ms. Ru­diak said.

Leav­ing Act 47 would al­low city lead­ers more in­flu­ence over bud­get pri­or­i­ties. The change also would show “that we are able to re­spon­si­bly man­age the city’s fi­nances our­selves as lead­ers and pub­lic of­fi­cials rather than hav­ing every­thing re­quired of us,” said Sam Ash­baugh, the chief fi­nan­cial of­fi­cer.

It would “demon­strate to not only the city tax­pay­ers but Wall Street and in­vestors — and peo­ple look­ing to move to the City of Pitts­burgh — that we are re­spon­si­ble stew­ards of tax­pay­ers’ funds,” Mr. Ash­baugh said. “It also helps us when we go out to mar­ket to is­sue bonds over the next few years.”

In the mean­time, Mr. Pe­duto urged coun­cil to pass leg­is­la­tion this year to gen­er­ate new rev­enue for prekinder­garten ed­u­ca­tion and af­ford­able hous­ing. Coun­cil is wrestling with fund­ing op­tions after a pro­posed in­crease in the re­alty trans­fer tax drew op­po­si­tion.

A city com­mit­ment to those causes — to “show that we’re in the game” — should help at­tract money from other or­ga­ni­za­tions for such crit­i­cal needs, Mr. Pe­duto said. He’s pur­su­ing UPMC, High­mark, Carnegie Mel­lon Uni­ver­sity and the Uni­ver­sity of Pitts­burgh to build an or­ga­ni­za­tion­ad­dress­ing dis­par­i­ties, in­equities and “lost op­por­tu­nity”in the city, he said.

Mr.Pe­duto cited hopes for a 10-year com­mit­ment but did not an­nounce a dol­lar fig­ure. Back­ing from the “Big Four” non­profit health and aca­demic or­ga­ni­za­tions should pro­mote sup­port from ad­di­tional en­ti­ties, he said. Or­ga­ni­za­tions in­clud­ing High­mark and UPMC is­sued brief state­ments af­firm­ing their in­ter­est.

“Mr. Pe­duto knows he has UPMC’s sup­port and can count on our fullest pos­si­ble par­tic­i­pa­tion for a so­lu­tion that is fair and eq­ui­table and in­cludes the other large non­prof­its,” UPMC spokesman Paul Wood said.

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