State should remove city from fiscal oversight, Peduto says
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.