Stay in Act 47
Preserve the city’s progress by keeping oversight
The city has bounced back admirably since 2003, when a financial crisis forced layoffs, the shuttering of pools and recreation centers, and the city’s entry into state financial oversight. Now, Mayor Bill Peduto wants the special scrutiny to end. While the lifting of oversight may provide a psychological boost, the discipline provided by the program is still needed.
As a city councilman, Mr. Peduto pushed for the city’s entry into oversight. As recently as May 2014, five months after becoming mayor, he continued to describe the city’s financial situation as precarious and wrote a plan for maintaining oversight for five more years. There is no reason to leave now. The city’s financial health has improved under Mr. Peduto, but as any doctor will tell you, patients need to continue taking their medicine even after they start to feel better.
Much remains uncertain. Mr. Peduto acknowledged as much in his budget address Monday, saying the 10 percent annual fund balances “are still significantly below” the 16.7 percent recommended by the Government Finance Officers Association. The city continues to catch up on infrastructure needs — street paving and building maintenance, among other items — predating Mr. Peduto’s tenure as mayor.
An overhaul of the Pittsburgh Water and Sewer Authority also looms. Will the city be on the hook for any infrastructure costs? At the very least, the city can expect to pay more for water as the PWSA begins to install meters and keep better track of how much it provides the city. According to one estimate, accurate billing of the city could yield the PWSA an extra $3.5 million annually.
There are other concerns, too. The city still has no plan to collect payments in lieu of taxes from nonprofits, the last agreement having expired in 2014. The failure to negotiate a new agreement is one of the administration’s biggest shortcomings, though chief of staff Kevin Acklin said in an email that the mayor continues seeking a “partnership that reflects the substantial investment capacity of our nonprofits, universities, foundations and hospitals to pursue our common goals beyond the city’s budget.”
Mr. Peduto has talked about involving the Big Four nonprofits — Highmark, UPMC, Carnegie Mellon University and the University of Pittsburgh — in new human-service initiatives but there’s nothing written in stone. His interest in expanding the city’s leadership into areas such as prekindergarten and affordable housing poses new financial considerations.
While the size of the city’s workforce has shrunk 26 percent since 2003, the city has been hiring police, firefighters, building inspectors and other employees during Mr. Peduto’s tenure. Oversight has provided caps on worker pay and benefits; that’s still a helpful management tool.
The city’s penson fund has come a long way since December 2010, when the city approved an emergency bailout using 30 years of parking tax revenue. In 2018, according to Controller Michael Lamb, the city is poised to put more into the fund than it will take out — a huge accomplishment. The pension plans are 60 percent funded, thanks to higher annual pay-ins and strong market performance. But there’s still a sizable unfunded liability that needs to be monitored.
Mr. Peduto said the end of oversight should be accompanied by city council’s agreement to cap pension enhancements, maintain fund balances and limit debt. The city should embrace those reforms — while remaining in oversight. Progress made can be lost again, as Mr. Peduto noted Monday, and another financial disaster could result in a clamor for a new form of government.
There are those who may think Amazon, which is vetting proposals from Pittsburgh and 237 other cities vying for the company’s second headquarters, would prefer a city without financial chaperones. But if Amazon chooses Pittsburgh, those chaperones — or think of them as friendly uncles or trust officers — would provide stability for the company’s multibillion-dollar investment.
The mayor may find a chorus of supporters for exiting oversight; Mr. Lamb said he’s supported the city’s removal from the program for five years. But the time isn’t yet right. This is not about knocking Mr. Peduto’s stewardship. It’s about making sure the state has his back as he continues trying to move the city forward.