Thursday, November 29, 2007
City Moves to Get Out of Act 47
In a 6-1 vote, City Council passed a resolution to petition the Secretary of the Department of Community and Economic Development (DCED) to review where they stand in Act 47 distressed status. Members of Council have stated that they aren’t asking to be removed from oversight by the coordinator, but it is clear that they are. Maybe Council wants some positive affirmation that they are going in the right direction, but is there anyone outside of City government who thinks things are good? Another explanation comes from the many public statements by public sector unions indicating they want to eliminate the power Act 47 has over contract negotiations. With several contracts set to be re-negotiated in 2009, this explanation seems very plausible.
Legally, Council is entitled to its action. Under Section 253(b) of the statute “a financially distressed municipality may petition the Secretary to make a determination that the conditions which led to the earlier determination of municipal financial distress are no longer present”.
Realistically, it is a different story. The same section points out four factors to consider, including feedback from the coordinator, the elimination of accrued deficits, obligations to finance the deficit have been retired, and the municipality has operated for a year with a positive fund balance. The law does not say that each factor has to be satisfied, just that they shall be considered. Since there is no fixed time limit in the statute and some municipalities have been in Act 47 for twenty years, it would be a monumental achievement that the City of Pittsburgh, with its hefty debt and pension obligations, would be ready to exit Act 47 in just four years time.
The Secretary is going to make a judgment call, but he does have some objectivity. There were over 200 initiatives made by the recovery coordinator—how many of them have been implemented? How many have been modified? We know for certain that the initiative to bid garbage collection was severely modified—how many others suffered the same fate?
At the very least, the City wants to see benchmarks set so the City knows what goals it has to meet to get out from under the special oversight. Here’s hoping that the state sets some stringent guidelines and direction, including a strong recommendation for the City to get its per-capita spending levels down to a level with better performing cities. After all the City’s own financial forecast shows spending will increase $50 million in the next five years. Beyond the operating side the large obligations loom. Until there is some drastic and significant move to correct the legacy costs, the talk about getting out of Act 47 ought to be shelved.
Legally, Council is entitled to its action. Under Section 253(b) of the statute “a financially distressed municipality may petition the Secretary to make a determination that the conditions which led to the earlier determination of municipal financial distress are no longer present”.
Realistically, it is a different story. The same section points out four factors to consider, including feedback from the coordinator, the elimination of accrued deficits, obligations to finance the deficit have been retired, and the municipality has operated for a year with a positive fund balance. The law does not say that each factor has to be satisfied, just that they shall be considered. Since there is no fixed time limit in the statute and some municipalities have been in Act 47 for twenty years, it would be a monumental achievement that the City of Pittsburgh, with its hefty debt and pension obligations, would be ready to exit Act 47 in just four years time.
The Secretary is going to make a judgment call, but he does have some objectivity. There were over 200 initiatives made by the recovery coordinator—how many of them have been implemented? How many have been modified? We know for certain that the initiative to bid garbage collection was severely modified—how many others suffered the same fate?
At the very least, the City wants to see benchmarks set so the City knows what goals it has to meet to get out from under the special oversight. Here’s hoping that the state sets some stringent guidelines and direction, including a strong recommendation for the City to get its per-capita spending levels down to a level with better performing cities. After all the City’s own financial forecast shows spending will increase $50 million in the next five years. Beyond the operating side the large obligations loom. Until there is some drastic and significant move to correct the legacy costs, the talk about getting out of Act 47 ought to be shelved.
