City Wants to be Free

City Wants to be Free

After presenting the 2012 budget to Council, the Mayor raised the idea that the City is ready to be released from state oversight. Now whether the Mayor meant Act 47, or the oversight board, or both is not clear from the newspaper article or the Mayor’s press release (which does not mention the request). The Mayor’s spokesperson had stated the City could function on its own in mid-October. Plenty of elected officials, both from the state and the City, weighed in on the Mayor’s statement.

Recall that the City formally petitioned DCED for removal from Act 47, a petition that was denied in July of 2008. There was a chance that the state was moving to eradicate the oversight board early in its tenure, but it is still in place and several new appointments have been made to the board.

In denying the Act 47 request, the DCED Secretary at the time noted the City had several issues to address:

  • Debt service requirements that exceed 20 percent of the City’s operating budget and will not decline until 2018
  • Unfunded pension liability currently at $467 million
  • OPEB liability that ranges from $220 million to $320 million
  • Workers’ compensation liabilities have remained high and are projected to reach $24.7 million by 2012

So what do things look like now, more than three years later? We know that debt service is still around 20% of the budget ($87 million for 2012); as a result of the pension bailout and asset infusion unfunded pension liabilities stand at $381 million; OPEB liabilities are now $488 million; and workers’ comp costs are down slightly, at $21 million for 2012.