Officials Fiddle As Credit Rating Teeters
Moody’s has downgraded the City of Pittsburgh’s financial outlook from "stable to negative." While the City keeps the A1 rating from 2008, the rating agency obviously has misgivings about the direction elected officials are taking in trying to deal with the massive unfunded pension liability, other legacy costs and bond debt.
One can only wonder how long the City can hold on to its A1 rating as it fritters time away and fails to deal with the coming jump in payments to the pension plans. Officials hoping for a surge in economic growth in Pittsburgh that would boost tax and other revenues are likely to be greatly disappointed given the struggling national economy that is unable to shake off a prolonged period of recession and near stagnation. Thus, it has become incumbent upon the City’s government to take some painful steps to address the "negative" financial outlook.
What credit rating firms do not see is any effort on the part of the City to reduce its spending through paring back non-essential services, outsourcing or privatizing services or even making a serious effort to consolidate services with the County or enter into contracts with the County to provide services.
Council has made it painfully clear that privatization in any form is unwelcome as shown through statements objecting to leasing the parking authority garages and City parking meters. It’s all about protecting jobs of City employees. The long running objections to outsourcing garbage collection when that particular function is carried out by private companies all over the County and state point to intransigence and irresponsibility toward taxpayers that are woven into the fabric of Pittsburg governance. Moreover, the Council’s insistence on passing prevailing and living wage ordinances demonstrates a pitiable lack of understanding of economics and the importance of free markets to economic growth.
In short, it is amazing that Moody’s ever assigned an A1 rating to Pittsburgh. How could Pittsburgh, which has been under financial oversight by two state appointed groups for the last six years and where officials have failed to reduce spending and payrolls to per capita levels more in line with other U.S. cities, be considered an A level credit risk?