With Pittsburgh Poised To Exit Act 47, Oversight Body Says It’s Ready To Dissolve

Jan 9, 2018


  Fourteen years after entering Act 47, the city of Pittsburgh appears to be very close to exiting the program, which places financially distressed municipalities under state oversight.

 

The Intergovernmental Cooperation Authority, or ICA, has been monitoring Pittsburgh’s finances as part of Act 47 since 2004. On Monday, the board of the ICA voted 3-1 to dissolve, pending approval from the General Assembly.

 

ICA Interim Executive Director Renny Clark said the ICA wants to cease operations around the same time Pittsburgh leaves Act 47. Clark, a non-voting member of the ICA board, he said he expects the secretary of Pennsylvania’s Department of Community and Economic Development, Dennis Davin, to approve the city’s application to exit the program in a matter of days or weeks.

 

The ICA has overseen Pittsburgh's spending and debt obligations since 2004, when the city's debt burden amounted to more than one-fifth of its operating budget.

 

Since then, Pittsburgh has cut its workforce by 26 percent, restructured employee benefits and enacted fiscal reforms, according to a November statement from Mayor Bill Peduto. The statement said the city has also taken steps to cap pension increases, reduce debt payments and retire unspent capital projects.

 

Peduto said, though the ICA was initially created by suburban legislators to block the city from enacting a wage tax on suburbanites who worked in the city, it was a helpful tool. 

"Although the purpose of creating [the ICA] was to be able to avoid a commuter tax being enacted by the city of Pittsburgh, the ICA also had some shining moments where they were able to provide some really good information to the city," Peduto said. 

ICA Board Member John Wilds said Pittsburgh is ready to take full control of its finances.

“The city of Pittsburgh is in very good financial condition at this point,” Wilds explained, “and we hope that the controls that have been instituted will make it continue to be [on] firm financial footing.”

 

Clark said the city has stayed within its budget and even ended with a slight surplus in recent years.

 

“The city has demonstrated mature responsibility in its financial planning,” he said. “They’re continuing to build a reserve fund ... They’re putting far more money into the pension fund than what they’re required to do under the minimum municipal obligation amount.”

 

Within the next year or two, Clark said the pension fund will start to bring in more money than it pays out to retirees.

 

ICA Board Member Michael Danovitz, however, cited inadequate pension funds as the reason he cast the lone vote against the resolution advising the Pennsylvania General Assembly wind down the ICA.

 

Pittsburgh’s pension is about 60 percent funded, and Danovitz noted that the city just started to meet its full funding obligation in the last year.

 

“Until we assure for a multiple-year period that our pension is growing and is healthy,” Danovitz said, “oversight is still needed.”

 

Board members Paul Harper and BJ Leber joined Wilds in supporting the resolution.

 

90.5 WESA's Kevin Gavin contributed to this report. 

 

*This story was updated on Jan. 9, 2018 at 9:47 a.m. And on Jan. 10, 2018 at 12:47 p.m. to include a statement from Peduto.