Pittsburgh to Remain Under Act 47
With the thanks of Pittsburgh’s mayor, Gov. Tom Corbett Thursday announced that the city would remain under the controls of Act 47.
Pittsburgh entered into distressed-city status 10 years ago, and the Ravenstahl administration had argued in 2012 that enough progress had been made to release the city from its bonds.
“While Pittsburgh continues to take considerable steps in its efforts in stabilizing the city’s financial position, many conditions that originally led to the distressed determination have not been alleviated,” Corbett said.
Corbett believes the city still has considerable pension and debt issues along with spending and income inequities that still need to be addressed.
Corbett would not speculate how long the Act 47 status would stay in place.
“You have to take a look at the overall health of the city, and of the region and of the state,” said Corbett, who called on the city not just to draw up a new recovery plan, but to implement it and show that it is working.
Mayor Bill Peduto thanked the governor for his leadership in the matter and his understanding that not only does Pittsburgh have a lot of work left to do but also that other municipalities in the state are dealing with similar issues.
Corbett would not say what the state could do to help the cities but did say he would be watching Pittsburgh for ideas that work.
Peduto was quick to outline the most basic of goals that he would include in a new Act 47 recovery plan that he called “the final exit strategy out of (Pittsburgh’s) financial woes.”
By the year 2020, Peduto is calling for a 5 percent reduction in operating costs, a 36 percent increase in capital spending and a six percent increase in pension spending. At the same time he expects to cut debt service payments.
Debt service payments drop substantially in 2019 when a bond issuance expires and then fall again in 2027.
In the meantime, Peduto said the current pot of capitol money created by the last bond issuance will run out this year or next and the city will once again have to go to the market if it is to at all keep up with capital needs.
Peduto said he will find savings through eliminating waste and fraud, finding efficiencies, and lowering employee costs. Peduto is getting some help on that last front starting Friday when an estimated 100 city employees take advantage of an early retirement incentive.
Peduto would also like to find new revenues through negotiating with the city’s largest nonprofits for budgetary support.