Pittsburgh's 2nd group of fiscal overseers taking steps to dissolve

A state authority that has overseen Pittsburgh's finances for 14 years is taking steps to dissolve because of the city's improved financial situation and a lack of state funding.

The Intergovernmental Cooperation Authority has asked the city for $37,000 to help pay off outstanding bills and is seeking legislative approval to terminate its operations.

State lawmakers created the ICA in 2004 as a second oversight agency to help Pittsburgh avoid bankruptcy. Pittsburgh's other team of fiscal overseers, known as Act 47 coordinators, recommended in November that the city be released from oversight. Pennsylvania Department of Community and Economic Development Secretary Dennis Davin is expected to act on that request early this year.

“No. 1, Act 47 is going away,” said B.J. Leber, who chairs the ICA board of directors. “It just doesn't make sense for us to exist beyond Act 47 either from a logistical standpoint or a community-needs standpoint.”

In addition, she said, the state did not appropriate funding for the ICA in its latest budget.

“We are operating without any kind of revenue,” Leber said. “For those two reasons, we need to go away.”

At least one ICA board member disagreed that Pittsburgh is ready to leave fiscal oversight. Michael Danovitz, the ICA's longest-serving board member, said the city has not shown a pattern of consistently paying into underfunded employee pension plans.

“I don't believe the work of the ICA is done,” he said. “This was the first year where they put in enough money to match the outflow of the pensions. One year doesn't make a pattern.”

Mayor Bill Peduto's administration last year pledged pension payments of $232 million more than state minimums in a five-year spending plan approved by the ICA and Act 47 team.

Under state law, the ICA must remain in place until Act 47 oversight ends or June 30, 2019, whichever is later. Leber said the ICA board has asked the Legislature to amend the law so it can end at the same time as Act 47.

Pittsburgh has operated under the Municipalities Financial Recovery Act, known as Act 47, since December 2003, when chronic deficits, overwhelming debt and mounting employee pension costs nearly pushed it into bankruptcy and relegated its rating among credit rating agencies to junk bond status.

Previous ICA officials battled with city administrations over financial issues to force compliance with fiscal mandates and at times withheld all or part of the $10 million in annual gambling tax revenue that Pittsburgh receives from hosting the North Side's Rivers Casino.

Peduto sued the ICA in 2014 over release of the money but dropped the suit after the board of directors now in place took office.

Pittsburgh Finance Director Sam Ashbaugh praised the ICA led by Leber and interim Executive Director Reynolds Clark.

“We've had a very productive and effective working relationship with the new board since they've been in place,” he said. “I think they recognize the financial improvements that the city has enacted.”

District Attorney Stephen A. Zappala Jr.'s office ended a yearlong probe of the ICA and its former executive director, Henry Sciortino, in 2016, saying criminal charges were unwarranted following an investigative series by the Tribune-Review documented shoddy record-keeping, among other things.

The Trib detailed the apparent destruction or loss of most of the authority's financial records, including 92 percent of all ICA spending receipts between 2010 and 2016 and all ICA bank records between 2004 and 2009.

ICA directors terminated Sciortino in 2017. The state enacted reforms that required the ICA to keep financial records up to seven years, undergo more regular audits and put more of its records and contracts online.

Bob Bauder is a Tribune-Review staff writer. Reach him at 412-765-2312, bbauder@tribweb.com or via Twitter @bobbauder.