Ravenstahl accuses council of steering toward fiscal disaster
Mayor Luke Ravenstahl yesterday accused City Council of steering the city toward financial disaster by failing to approve his plan to shore up beleaguered municipal pensions.
In his 2011 budget address, Ravenstahl said he would use nearly $50 million in reserve to ensure balanced budgets through 2015. The city would start tapping its reserve in 2013, he said, but that money would be gone by 2016 — about the time the city faces steep increases in annual pension contributions, he said.
“With this budget and five-year plan, our city walks with its eyes wide open into a financial nightmare,” Ravenstahl said. “… After 2016, I cannot tell you how Pittsburgh will be able to deliver residents the core services they need without severe cuts and tax increases.”
He said his failed plan to lease the city’s parking system “presented City Council with a solution that would have saved us from this, but some members … chose the short-term, irresponsible approach that has long plagued our city, and now will again.
“But it is not too late to prevent an eventual Pittsburgh bankruptcy, if five members of council choose to do the right thing.”
Some council members quickly rebuked Ravenstahl, calling his presentation short on numbers and long on rhetoric.
“It’s unfortunate,” Councilman Doug Shields said. “It was important for him to reiterate a vision for the city. It was not a time or place to condemn the council en masse.”
Ravenstahl said his budget remains essentially unchanged from this year. Yet, it projects unexplained, increased payments from nonprofit organizations in lieu of taxes. The city budgeted $2.8 million from nonprofits for 2011 — but under the mayor’s five-year plan, that number would jump to $20 million in 2012, and no money from nonprofits is budgeted for years following. Nonprofits were projected to pay $1.7 million this year.
The budget needs approval by council and the Intergovernmental Cooperation Authority, a state agency overseeing the city’s finances.
Henry Sciortino, head of the ICA, said he would review the document, and distributed it to the authority’s board.
“Despite all the gnashing of teeth, we have a balanced budget that actually generates a surplus, and that’s good news for Pittsburgh,” City Controller Michael Lamb said.
The city must get its pensions to 50 percent funding level by year’s end, or the state will manage the retirement accounts. The city needs at least $220 million to do so but doesn’t have the money or a plan to raise it. Ravenstahl warned that without an infusion of cash, the annual payment for pensions would be $91 million in 2016 and $160 million by 2030.
The pain would not be immediate, though. This year, the city contributed $60 million to pensions and would put about $45 million in yearly for a couple of years.
Eight council members — everyone except Shields — met with Ravenstahl after his budget address to talk about possible compromises on plans to raise money for the pensions.
“Nothing definitive is on the table, but the lines of communication remain open,” Councilman Bruce Kraus said.
“We have no intention of selling ourselves short, and no plan to initiate debt that will destroy future generations,” Council President Darlene Harris said.
Robert Strauss, a professor of economics and public policy at Carnegie Mellon University, warned other factors are looming that officials aren’t discussing publicly: rising costs of health insurance costs and workers’ compensation; property reassessments; and how the economy might affect wage tax collections.
“The pension skirmish is just one of a matrix of issues, and I don’t see the underlying political will to address the issue on increasing revenues through a commuter tax,” Strauss said.
â¢ Total budget: $456 million, with expenditures of $447 million, leaving a surplus of nearly $9 million
â¢ Operating budget: $208 million, down $4.5 million from 2010
â¢ Capital budget: $52 million, including $25 million from the city’s PAYGO funds, $16 million in Community Development Block Grant money, and $11 million from other sources
â¢ $5 million for vehicles
â¢ $3.3 million for demolition of abandoned structures, down $700,000 from 2010
â¢ $9 million for street resurfacing, up from $8.5 million in 2010
â¢ $7 million for Urban Redevelopment Authority initiatives