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ICA warns Pittsburgh over potential budget deficit

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Friday, April 26, 2013, 12:01 a.m.
 

Pittsburgh could lose state funding if it fails to meet the deadline Friday to address a potential budget deficit and update its financial management system.

The city must respond in writing to the Intergovernmental Cooperation Authority's query on the issues by day's end, according to Henry Sciortino, executive director of the city's state-appointed financial overseer. Possible sanctions include revoking approval of the budget and withholding millions of dollars in state aid. Pittsburgh budgeted $13 million alone this year in anticipated Community Development Block Grants. A complete total of state funding was not available.

“Practically speaking, any revenue they would be getting from the state, they would not get,” he said.

Mayor Luke Ravenstahl, speaking publicly on Thursday for the first time since March 20, said the ICA's stance surprised him and that he disagrees with the agency's contention.

“We have complied and will continue to comply with their (requests),” he said.

The state Legislature in 2004 appointed the ICA to help resolve Pittsburgh's financial problems. Pittsburgh must submit annual budgets and five-year financial forecasts to the ICA for approval.

Pittsburgh has a deficit for 2014 through 2018 because of the termination of an agreement under which the nonprofit community gave the city $2.6 million this year in lieu of paying taxes.

Financial planners must find new revenue to make up for that loss, or cut expenses, Sciortino said. Controller Michael Lamb, however, disagreed, saying the city shouldn't assume that money will disappear.

“I think it would be irresponsible to not anticipate some agreements from the nonprofits,” Lamb said.

The ICA wanted the city to develop a task force consisting of city, community and labor leaders to work out a new agreement. However, Regional Industrial Development Corp. President Donald Smith, who chairs the task force, asked the ICA to put the task force on hold. Smith cited a coming change in city administration with Ravenstahl leaving office, pending legislation in Harrisburg that could affect the legal status of nonprofits and Pittsburgh's legal challenge of UPMC's nonprofit status.

Sciortino said the ICA wouldn't quibble over the task force.

“We don't care how they solve this budget issue. We want an answer as to how they're going to fill that budget gap.”

Despite the mayor's insistence the city has complied with the ICA's demands, the agency said the city failed to buy software to help it track employee costs, work assignments and budget forecasting. Lamb said the city has not purchased the software.

Last year, the ICA released $10.2 million in gambling taxes it withheld from the city in lieu of a plan for using the money. The ICA required Pittsburgh to use part of the cash to buy the software by Dec. 31, 2012.

“There's no reason why they shouldn't have this,” Sciortino said.

Finance Director Scott Kunka said the city is almost ready to begin soliciting bids for the software.

Bob Bauder is a staff writer for Trib Total Media. He can be reached at 412-765-2312 or bbauder@tribweb.com.

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