Pittsburgh gives budget response
Pittsburgh met a Friday deadline to respond to queries about its budget and financial management system, but it was unclear whether the response will satisfy the city's state-appointed financial overseer.
The Intergovernmental Cooperation Authority threatened to reject Pittsburgh's $470 million budget, which could ultimately result in the withholding of millions in state funding, if the city missed the deadline.
Mayor Luke Ravenstahl's administration sent a letter to ICA board Chairman Dana Yealy and Executive Director Henry Sciortino that appears to address the financial management question but ignores what the ICA believes is a looming budget gap.
“We believe we've complied with all the conditions and we're in excellent financial shape,” Assistant Finance Director Cathy Qureshi said. “There is no budget gap.”
Sciortino said on Friday evening he had not received the letter and could not speculate on the board's response. Yealy could not be reached.
Sciortino said the ICA has legal authority to request withholding of state funding. It did so in 2005 during a standoff with former Mayor Tom Murphy over employee labor contracts, he said. The two sides resolved the issue before Pittsburgh lost any money.
“If there's a delay in state funding, that's going to create a problem for the city,” said Controller Michael Lamb, who estimated the city receives $50 million annually in state aid. “There's no doubt about that.”
The city is not worried about the threat of a funding cut, according to Marissa Doyle, spokeswoman for Ravenstahl.
“This is nothing more than a theoretical situation that we do not believe the city will need to address unless the ICA identifies a reason why this would occur,” Doyle wrote in an email.
The Legislature in 2004 created the ICA to help resolve Pittsburgh's financial problems. The city must submit annual budgets and five-year financial forecasts to the ICA for approval.
The Ravenstahl administration and members of City Council have long believed that legislators from Pittsburgh's North Hills created the authority to stop the city from enacting a commuter tax on suburban residents.
Relations between the city and ICA are strained at best.
On Thursday, Ravenstahl described the authority's actions as an attempt to “justify, in my mind, their existence.”
Pittsburgh has a budget 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. The ICA wants to know how the city plans to fill that gap, Sciortino said.
Qureshi said annual budget surpluses — the city anticipates a $23 million surplus for 2013 — would cover the $2.6 million. But she said officials also are confident of striking a new agreement with nonprofits.
Reynolds Clark, who chairs the advisory board for the Pittsburgh Public Service Fund, which represents nonprofits in negotiating annual contributions, said city leaders have not contacted his group about a new agreement.
“That's not unusual,” Clark said. “Normally that would not take place until probably sometime after September.”
Clark said the city's legal challenge of UPMC's nonprofit status caused tension among some members, adding that it's too early to say whether it could affect negotiations this year.
“I think everybody just really wants to see how this proceeds,” he said.
The ICA also wants the city to buy computer software to help it track employee costs, work assignments and budget forecasting. Lamb said the software would establish financial transparency and help identify fraud.
Sciortino said the ICA and Pittsburgh should be able to resolve the situation amicably before sanctions are imposed.
“This isn't the way we want to do this,” he said. “We want collaboration.”
Bob Bauder is a staff writer for Trib Total Media. He can be reached at 412-765-2312 or email@example.com.