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Allegheny

Gov. Tom Wolf expected to end state oversight of Pittsburgh's finances Monday

Bob Bauder
| Saturday, Feb. 10, 2018, 11:00 p.m.
Pennsylvania Gov. Tom Wolf
Nate Smallwood | Tribune-Review
Pennsylvania Gov. Tom Wolf

Pennsylvania Gov. Tom Wolf on Monday is expected to announce an end to Pittsburgh's 14 years under a financial recovery program controlled by the state Legislature and guided by a law known as Act 47, according to sources with knowledge of the event.

The announcement is scheduled to take place in the City-County Building, Downtown.

Dennis Davin, secretary of the Pennsylvania Department of Community and Economic Development, is expected to join Wolf at the announcement. Davin declined comment, as did Pittsburgh Mayor Bill Peduto's office.

Davin's department administers the Municipalities Financial Recovery Act in Pittsburgh and 16 other Pennsylvania cities that have been declared “financially distressed,” often because they're burdened with debt and suffer from shrinking tax bases. Act 47 is intended to prevent cities from entering bankruptcy.

Since the act took effect in 1987, 13 Pennsylvania cities have emerged from “financially distressed” status. The most recent was Altoona in September after five years under state oversight. Former Gov. Ed Rendell declared Pittsburgh's distressed status in December 2003.

The announcement has been expected since early this year when Act 47 coordinators and the Intergovernmental Cooperation Authority – Pittsburgh's second oversight team – agreed the city has met all obligations to leave state supervision. Both recommended Pittsburgh's release from oversight.

State House Speaker Mike Turzai, R-Marshall, said he was not invited to the announcement, “but I heard they were thinking of doing it.”

Turzai crafted legislation establishing the ICA.

“Getting out of Act 47 is a positive step for the city of Pittsburgh,” he said. “The ICA board and Act 47 did put constraints on city overspending and overborrowing. Further, there were demands placed on the city to pay down significant parts of it is debt. The city, however, still needs to confront aspects of its operations and its authorities' operations. Many folks believe that the city would be better off letting the private sector run its parking authority, water authority and sanitary authority.”

Peduto late last year requested permission to exit Act 47 in a letter sent to Wolf, a Democrat running for re-election this year.

Pittsburgh has operated under Act 47 since late 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.

Shortly after entering Act 47, the city laid off 446 full- and part-time employees, including nearly 100 police officers and 24 EMS personnel. City services were significantly reduced, including the closing of senior centers, recreation centers, and swimming pools.

Since then, the city has stabilized its finances by increasing the amount of its annual employee pension plan contributions, dedicating future parking revenue to cover employee retirement obligations and paying down long-term debt.

State lawmakers established the Intergovernmental Cooperation Authority as a second oversight agency to help Pittsburgh avoid bankruptcy.

The ICA board of directors in January asked state legislative leaders for an amendment that would permit the authority to end at the same time as Act 47. The Legislature has yet to act on the request.

Bob Bauder is a Tribune-Review staff writer.

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