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Auditor general will scrutinize Pittsburgh's financial overseer

Bob Bauder
| Tuesday, Sept. 15, 2015, 1:04 p.m.
Pennsylvania Auditor General Eugene DePasquale
James Knox | Tribune-Review
Pennsylvania Auditor General Eugene DePasquale

Pennsylvania's highest-ranking senator said Tuesday that he would oppose annual state funding for Pittsburgh if the city refuses to follow direction from its Legislature-appointed financial overseers.

Joseph Scarnati, R-Jefferson County, the Senate president pro tempore, said a yearlong battle between Pittsburgh and the Intergovernmental Cooperation Authority has “provoked” him to extreme measures.

The feud has escalated from verbal insults between the ICA and Mayor Bill Peduto's administration to a city lawsuit seeking release of gambling funds, accusations of political duplicity and now threats from the highest levels of state government.

“I'm not going to sit and just appropriate money to the city of Pittsburgh for whatever reason when you're not following whatever recommendations are coming from the ICA,” Scarnati said. “The mayor can man up and come see me in Harrisburg if he has a problem with our appointments to the ICA.”

Peduto spokesman Tim McNulty said Peduto, a Democrat, has asked unsuccessfully three times in the recent past for a meeting with Scarnati.

“He is the only leader in Harrisburg who has not agreed to meet with (Peduto),” McNulty said.

Scarnati's comments capped a day in which Auditor General Eugene DePasquale announced an audit of the ICA, followed by an announcement by state Sen. Wayne Fontana, D-Brookline, that he intends to introduce legislation that would abolish the authority.

At issue is more than $12 million in state gambling funds that Peduto has said the authority is illegally withholding from the city. The Legislature established the ICA in 2004 to help the city avoid bankruptcy. It has legal control over about $10 million the state gives Pittsburgh each year for hosting Rivers Casino and has the power to disapprove city budgets.

“The city worked in good faith with the ICA for the last two years but was never given a penny of the funds owed taxpayers since 2014,” McNulty said. “That is why we asked the courts to intervene.”

The authority has withheld the gambling money since 2014 to force Pittsburgh to implement an in-house payroll system that is expected to save nearly $1 million annually. City officials say it will be operable by January.

City officials say the ICA has outlived its usefulness. Fontana called it “unnecessary, redundant and a waste of taxpayer dollars” and accused Republican leaders of using the ICA as a way to meddle in Pittsburgh.

Scarnati appointed ICA Chairman Nick Varischetti. The House Democratic Caucus appointed board member Elise Roby Yanders. Former House Speaker Sam Smith, a Republican, appointed board member Michael Danovitz.

“How else can the majority party have any say or influence in the city of Pittsburgh than this?” Fontana said.

Scarnati, who has received thousands of dollars in political donations from Varischetti and his family, denied a political motive. He noted that former Democratic Gov. Ed Rendell signed legislation establishing the ICA, and plenty of local Democrats supported it.

“I have nothing in this but being a good steward of taxpayer dollars,” he said. “The Varischetti family I have known for three generations in my hometown. When I'm looking to appoint people to boards, I look for people I know and trust.”

DePasquale, who addressed reporters in the Allegheny County Courthouse, said his office began an audit of the ICA at the request of Peduto but will not conduct a similar review of city finances, despite a request Monday from Scarnati and House Speaker Mike Turzai, R-Bradford Woods. He added that Pittsburgh Controller Michael Lamb and independent auditors review city finances yearly.

“I thought by entering into this, I could help resolve some of the problem,” DePasquale said.

Varischetti, who has accused the Peduto administration of refusing to meet with the ICA board, said he hopes DePasquale can persuade the city to cooperate. “We respect the auditor general's role in this process, and our office is already working with him to provide any and all information to support his audit of the ICA,” Varischetti said in a statement.

Bob Bauder is a staff writer for Trib Total Media. Reach him at 412-765-2312 or bbauder@tribweb.com.

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