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Dissolving city an option, board members say

| Wednesday, March 31, 2004, 12:00 p.m.

The state oversight board is looking at dissolving Pittsburgh's government -- including eliminating the mayor's office and City Council -- as a way to solve the city's financial woes, board members said Tuesday.

"We will look at that as one of the options," said oversight board Chairman Jim Smith. "I'm not sure it's a solution yet. It's an option to look at. That's a pretty drastic option."

Member David O'Loughlin said the board has "an opportunity to right this ship and to try to do it in an imaginative and creative way. We can't leave anything off the table, because once we do, we've passed it by."

Smith, a financial adviser at Merrill Lynch, said the board has talked about consolidating city and county services but not about whether that would be included in its report.

A draft of the report, due April 12, offers 15 to 20 options -- including folding city government into Allegheny County -- to save money, said O'Loughlin, a former county official and president of Western Pennsylvania Maglev Corp.

Such a merger would make metropolitan Pittsburgh the nation's seventh-largest city. It would not call for dissolving any other municipality.

Former county Chief Executive Jim Roddey, who serves on the oversight board, said he plans to present drafts of the report today to the other three board members. Roddey said it is "premature" to talk about dissolving city government.

"I don't know that will be in the report," Roddey said. "We're looking at all options."

Another board member, Bill Lieberman, an insurance broker, said he supports a city-county merger. He has not seen the draft report.

"These are difficult things to do, but this region's got to make a decision to move forward or not," Lieberman said. "Do we want to be Toledo with a football team?"

Other options in the draft report include declaring bankruptcy, imposing regional business taxes, selling off city assets such as parking garages, restructuring the city's $1.4 billion in debt and cutting spending, board members said.

Murphy's job at stake

State lawmakers created the oversight board last month to examine Pittsburgh's finances and approve a five-year budget plan. Members were appointed by Gov. Ed Rendell and leaders of both parties in the Republican-dominated Legislature.

Because of Murphy's prickly relations with some legislators, many might go for an option that junks his job -- one that he might seek again next year.

"If there's one thing that will keep the Legislature from assisting the city of Pittsburgh, (it's) the prospect of Murphy running for re-election and winning," said Murphy critic Joseph Sabino Mistick, a law professor at Duquesne University. "The only way to ensure that does not happen is to eliminate the position."

The mayor's spokesman declined to comment.

The state oversight board isn't alone in looking at Pittsburgh's finances. In December, Murphy won state approval for the city to be declared distressed under Act 47. A state-appointed recovery team is looking at the city's finances and will propose its own plan.

The oversight board's draft report will address each of its recommendations. Included will be the mechanics of how to dissolve city government, O'Loughlin said.

A merger of city and county governments would require officials to figure out how to pay off the city's $1.4 billion debt, said Robert P. Strauss, a public policy expert at Carnegie Mellon University.

Annual debt payments account for 20 percent of city's $389 million budget.

Persuading suburbanites to pay Pittsburgh's debts would be difficult, Strauss said, and it might be unconstitutional to tax city residents alone to repay them if the city and county merge.

If the city defaults on its debts, he added, that "nationally observed event" would affect local governments, nonprofit organizations and businesses.

'A lot of complicated things'

A merger "is not crazy, but there are a lot of complicated things that have to be accomplished," Strauss said.

Even if the board ultimately recommends dissolving Pittsburgh, it will likely seek to first stabilize city spending and revenue to make a merger more attractive, O'Loughlin said. The process could take about three years and include changes in state law as well as possible voter referendums in Pittsburgh and Allegheny County.

"My own view is that I think we need to study those issues, but I don't see where (a merger) makes sense or is necessary at this point," O'Loughlin said. "We've got to consider everything and try to do this in a rational, sensible way."

Short of eliminating city government, oversight board members are looking at other ways to merge city and county services, such as the ongoing combination of 911 emergency call centers, he said.

Another option will be spreading business taxes across the region so municipalities outside Pittsburgh would share in the new revenue and could lower property taxes, O'Loughlin said. That would eliminate one reason companies might move from Pittsburgh to the suburbs.

"It's a regional problem," O'Loughlin said. "Let's end up with something that creates not only a better city, but a better region."

The oversight board meets at 3 p.m. today in the Port Authority board room on the fifth floor of the Heinz 57 Center, 345 Sixth Ave., Downtown.

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