I don’t watch City Council on the TV as a rule, mostly because a) I don’t know when the interesting (or any) programming is on and b) because watching in the evening would mean convincing the wife and step-daughter that City Council is actually interesting compared to the Korean melodramas I have occasionally caught recently (Air City?). But I did catch a repeat of *the* recent significant hearing, the one where Shields introduced his request to Yablonsky (the state Secretary of Community and Economic Development) to a) have the city taken off Act 47 status or b) explain why not (or what we should do to get there). What was so interesting about this was to hear Shields give his reasons for thinking that the city could exit Act 47, and then later to hear Doug Peduto’s take on the issue. Frankly, I trust neither man, but watching each speak to their constituencies in a planned and carefully orchestrated fashion was really quite interesting and educational.
So Shields talked about what was in an old Act 47 document about exiting the distressed city status. I couldn’t find the particular document he referred to (on the city's website), and I can only remember one of the three conditions he listed for terminating Act 47 status, that of having a balanced city budget. I do remember that Shields pointed there is nothing in the Act 47 document he was reading about long term debt. Shields added that he viewed the municipal debt and the pension shortfalls as similar to a mortgage. Banks never call in the mortgage to be paid all at once, so as long as the city is making payments, it is doing exactly what it should be and in the long run all will be well. What Shields was saying is if Act 47 did mention long term debt, Pittsburghers might expect the state to help the city address these issues. Now, to be fair, the 240 page Act 47 document I could find on the city’s website, the one prepared by Eckert Seamans in 2003, does mention the city’s long term debt. On the other hand it also mentions a $145 Occupational Privilege tax, the thing we know as the $52 tax. So it obviously does not reflect a current or final official position.
Which brings us to another thing Doug Shields said at this hearing. He noted that Act 47 had envisioned a lot more or at least larger sources of revenue for the city. Specifically property taxes were supposed to go up by an estimated five percent a year; instead they have not gone up any since (I believe) 2002. Casino revenues, figuring in the Act 47 projections, have not materialized. And the contribution by non-profits has been smaller than projected in the Act 47 document. So the city has achieved its balanced budget in spite of the overly optimistic projections contained in the Act 47 report.
Peduto’s response to Shields was equally interesting. He planned to send his own, independent letter to Yablonsky, and ask specifically about things like long term debt. He was also worried about the coming shortfall the Mayor had projected in 2010. By contrast, Shields made of point of saying early that we can’t really know about the future, if you look how differently things have turned out in 2007 versus what was projected in 2004, you can see how little we really can say about 2010 (according to Shields).
While Shields was talking purely to make political points, it seems likely he was exposed a short term orientation to Act 47 that isn’t really good for the city. We really need the governor to step up here and tell Pittsburgh that it needs to get it’s long term issues resolved. That expecting the state to fix our pensions and debt issues is essentially a cop out.
So maybe some good will come out of this City Council resolution. Maybe Yablonsky will come back with some longer term issues the City needs to resolve before exiting Act 47. And Council might be spurred to action when Yablonsky gets back to us.