Sunday, May 17, 2009

Which are we?

The PG today has statements from the Mayoral candidates and also answers from each to specific questions. I am not going to go into specifics about their statements/answers except to cover an issue I think lies under the surface and yet is vitally important. Mayor Ravenstahl basically maintains the City is doing well, yet needs more work to secure it’s position in the future. Pat Dowd says the City is in trouble and needs leadership with transparency and accountability to guide us. Carmen Robinson talks about two Pittsburgh’s, and wants to reach out to the neglected one.

The gap between Ravenstahl’s position and Dowd’s position is what I want to look at (for the record, I agree with Robinson, but I don’t see much indication she will get anywhere in the primary). Is the City doing better than most cities in this economic downturn, with manageable problems on the horizon, or does the City have so much debt and obligations it can not recover without tough action now? Now, I credit the Act 47 five year plan with creating the surplus; it was written that way. The Mayor may have created a bigger or smaller surplus than was foreseen/feasible, but it was always supposed to be there, as were many of tax reductions the Mayor brags about, and the increased services. But evidently the plan was not intended to address our debt or our pension shortfall, and there is no way to turn 50 million (what’s left of our surplus after the ICA plundered it) into seven hundred million or two billion (whatever our total debt/pension figure is). Plus we are looking at problems with future healthcare costs. These are some of the issues Pat Dowd is talking about (btw, there is supposed to be a new five year plan, though I couldn't say what it will cover).

It is the difference between whether we are a desirable place to go/be in this economic downturn versus whether we are teetering on the edge of bankruptcy and there is no one out there to help us out. If we go into bankruptcy, what will happen? We may renege on our debts, damaging our credit rating and making it harder to borrow on favorable terms for decades to come. We may throw our municipal pensions on the tender mercies of the State or the Federal Pension Benefit Guarantee Corporation. Our retirees may get pennies on the dollar (kinda makes you glad this is likely to happen on Ravenstahl’s watch).

Now I think the “City in trouble” line is likely true, though I don’t know how it will work out specifically under a Ravenstahl administration. I think at some point there will be a payment missed, City Council will squabble amongst themselves for a while, but eventually the Mayor and Council will jointly declare bankruptcy in Federal Court. It is possible that the State will step in and take direct control of the City before that happens (I am not sure about the legal rules here), although the only thing the State would be saving is face here, as they would not likely be happy about taking on the City’s financial issues. In the end, I think the City would continue, but I think it’s political power and prestige would be greatly reduced. City services would also be reduced for a long time to come.

Is Dowd the man to avoid this? Maybe. I don’t know that I trust him to be a magician, but he seems to recognize most of the crisis for what it is. His being in office, with an implied threat that he will declare bankruptcy if it is needed, might influence Harrisburg towards more generosity towards Pittsburgh.

That’s not much to hang a hat on, but that’s where we are.

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