City of Pittsburgh Council District 4
Update from Councilwoman Natalia Rudiak
Act 47 Edition

Good Afternoon,

 

Today, Pittsburgh City Council voted to approve the Act 47 Recovery Coordinators’ 5-year plan to lead our City to financial recovery. Read on to learn more about Act 47 and what this plan means for our City.

What is Act 47?

 

Act 47:

In 2004, after decades of declining population and declining tax revenue, the City of Pittsburgh was designated “distressed”, a term defined by the Commonwealth of Pennsylvania’s “Financially Distressed Municipalities Act” of 1987 (also known as “Act 47”).


ICA:

State legislators also passed Act 11, which added another layer of financial oversight from the state, called the Pittsburgh Intergovernmental Cooperation Authority (PICA).

 

Act 47 Plan:

Every five years, the state-appointed Act 47 Coordinators have worked with City officials to craft a plan for Pittsburgh’s financial renewal.

 

Why are we still considered “distressed”?

Thanks to the implementation of many of the recommendations from previous plans, the City is no longer in crisis mode, but we still have a lot of work to do. If we do nothing,

 

  • there will be a real structural deficit from 2015-2019
  • expenditures will outpace revenues and pension costs will continue to grow
  • our reserve fund will be depleted and we will have no capital budget by 2018
  • our need to fix roads, bridges and buildings will continue to exceed our ability to do so


Currently, the two most important factors that impact our city finances are:

 

1) the 2013 millage rate adjustment which has caused a significant loss of property tax revenue (link to Piktograph), and

 

2) actions by our pension board in 2013, which now require a higher annual contribution of taxpayer dollars to the pension fund.

 

What does the Act 47 Plan mean for our City?

The Act 47 5-year Amended Plan passed today by Council is just that -- a plan. The document provides a menu of options for the City to manage continued debt, pension obligations, and cash flow, with a particular focus on restoring real estate tax revenue lost in 2013, and investing in overdue maintenance on buildings, roads, and bridges.

 

Here are just a few of the recommendations included in the plan:

 

  • Prioritizing infrastructure needs, and spending $25 million per year from 2015-2019 on reconstructing crumbling roads, bridges, and buildings
  • Seeking higher annual contributions from the largest tax exempt non-profits, which rely on our bridges and roads
  • Freezing and moderating wage growth of City employees
  • Reducing the City’s non-salary operating costs by 5% per year, across the board
  • Building our City’s tax base by supporting Urban Redevelopment Authority projects
     

You can view the entire Act 47 plan and recommendations here.PDF File

 

What does the Act 47 Plan mean for you?

 

Starting in 2015, you will see better roads, bridges, and public buildings. Why? Act 47 analysis shows that more than half our city roads are failing, 24 of our bridges are structurally deficient, and our public buildings, from recreation centers to police stations, are falling apart. They recommend an infusion of $120 million of bond capital in our city infrastructure.

But, annual property tax revenues in our city are the lowest point they have been since 2004, leaving a gap in our operating budget. This leaves a lot of questions and we need your help. Our office put together this more in-depth graphic to explain our property tax problem.

 

We look forward to hearing from you.
 

What happens next?

 

Passing this plan only means we have work to do; the real deadline is the end of the year when the budget has to be passed. This plan will guide the work required of the Mayor and Council over the next six months to ensure that the City’s 2015 Capital and Operating budgets deliver the service, amenities, and infrastructure City residents deserve. I look forward to working through the plan with Mayor Peduto and my colleagues on Council, choosing the best options for better management and increased revenue to ensure that the City proactively invests in our infrastructure, and also continues to provide and improve services to residents of the City of Pittsburgh.

 

If you have further questions or suggestions, please feel free to contact me here.

 

Sincerely,

SCAN Natalia Rudiak signature.jpg

Natalia Rudiak
Chair, Committee on Finance and Law
Councilmember, City of Pittsburgh

Published:
Tuesday, June 24, 2014
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