Mayoral budget subject to oversight review

By John Lavanga / A&E Editor

Pittsburgh Mayor Luke Ravenstahl’s budget proposal for next year includes a $9 million increase over last year’s proposal with no planned change in taxes.

Last Tuesday, Ravenstahl unveiled his proposed budget for 2014. The budget — which is currently under review by Pittsburgh’s Intergovernmental Cooperation Authority, the state’s oversight board — totals $479 million. Ravenstahl’s office has also budgeted charitable contributions from nonprofits, which in the past have raised concerns among those who provide oversight. Next week, the oversight board may reject Ravenstahl’s proposal because such donations are projected, and thus not guaranteed.

Now that Ravenstahl has proposed his budget, Pittsburgh’s Intergovernmental Cooperation Authority must approve it or recommend amendments before City Council can vote on it.

Pennsylvania state legislature created the authority as an oversight board for the city’s finances shortly after the city entered Act 47 oversight in 2003. Act 47 allows a financially distressed municipality to restructure its debt while simultaneously limiting how much government funding it receives.

Since 1987, 27 municipalities have entered into Act 47 oversight — the most recent being the cities of Harrisburg in 2010 and Altoona in 2012 — including eight in Allegheny County. Only six of these municipalities have had Act 47 status rescinded.

Though the authority and Act 47 are separate programs, board member Ann Dugan said they play complementary roles in the state’s oversight of the city’s finances. While the authority has the ability to approve the budget, Act 47 gives guidelines for budget proposals.

According to Dugan, the mayor’s office has overestimated the sums of charitable contributions from nonprofits in recent years, including those from Pitt.

“These [contributions] cannot be taken for granted … That’s been our problem with the mayor’s office. They assume that it’s going to increase every year,” she said.

According to the 2014 budget, the total amount of projected “payment from nonprofits for services” during the upcoming year is projected to be $3.19 million, or roughly $200,000 less than the $3.4 million projected for 2013.

In 2012, the actual amount contributed was roughly $4.99 million.

Ken Service, Pitt’s vice chancellor for communications, said the University makes contributions to the city through the Pittsburgh Public Service Fund, to which numerous nonprofit groups across the city contribute. Service said the fund for this year includes $2.6 million in planned donations.

Service said individual amounts that Pitt and other organizations contribute to the fund are not disclosed.

During last year’s budget review, the Intergovernmental Cooperation Authority expressed concern that the projected increases in these contributions were excessive, Dugan said.

Next Tuesday, the authority will convene to decide whether to approve the proposed budget or send it back for changes. Much of this decision is based on scrutinizing the projected revenue to ensure that the assumptions made by the city are correct.

Pittsburgh Assistant Director of Finance Nick Lyons described Ravenstahl’s proposal as a “baseline budget,” noting that the only major change was an additional $25 million in pension contributions. 

Meanwhile, Lyons’ colleague Assistant Director of Finance Cathy Qureshi said that the nonprofit contributions in the budget are calculated based on signed contracts with nonprofits, as well as by looking at past trends in contributions.

“The city has received the revenues in this line item consistently,” Qureshi said in an email.

The budget also includes a section that lists 31 new positions in government that 8th District City Councilman Bill Peduto, the Democratic mayoral candidate and presumptive winner, recommended. 

Although the budget includes no provisions for funding these, Peduto’s office said he will try to find ways to fund the newly named positions while balancing the budget.

“If we add positions, then we will need to remove positions at the same time,” Dan Gilman, Peduto’s chief of staff in City Council, said in an email. “We will not be increasing the budget to bring on new positions.”

According to the budget itself, Peduto voluntarily submitted his proposals for consideration. It adds that the mayor’s office included the recommendations “in the spirit of cooperation and government stewardship.”

Although Republican mayoral candidate Josh Wander is currently traveling abroad, he wrote in an email last week that Ravenstahl made no effort to reach out to him during the budget-drafting process, and he described the inclusion of Peduto’s recommendations as “premature.”

Wander recently sold his Pittsburgh home in Squirrel Hill and is currently working in Israel as a security consultant. He said that the sale of his home had nothing to do with his status as a candidate for mayor. Instead, he made the sale because of the neighborhood’s booming real estate market.

“If elected, I would immediately resign my current position to lead the city,” he said in an email.

It is unclear when Wander will return to Pittsburgh, but he said that he aims to attend all scheduled debates between himself and Peduto.

Members of the Peduto campaign had no comments on Wander’s absence, simply saying that they look forward to seeing Wander at the scheduled debates.

Voting for the mayoral election will take place Nov. 5.

If the budget is approved, it will be presented to City Council in November for approval. But the process could begin anew come January if the next mayor decides to reopen the budget and make significant changes. 

Dugan anticipates looking at a newly proposed budget this January.

“Change always brings a ripple effect of change,” Dugan said. “I would assume that a new mayor would really want to carefully look at the budget and the revenue sources and develop a new approach.”

Gilman said Peduto wants to avoid this extra step, if elected, by being involved in the budget-revision process as a City Council member. 

“We will continue to work with the administration and City Council throughout the budget process so that we can go into next year with a budget we all support,” he said.