Pennsylvania Gov. Tom Wolf joined Dennis Davin, the secretary of community and economic development, and other leaders for an announcement and celebration Monday in Mayor Bill Peduto’s Downtown office. Mr. Davin formalized the city’s exit from Act 47, which guided Pittsburgh back from the brink of bankruptcy.
"Gov. Wolf, Secretary Davin, Pittsburgh is back," Mr. Peduto said after the men signed paperwork releasing the city from Act 47. "There's a lot of emotion not only in this building but throughout this city. To be honest, the only reason that we're even here is because of the way that Pittsburghers are able to do things together."
The program effectively limited the city hall’s direct control over its budgets, establishing a recovery plan that cut costs, reduced the municipal workforce and managed long-term obligations such as debt and pension expenses. City finances have since swung from projected deficits to steady surpluses.
Mr. Peduto announced in November that he was seeking an end to Pittsburgh’s distressed designation under Act 47, his administration arguing that city finances — and money-managing habits — have improved. At his urging, city council passed several proposals codifying what the mayor called best financial practices, including standards for fund balances and realistic revenue projections.
The idea is to keep the city’s financial condition from backsliding in the future, according to Mr. Peduto, who cast the policy changes as a necessary condition for leaving Act 47.
Also in November, Pittsburgh’s state-appointed recovery coordinators agreed that the city was ready to shed distressed status. In a 33-page report, the Downtown law firm Eckert Seamans Cherin & Mellott and advisory firm Public Financial Management in Philadelphia, both named to guide Pittsburgh’s financial comeback, voiced confidence.
“Over time, the city has adopted a series of financial management tools that will guide the decision-making of future leaders on fiscal issues to ensure budgetary stability,” the report says. “The city has strategies in place to address its primary legacy costs — employee pensions, retired employee health care and workers’ compensation — while maintaining its workforce and increasing the necessary investment in Pittsburgh’s infrastructure.”
A second state-appointed entity, the Intergovernmental Cooperation Authority, monitors and holds veto power over Pittsburgh budgets. Created by the state General Assembly when Pittsburgh entered Act 47, the ICA asked lawmakers to dissolve the body this year. Legislation to take that action has been introduced.
The state’s 2018 budget includes no funding for the ICA.
Meanwhile, departing Act 47 will afford city leaders more influence over budget priorities, such as long-term plans for more police officers. The change should show “that we are able to responsibly manage the city’s finances ourselves as leaders and public officials rather than having everything required of us,” said Sam Ashbaugh, the chief financial officer, late last year.
It will “demonstrate to not only the city taxpayers but Wall Street and investors — and people looking to move to the City of Pittsburgh — that we are responsible stewards of taxpayers’ funds,” Mr. Ashbaugh said at the time. “It also helps us when we go out to market to issue bonds over the next few years.”
Liz Navratil contributed. Adam Smeltz: 412-263-2625, [email protected], @asmeltz.