Tuesday, May 26, 2009

Inside New Act 47 Plan -- Quiet Rollout After Elections & Before Holiday Weekend

It was filed quietly with the City Clerk on the day after Election Day; City Council was not in session and Mayor Ravenstahl had taken Wednesday off.

It was Thursday before most City Council members started to read it. By that time, Mayor Ravenstahl was with the Steelers in Washington DC, visiting the White House.

That was when I got my first look at the state Act 47 team's new financial recovery plan for Pittsburgh --- in an e-mail on my BlackBerry; it's not the best way to read a 300 page, 6 meg file with charts and tables. I was told that no printed copies were available for the media. It was Thursday afternoon before the first news account hit the web, Thursday evening before my TV report aired, and Friday -- heading into a long Memorial Day Holiday weekend -- before newspaper reports started reaching the public.

I asked Act 47 Coordinator Jim Roberts about the timing of the plan's release in relation to the elections. He said:

"We don't really want the plan to become an election issue, a football during the election. So, we thought we're close enough now. We'll just wait until the end of the -- made the decision to wait until after the primary."

The draft plan provides a heads-up about the potential for the City of Pittsburgh to dip back into deficit spending. It reveals the potential for annual tax increases in the years ahead. They're all described in the new financial recovery plan proposed by Pittsburgh's Act 47 state-appointed overseers --but they say none of those things are guaranteed to happen if tough decisions are made to prevent them.

Arriving just a day after Ravensthal's primary win, the draft of the state's financial recovery plan for Pittsburgh warns that if nothing is done, beginning next year 7 to 10 million dollars a year in deficit spending would start eating into the 100-million dollar cash reserve which Mayor Ravenstahl spoke of as a surplus during the campaign.

"These improvements represent steps in the right direction for Pittsburgh, but without this amended plan financial projections show that Pittsburgh will return to a structural imbalance by 2011."

-- Acting PA Community & Economic Development Secretary George Cornelius

In plain words, it warns that if nothing new is done, starting during the next year in 2010, city government will again start spending more than it's taking in.

"If they don't take steps that are outlined in the plan. But the plan says you will generate operating balances" says Act 47 Coordinator Roberts. He says the baseline projections depict only what would happen if the new blueprint is not implemented.

The plan also warns about the city's $1-point-2 Billion unfunded legacy costs. It says the city has "a unique opportunity to apply its resources to a full financial recovery", but admits the city "faces daunting challenges to sustain progress". The Act 47 draft plan warns that the city pension liability has reached "crisis proportions". It alerts that "for the first time, fewer active employees are contributing to the pension fund than there are retirees drawing benefits". The pension fund lost $100-Million in the market downturn last year and is only 29 percent funded.

It calls for the city to make millions of dollars in extra payments into the pension fund, over and above the millions previously directed by the city's overseers. The plan says the money could come from the mayor's proposal to lease out the public parking garages, for example -- or it could come from tax increases in each of the next five years. "That's up to the city", said Roberts. "As long as those funds are substantially increased in amount, we're not going to tell them how to do it."

There is a "failsafe option" that would require city tax hikes that are big enough to bring in $10 Million a year.

The draft plan says the Act 47 team will provide for default city tax increases in each year that another option for making increased payments to the city pension fund is not identified. The higher taxes would be triggered if there's no specific legal alternative nailed down by the time the budget is proposed. Roberts says taxes raised would be "the taxes that are in the control of the city, as opposed something that you'd have to go to the legislature to ask about. So, that's earned income tax, real property tax" and others.

The draft notes that the city may try asking the legislature for permission to boost the tax on suburbanites working in the city from $52 to $145. However, the Act 47 team is telling the city not to rely on power it does not have when it budgets tax increases.

There are other steps proposed to raise money. For example, boosting revenue from fees for city services by 30 percent. Roberts says his team also endorses the city asking the state legislature for permission to keep the parking tax at 37-and-a-half percent, instead of dropping it to 35 percent next year.

Ravenstahl's budget and finance director Scott Kunka told me Thursday afternoon that the mayor's position is clear: that he is not going to raise taxes.

Kunka also says that the mayor's latest budget projections do not show the city in danger of going into the red. He cautioned "we just literally received this this morning ourselves" and that they need the opportunity to review the draft and vet the numbers. Kunka observed that "a lot of the plan is an endorsement of actions the mayor has already taken".

You can look at some highlights in this post, "My New Act 47 Scrapbook".

[The state Department of Community & Economic Development didn't issue a news release on the new plan until Friday. A search of its website turns up a page with a link to download the complete draft.]



Saturday, May 23, 2009

My New Act 47 Scrapbook

How do you wrap your mind around about 300 pages of new information? When I'm going through paper documents, I use a highlighter pen, marking up key words and phrases. On the computer, I use that oval annotation tool if it's a pdf file. Here's a sampling of my markups while going through the Act 47 team's new draft financial recovery plan for Pittsburgh.

I'll be coming back to this topic with some notes on things that caught my attention, as well a link to my initial TV report. I welcome your comments on the snippets here below as I work on that upcoming post. Meanwhile, here's a link to the Post-Gazette report about Mayor Ravenstahl's interest in pursuing a higher tax on suburbanites who work in the city.

Now, my new Act 47 scrapbook. It's arranged by topics I've been working on -- not entirely in the order of appearance in those nearly 300 pages of the plan. Click on the images to enlarge them to readable size.


Thursday, May 21, 2009

Dowd Responds on Ravenstahl: No Apologies Necessary

[Mayor Ravenstahl's overwhelming primary win would have made Patrick Dowd's campaign old news -- but the mayor says he's looking for an apology from Dowd. I blogged about the mayor's remarks here. He said "I think Patrick crossed the line in this campaign. I asked for -- a couple of times -- an apology, he didn't want to offer it. Hopefully, in the very near future he will so that we can continue to work together, ideally, to move the city forward."]

Here are some Q&A highights and notes from my interview with Councilman Patrick Dowd. In it, Dowd responds to the mayor's post-election claims about his conduct and describes his attempts to reach out to Ravenstahl on election night.

Q: Did the mayor ask you for an apology?

A: "I don't think I've even had the opportunity to talk to the mayor. I haven't heard any requests for an apology; maybe he's made them in public. I've not heard them and he's not made them directly to me."

Q: Do you owe the mayor an apology?
A: "I'm really pleased with the campaign that we ran. We ran, I think, an issues-based campaign... despite being outspent almost ten-to-one -- probably close to ten-to-one when everything's calculated up."

Q: Do you have anything to apologize for?
A: "I think we ran an issues based campaign, so I don't. It's a public event, it's not something where you take it personally. These are not personal attacks, they're public attacks, they have to do with policy matters. We talked a lot about campaign contributions and the way those contributions contributed to contracts and the letting and giving of contracts in certain ways."

Q: Did you depict the Ravenstahl administration as engaging in pay-to-play politics?
A: "Yeah, absolutely. And I think the record will show that there's a relationship between campaign contributions and contracts. But that's not a personal matter. that's a policy matter."

Q: Did you allege that the mayor was personally corrupt in any way?
A: "Well, to the extent that his administration engaged in unethical or inappropriate pay-to-play politics, then yes, absolutely, as an administration. I think to see this as a personal attack is, I think, to belittle what it really is. We're talking about policy issues and how decisions are made here in the City of Pittsburgh."

Q: Did you cross the line in any way?
A: "No, I think we talked about the important issues. Campaigns are about holding people accountable: a candidate as a challenger , a candidate as an incumbent. It's about holding people accountable, and I don't think we crossed the line."

Dowd told me that he offered Mayor Ravenstahl a sincere congratulations on election night.

Q: Did you call him to concede?
A: "Oh, yeah, absolutely."

Q: You spoke with him?
A:" No, no. He's not returned my call."

What happened? Councilman Dowd says he'd previously proposed that he be given the mayor's cell phone number for an election night call -- but that the Ravenstahl's campaign did not provide it. Dowd says that on election night his campaign manager called Ravenstahl's campaign manager:
"We were told at that time that he wasn't available. They didn't know where he was."

The councilman says his campaign manager waited, then placed a second call to the mayor's campaign manager -- again with no results. Dowd says they eventually tried reaching the mayor's chief of staff, Yarone Zober, because they presumed he would know where the mayor was. Dowd says that Zober did not answer their first call.

Dowd says Zober did pick up their second call.
"He was obviously at the Hofbrauhaus. You could hear the music; it sounded like you were in Bavaria. He said he didn't know where the mayor was, and I said 'could you have him give me a call'. He said he would see."

The councilman says that Mayor Ravenstahl never returned his calls.

Councilman Dowd says he will "reach out again to congratulate" Mayor Ravenstahl and "to try to work with him to make sure that we can help move this city forward in providing the collective leadership that it needs".



Wednesday, May 20, 2009

Ravenstahl Salute to Robinson, Slight to Dowd... Coattails...Teenage Wasteland

A conspicuous omission begged the question to Mayor Ravenstahl in his post victory speech interviews. Here's a link to video of my Q&A with Mayor Ravenstal during Channel 4 Action News election coverage. It comes about 2 1/2 minutes in:

Q: "You saluted Carmen Robinson, one of your competitors -- didn't mention Patrick Dowd. There's bad blood there?"

A: "My mom always told me 'if you don't have anything nice to say, don't say anything at all', so that's what I chose to do tonight. I think Patrick crossed the line in this campaign. I asked for -- a couple of times -- an apology, he didn't want to offer it. Hopefully, in the very near future he will so that we can continue to work together, ideally, to move the city forward."

You can see the full victory speech here at The Pittsburgh Channel.

During his remarks, Mayor Ravenstahl said:

"..finally, I want to give a special note of thanks to Carmen Robinson tonight. She did a fine job in this campaign. I give her a tremendous amount of credit for entering into this mayor's race. I thought she ran a tremendous campaign. She talked about the issues, she talked about what was important to her. Let's give Carmen Robinson a big round of applause this evening."

He closed on this note:

"I can't tell you how excited I am to begin that work, as early as tomorrow morning. To roll up our sleeves and rebuild this city, just like those that were before us did. We just celebrated our 250th anniversary last year. This is a great, great city. This is a city that's on the brink, as I said, of our third renaissance. And I can't tell you how excited I am to be the Democratic nominee for the office of the mayor for a full four year term. I can't wait to work on those eleven points in our eleven point plan. I can't wait to take this suit coat off and roll up my sleeves like each and every one of your do in the city of Pittsburgh every day when you go to work. Because that's what it's all about. This city has been built by the people of this city. This city will continue to thrive as a result of the people in this town..."

Ravenstahl proved not to have political coattails to carry his two key allies in Pittsburgh City Council races. Natalia Rudiak beat the candidate the mayor backed -- Anthony Coghill -- as well as party committee-endorsed Patrick Reilly in District 4. Rudiak is now the Democratic nominee to replace the mayor's friend and mentor Councilman Jim Motznik, who beat Michael Diven in a primary race for district judge. Another Ravenstahl ally on council -- Tonya Payne -- was upset by challenger Daniel Lavelle. At council's Wednesday meetings next year, Motzik and Payne will be missing from the opposite end of the table for face-offs with Bill Peduto and with Doug Shields, whose council presidency appears more secure.

One footnote. I'm not a musician, but I have an ear for melodies. One lingering question kept coming to me during the drive home last night. Whose idea was it for the band to play The Who's "Teenage Wasteland" as mayor entered for his victory speech? The passage they used comes about forty seconds in to this clip.



Thursday, May 14, 2009

Wecht Case -- A Major Ruling

Here are the notes for my 6 p.m. live report on WTAE Channel 4 Action News concerning the Wecht case ruling:

This can be a major blow to the government's case against former coroner Doctor Cyril Wecht.

It tosses out evidence gathered from two key search warrants in the government's case that Wecht used his public office for private gain.

Those searches -- of Wecht's private business offices on Penn Avenue and of an employee's laptop computer -- produced important evidence for the government's first trial. The jury in that trial could not reach a verdict after long deliberations.

Wecht was accused of having used the employees and resources of the coroner's office for the profit of his private consulting business. He was charged with mail and wire fraud in alleged false billing of private clients.

First reaction from U.S. Attorney Mary Beth Buchanan? She says:

"Our office will review the court's opinion and will determine the appropriate course of action."

No word on whether that could mean an appeal to a higher court.

In his decision, Judge Sean McLaughlin says:

"My ruling...suppressing a substantial portion of the government's evidence, is not undertaken lightly."

"(it's)...not based on...constitutional hair-splitting or a mere legal technicality ".

"These rulings are grounded in well-established 4th amendment principles... which serve as a bulwark against unwarranted government intrusion into the private affairs of every citizen, not just this defendant ".

[I'm hoping to offer a more detailed post on The judge's ruling tomorrow.]

Sent from my mobile device


Friday, May 8, 2009

Helped or Were Ordered? Q&A with Mayor Luke Ravenstahl

Click to play

This Q&A with Mayor Ravenstahl is from May 1st, the day after the mayor's race debate in which "Ravenstahl apologized for a 'misleading' ad".

You can listen in with the audio link above -- or read the transcript of the Q&A session. The questions are mine, except where noted. Below the transcript, I'll also share some fact checking about state law and Pittsburgh's financial oversight.

Q (Bob Mayo) : "What exactly is it -- that you apologized about something? What was the apology for?"

A (Mayor Ravenstahl) : "Well, what we'll do -- it was basically around, it was basically around the question of reducing taxes. The parking tax and the gross receipts tax. And the question was that we were suggesting that we were taking the entire credit for that. I said last night that the state clearly did help. And we'll actually adjust our ad today to say that we helped reduce the tax, rather than taking credit for it ourself. So, it was just a small, minor nuance, and something that we've taken care of in our campaign advertisement."

Q : "So, the... the state-imposed plan required the reduction of those taxes. Whoever was mayor was required by law to do that?"

A (Mayor Ravenstahl) : "Well, *in theory*, yes. But at the end of the day, we submit the budget, I submit the budget every year with our recommendations. You may remember when council a few years ago actually voted to freeze the parking tax -- I vetoed that. So there have been efforts in the past to try to freeze those taxes. We've continued to -- continued to put budgets forward that have reduced them. And so we were a partner in that effort, and that's all we were trying to communicate in the campaign commercial."

Q (Maria Leaf) : "Did you proofread the script for that ad, mayor, before it ran? I mean, how did this happen that it got on the air like this?"

A (Mayor Ravenstahl) : "Well, you know again, it's something that we think we definitely did reduce those taxes, and I'm not suggesting that we didn't. But in the effort of -- in the effort of cooperation and through the discussion last night, we'll simply add the word we 'helped' or 'worked with' the state to deal with these issues. Everybody knows that we submit a budget every year. I can tell you that I get requests over and over and over again to increase spending. It's interesting that the critics will criticize the budget situation when it doesn't go their way. But then, of course, when something does work and it is doing the right thing, it's the state's --uh, it's the result of the state's work. So, it's part of the political game that gets played this time of year. And we're very proud of what we've done financially. And we played a significant role in leading this city to where it's at."

Q (Maria Leaf): "But would you have changed the commercial if it had not been brought up last night?"

Mayor Ravenstahl : "Uh, probably not. You know, again, I don't think that the commercial was wrong in the way that we reflected what we've done. We have lowered the gross receipts tax, we have lowered the parking tax. I have submitted that in our budget. City Council can also take credit for reducing that tax, because they vote on the budget. And so, the city played a role in that effort and we're proud of it. And we also will acknowledge now that the state did help. They clearly did, and nobody ever suggested that they didn't. And so in the interest of clarity we'll -- we'll adjust the ad."

Q (Bob Mayo) : "Helped -- or ordered and required by law?"

A (Mayor Ravenstahl) : "Uh, helped. Yeah, they -- we helped them, uh, to do that by introducing our budget each and every year. There are things that in Act 47 and in our budgets now that weren't originally in the Act 47 plan. So there is clearly adjustment each and every year. This is something that was off the table, we agreed with. We wanted to see those taxes reduced, and we cooperated and helped the state with those efforts."

Q : Didn't the state legislature write into state law the recovery package that the *legislature* approved --?

Mayor Ravenstahl: "They're -- Sure."

Q: " -- that the taxes had to go down?

Mayor Ravenstahl: "The state law and, you know, and the original act that we passed also called for a 144 dollars a year. It also called for a higher payroll preparation tax. So we can sit here and pick and choose the different issues we want to talk about. There are a lot of things in Act 47 that weren't enacted. This is one that was enacted as a result of our leadership and continued support of reducing these taxes."

Q: "But the legislature didn't mandate the lowering of the taxes? You're saying that a... ?"

Mayor Ravenstahl: "It was in the Act. There were a lot of things that were "in theory" quote, unquote, mandated that didn't happen. And we weren't mandated to save a hundred-million dollars above and beyond what they've asked us to do, but we did that. Something we're proud of and take credit for. So, so when we get the credit or when we get the criticism, it's also part of the credit that should be-- should be recognized as well."

Now, a look back at some history.

Let's start with two quotes from Mayor Ravenstahl:

"I'm not going to break state law," Ravenstahl said.

That's from an October 12, 2007 Trib article which reported:

"A bill freezing Pittsburgh's parking tax likely will die next week on Mayor Luke Ravenstahl's desk.

"It is not his intent to be confrontational with the state Legislature," said his spokeswoman, Alecia Sirk.

The bill City Council approved 8-1 on Tuesday clashes with a state law that mandates a lowering of Pittsburgh's 45 percent parking tax -- the nation's highest -- to 35 percent by 2010."


"We must abide by the state law mandating the parking tax reduction," Ravenstahl said.

That's from an October 18, 2007 Trib story headlined "Mayor vetoes council's freeze" .

This 2007 Post-Gazette headline puts it succinctly.

The PG story goes on to report:

A legal opinion provided to council in December, signed by Solicitor George Specter, found that the city's charter doesn't permit it to ignore the state-mandated tax cut...

..."An illegal act by the city is unenforceable," said state Rep. John Maher, R-Upper St. Clair. "Pursuing this avenue in this manner is effectively unenforceable theatrics that could have grave consequences should [state-mandated oversight agencies] exercise their responsibility."

Back then, I blogged here about State Senate Majority Whip Jane Orie's warning. She said that doing any else but lowering the parking tax:

• "... violates the spirit and letter of the law. It's in complete violation of the state law. This was negotiated in a bi-partisan fashion."

• "There are ramifications for violating the law, and they could lose state moneys. That alerts them them, you are taking an action in violation, this is what is at risk."

• "Under state law, if they want to play this game---and it's really sad, because they're violating the letter of the law--not only can the state withhold funding. The state, because it's a state created city parking authority, we can force them to reduce the rates."

Orie fired off this letter to the Pittsburgh's oversight board, warning that the city was poised to pass an ordinance "which violates a state law (Act 222 of 2004) specifically mandating a reduction in the City of Pittsburgh Parking Tax". She also wrote that "...the City's Solicitor, George Specter, provided a legal opinion to the City Council in December which clearly stated that the city's charter doesn't permit it to ignore the state-mandated tax cut". (You can click to enlarge the images.)

The state law we're talking about isn't Act 47 or the act that created the oversight board (though both the oversight board and the Act 47 team have roles in making sure the city obeys the law in question). It's the city financial recovery legislation passed by the state legislature that some called "the bailout".

Let's jump back to November, 2004 when the law was passed:

PG: "The elimination of the gross receipts tax and the reduction of the parking tax were required by a state law passed on November 22, 2004. House Bill 197 eliminated the mercantile tax and phased out the Business Privilege Tax on businesses' gross receipts."

Mayor Murphy talked about it here.

Governor Rendell commented here when he signed the legislation.