Pittsburgh cleared another hurdle Wednesday in its quest to exit state financial oversight.
State fiscal overseers and city officials testified during a public hearing that Pittsburgh has met all requirements to be free of state supervision for a first time in 14 years.
The city has operated under the Municipalities Financial Recovery Act, known as Act 47, since December 2003 when chronic deficits, overwhelming debt and mounting employee pension costs nearly pushed it into bankruptcy and downgraded its rating among credit rating agencies to junk bond status. In a November letter to Gov. Tom Wolf, Mayor Bill Peduto asked for the city to be released from oversight.
Gordon Mann of Public Financial Management in Philadelphia and a member of the Act 47 team, said Pittsburgh has met all requirements under state law.
It has eliminated operational deficits, achieved annual balanced budgets and recurring surpluses and paid down debt, Mann said.
"We find that Pittsburgh meets all criteria for exiting Act 47," Mann said.
He cautioned that the city must continue fiscal restraint to remain solvent. He said the city must maintain a balanced budget and create projected five-year spending plans each year, add to pension plans, contribute money from reserve funds for capital improvements and maintain a surplus equal to at least 10 percent of annual spending.
Sam Ashbaugh, Pittsburgh's chief financial officer, said the city plans to do that.
Dennis Davin, who heads the Pennsylvania Department of Community and Economic Development, has 90 days following the hearing to decide if Pittsburgh's oversight should end.
Marita Kelley, deputy executive director for the Governor's Center for Local Government Services, who served as hearing officer, said Davin could make a decision much sooner. Davin ruled that Altoona could exit oversight in less than a month, she said.
"We can't guarantee that will happen, but it could happen," Kelley said.
State lawmakers also created the Intergovernmental Cooperation Authority as a second oversight agency to help Pittsburgh avoid bankruptcy. State law requires the ICA to remain in operation until June 2019.
Interim Executive Director Reynolds Clark said the ICA board would seek to end its role in conjunction with the city's exit from Act 47. He noted that the Legislature did not include ICA funding in its recent budget.
"We have no funds to operate," Clark said.
