As Financial Recovery winds down, Legislative caretakers getting greedy?

It’s not every day that suburban and rural Pennsylvanians demand more government.

But when the job was keeping taxes and fees low for commuters and other visitors to Pittsburgh, state legislators in 2004 couldn’t move fast enough to create a new authority with a vague mandate and sweeping powers that was largely redundant.

Special double financial oversight hasn’t been a total disaster. After a world-historic economic boom and bust, austerity measures born largely by city workers allowed Pittsburgh enough time to reclaim its riverfronts, better exploit its universities and achieve semblances of vibrancy, distinction and stability by the time city living came roaring back into vogue.

Pittsburgh has since demonstrated its readiness to emerge from its state-administered recovery program, and voluntarily awaits only for its debt schedule to align with a solidified nonprofit PILOT arrangement and other signs and portents, in a bid to ease the transition.

But when the legislative leaders in charge of the ICA claim this…

“The ICA Board members who have made well thought out decisions with the goal of helping to strengthen the City of Pittsburgh should be saluted for their fiscal leadership.” (Scarnati & Turzai)

… it’s not an accurate illustration of their role.

The coordinators of the Act 47 Recovery Plans, working at the behest of the executive branch of state government, handle the annual budgeting strategy including five-year planning. The text of Act 47 itself provides the City with a cap around collective bargaining. The very acceptance of state authority under Act 47 provided officials sufficient political cover to enforce austerity.

The ICA was created to say “No” to a commuter tax or any other new revenue tactic ordinarily made possible by Act 47, that would upset the city’s many neighbors.

It really was just that simple: reject options that would affirmatively upset suburbanites. That’s why it is dominated by state legislative leadership, who represent interests mostly outside the city. “No taxation without representation!”

We could argue on ideological grounds whether saying “No” to such new revenue actually helped the city balance its books by protecting economic growth. That’s an old argument and unimportant here, however — unless we’re now fighting over who deserves credit for Pittsburgh’s resurgence. The state, by assuming greater responsibility for Pittsburgh, had an interest to protect suburban dwellers’ pocketbooks regardless, and did so by throwing together the “ICA” on the quick and dirty.

As long as the Legislature was stepping in to assume some control, though, it figured it might as well seize responsibility for city debt management too. After all, it could so easily be argued that the city had already taken too long to awaken to new realities… so of course the state could do the work better.

So the ICA panel retained for its “executive director” a high-priced journeyman municipal bonds trader with the intergovernmental and Wall Street experience appropriate to a delicate operator. And it got into the business of analyzing transactions and budgets, all the better to assemble reports to justify what were essentially simple political decisions. It hired its own advisors, lawyers, and consultants, doing a lot of extra management — perhaps well-intended, but in which suburban constituencies had no particular core interest.

The ICA might not have needed to become a whole government outfit. But it was tolerable until it got involved in the gambit of withholding casino revenue from the city until it performed various forms of “extra credit”.

It’s questionable whether suburban dwellers feel any interest whatsoever in how quickly the City of Pittsburgh implements any specific financial software, for example. It is however a fact that when trying to recover from financial hardship, predictability is important.

The benefit of activist state leaders holding back and dangling as a “carrot” tens of millions of dollars may be too dubious to be very worthwhile. And it’s an invitation to scrutiny, considering the possibility that the ICA itself may be capitalizing on that accumulated tax revenue.

That is when the everyday friction of oversight became serious.

When Mayor Bill Peduto stated that…

“It is obvious to us that the ICA has awarded no-bid contracts to politically connected firms in violation of city and state law” (P-G, Robert Zullo)

… which is just the sort of accusation he has leveled in the past to noteworthy effect, the ICA responded with boilerplate about how much it is helping the City. And…

In a statement, ICA chairman Nicholas Varischetti did not address the allegations of illegal no-bid contracts but said the authority “would welcome the auditor general to review our records and to perform a complete audit of our work.” He added that he has directed executive director Henry Sciortino to “make any accommodations necessary to support the auditor general should he wish to avail himself of this request.” He noted that the authority’s annual reports, official correspondence and meeting minutes are available on its website. (ibid)

That seemed like a self-assured response until one considers that the Auditor General obviously possesses unquestionable authority to audit the ICA, and that the ICA’s website promptly went down and has been down ever since:

It’s only the smell test. But it’s another failure.

Today we learn that ICA director Sciortino is going around to nearby state legislators, asking for help in “mediating” the dispute. Good luck with that.

Pittsburgh is almost out of Act 47. The city by any ordinary interpretation has passed enough balanced and approved budgets that the ICA by its own law may expire. But its officials are arguing that “conditionally” approved budgets don’t count, and revoking old approvals on specious-seeming grounds.

If the Legislature’s ICA has become more trouble than it is worth in oversight’s waning days, then Governor Tom Wolf can decide to take up the simple responsibility of safeguarding non-City residents’ interests himself, by adopting the city’s interpretation. It might even earn him a boost, to become the Governor that liberated Pittsburgh and its neighbors from inefficiency and politics.

Sen. Scarnati and Rep. Turzai might take the Governor to court to argue their own interpretation, but then they’d be the ones “wasting taxpayers money on frivolous lawsuits”. And in what public interest?

I don’t know what the next few months will bring. But if the ICA had remained a quarterly roundtable of legislative designees protecting suburban pocketbooks, and not long ago morphed into a perfectly Orwellian bureau of “Cooperation”, it would have saved the Commonwealth a lot of grief. Perhaps like all good things it should come to an end.

42 thoughts on “As Financial Recovery winds down, Legislative caretakers getting greedy?

  1. Anonomas

    Funny, because the Peduto team and its cheerleaders never questioned the ICA when Luke or Murph was the mayor. Never. In fact, Bill specifically called for the continuation of state oversight.

    Sure, Bram the cheerleader will claim that this was only related to Act 47. that state is facially true. But if ICA was so bad and such a terrible board purely made up for political handouts, why didn’t Bill see that for the past 10 years? Or, is it readily apparent that he is only going after them because the ICA won’t let him be a dictator? In fact, here is the real issue. It is actually extremely simple. But Bram and PG are doing everything possible to cause a misdirection. The ICA wants the City to implement the financial management system. And, they want the City to answer questions about finances and transparency. Word on the street is that Bill doesn’t want to implement the financial system because he is grossly underfunded the pension plan, spending money on lots of new programs and failed to get a deal with the non-profits like he promised. As Bill put it in this article, the City can easily get back to old back practices. Only difference now is that Bill is the one with bad habit.

    If you are still reading, why is it that Bill supported the ICA in this 2012 article? Funny how times have changed. If only we had some real journalism around this town. that is about the only thing more disturbing that Bill’s hypocrisy.

    And don’t bet on the legislature helping Bill. He doesn’t have as many friends there as you think.

    1. Bram ReichbaumBram Reichbaum Post author

      As far as alleged street rumors that the mayor underfunded the pension plan: those payment receipts exist, do they not? If less money was put in than what is claimed every month or quarter, we’d see it. All we may not see yet is the end of year fund balance, and sure it’s likely that since the stock market took such a dive this year and especially last month, the pension fund will be shown to have taken a hit. That won’t be a surprise.

      The ICA goes unmentioned in your 1st article, and in the 2nd, yes once again it sounds like you are conflating Act 47 with the ICA. But who cares? How anybody feels about any of our mayors Murphy, O’Connor, Ravenstahl or Peduto has little to do with this. Mayors are a normal part of life.

      My concern is whether this “ICA” has evolved into an obtuse white collar make-work shop for the Legislative leadership, and their excuse to fiddle around the politics of a city they don’t come close to representing. One that I happen to live in.

  2. Anon

    Actually, the structure of the articles in my post was intentional. I wanted you to first in your mind differentiate Act 47 oversight and ICA oversight. But the second article makes clear that Peduto used to love the ICA. Did you miss this part: “and two of the ICA’s champions — Peduto and Lamb.”

    Again, my point is that even with just the first article you need to take a nuanced opinion to support Bill. That nuance is that Act 47 oversight is good and non political (even though they are political appointees) but that ICA oversight is bad. That is despite the fact Bill has repeatedly said oversight is good and has NEVER, until now, questioned the ICA. In fact, as the second article states, he championed the ICA and used to call out Ravenstahl for not following its recommendations.

    Maybe the truth is that Bill does like oversight – or maybe he just likes politics and the person really playing politics and handing out no bid contracts and favors to friends is the Mayor?

    1. Bram ReichbaumBram Reichbaum Post author

      If you’re here to prosecute Bill for flip-flopping and think you’ve found a smoking gun, enjoy. Bet it made sense to him in Nov. 2012 to accentuate the positives of oversight in general, while Luke sought to run for reelection as the Mayor Who Ended Our Financial Distress.

      But it’s not going to change anything in the AG’s audit, or the DCED secretary’s determination, or any judge’s ruling, and it won’t make the ICA look any prettier. Best part of your link was Sciortino saying, “I don’t have to talk to reporters, I don’t need to talk to you.” I’m sure that’s what they instructed him.

      1. Anon

        Fear leads to anger. Anger leads to hate. Hate leads to suffering. That leads to justifying whatever Bill does. Don’t be a hater Bram. The point is that Bill loved the ICA before and never had a beef with it being a political entity or how it contracts until now. Could that be because he actually doesn’t want transparency? Or, in the words of Murphy, is that Bill doesn’t want anyone else in the business of bonds and insurance and the other goodies Bill gets to hand out to donors?

        Your response is very telling. When exposed, you turn to the argument of “we have the political power to crush the opposition, so who cares whether our position is defensible.” Nice Bram. Real nice. I guess that is the face of progressive politics these days.

      2. Bram ReichbaumBram Reichbaum Post author

        Not political power, facts. And again with “loved” the ICA? “Loved”? Whoever you are, you’re not interested in painting a serious picture. I didn’t praise or disparage anybody in my post — I looked at what happens when an obscure new government agency is created reactively and on the fly with broad powers and left on its own for 10 years. You leapt straight to ad-hominems and loaded personal characterizations from the start. But spin isn’t going to matter here, just facts in the record and the plain language of law.

        I will add that ordinarily a city does its own business, because it’s accountable to its own people and there’s no legitimate fiscal reason to outsource it to Cranberry.

      3. Luke Skywalker

        “Fear leads to anger. Anger leads to hate. Hate leads to suffering.” – Thank you for your insight, Yoda.

  3. anon

    The ad-hominem are a regular on this blog. And yes, Bill was a “champion” of the ICA. In my book that is pretty close to “loving” it until it didn’t fit his agenda. But the bigger problem is that your facts are usually just wrong. this post is a prime example. You go an accuse everyone in the world of all sorts of horrible things (no bid contracts, corruption, etc.). It just doesn’t make you very happy when someone calls you out. For example, the ICA has nothing to do with commuter taxes. That is completely a function of the Act 47 overlords. And, you claim Bill has always been against the ICA, again a fact that is just wrong. The entire premise of your post is to use incorrect or misguided facts to tarnish people and their reputation for a political objection. You may think that is productive. I think it is lame.

    1. Bram ReichbaumBram Reichbaum Post author

      Yeah, I do get a lot of that. Typically from folks who have some connection to whomever / whatever I’m critiquing. So you’re in fine company.

      Did you follow the links? Commuter taxes are forbidden in PA outside of Act 47. The ICA was absolutely created to head things like that off, and I didn’t even mention that to complain about it. And technically I didn’t accuse the ICA of handing out political no-bid contracts, our mayor did. The ICA pointedly did not deny it, but said to go to their website and we’ll see everything’s okay — the website that’s been broken since this feud began. I think the way they’re going to try to get out of it is to say those are all “professional services” contracts, but I wonder if they’re going to get hung up on conflicts-of-interest.

      1. Anon

        We might agree on something here. Professional services contracts are always a “way out” – and that needs to change. The private sector certainly knows how to use transparent RFP’s and bidding for professional services. There is no reason the same politically connected “professionals” get all the contracts. But Bram, the Mayor is doing the same thing. Just look at who is getting all the bond work and all the legal work. It won’t take long (if you actually look) to see the very unsavory connections to big bucks being made.

      2. Bram ReichbaumBram Reichbaum Post author

        Anon 9:08 – Personally, my biggest beef involves the ill-advised abuse of gaming revenue, not the no-bid professional services contracting (that is unless it really is illegal).

        But insofar as the contracting, sure, you could say Bill just wants to dole out the work that Joe and Mike are doling out presently. But why exactly shouldn’t he? Joe and Mike already get to dole out tons of work in their own capacities. If Bill is the city’s elected executive, how are we “fixing Pittsburgh finances” by diverting the doling through Joe and Mike instead? How is that financial oversight? One could make an argument for Joe and Mike if they were employing some revolutionarily fair, transparent and effective RFP process (or private sector standards as you say) but they’re not.

      3. anon

        Who in the heck are Joe and Mike?

        PS – “doling out work” is the problem, no matter who is doing the doling. Bill was supposed to fix that. He didn’t. He made it worse and Pittsburgh will be worse off for it.

      4. Anon

        Example 1 Bram – i guess all those developers with City business donated to all the Mayor backed candidates this past spring out of happenstance.

      5. Bram ReichbaumBram Reichbaum Post author

        Anon 7:54 – Anon 8:08 wrote, “He made it worse and Pittsburgh will be worse off for it.” [strums fingers] Nobody can back up that contention even a little bit, can they? You can move the goalposts 70 yards by claiming that if the business community hasn’t stopped giving to incumbents, then the new mayor must be to blame for something. I guess.

  4. Anonymous

    So Bill says the ICA is just a way for out of town legislators to get into City business and hand out no bid contracts.

    Wonder who Bill wants to open up those no-bid contracts for? Oh I know, he’ll conduct an anonymous nationwide search for the best and brightest…. As long as they’re related to the Auditor General and/or a Costa.

      1. Anon

        I like them. Good start. Lets just hope it isn’t something that isn’t all pomp and press and no substance. Examples are the transition teams and all their plans still on the shelf collecting dust and open data. Yes, there is open data, but very few things have been put on the open data. If the procurement is all about bidding on supplying pencils, then that is ok, but kind of a snoozer. If it is better transparency on big ticket items, now we are talking.

      2. Bram ReichbaumBram Reichbaum Post author

        Talent City did some good things in some cases, and did nothing but provide Peduto with political cover other cases. It wasn’t “a lie,” it just wasn’t a magic bullet.

  5. Anonymous

    Did the City publicly and transparently put out to bid what law firm it would hire to sue the ICA and accuse the ICA of only wanting its hands in no-bid City legal contracts?

    Or is it “do as I say, not as I do”?

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