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Fiscal Oversight Board Tells Pittsburgh $33 Million in Spending Cuts Not Enough; Wants $50 Million Total

July 15, 2004

PITTSBURGH — The city's fiscal oversight board told the Mayor Murphy administration to find an additional $17 million in spending cuts, on top of the $33 million required next year by the Act 47 recovery plan, reported the Pittsburgh Post-Gazette on July 7.Board members said they want to find $50 million in spending cuts before asking the Legislature to approve tax changes later this summer. The board did not specify what the city should slash, but said it should plan for "major reductions" to the city workforce over the long term. The city is budgeted to spend $390 million this year. The board's request for $50 million in cuts would be a nearly 13-percent drop in city spending. The city faces a $72 million budget deficit next year, according to the Act 47 recovery team. The board sent a letter to Mayor Tom Murphy saying that "substantial new revenue streams will be essential" to plug that deficit, possibly including new payroll taxes and an increase in the $10 occupation privilege tax. In saying the city has to cut more in spending, the board also is saying the city does not have to raise taxes as much to balance its budget. In fact, after cutting $50 million in spending, the board could call for half of the $41 million in tax increases the Act 47 plan requests and still nearly fill the $72 million shortfall. The Act 47 recovery plan City Council approved last week calls for $33 million in spending cuts next year, rising to $65 million by 2009. They largely target the city workforce, calling for a two-year wage freeze, increased employee health care payments, and controls on union contracts. The Act 47 plan calls for cuts to 168 of the current 816 firefighter jobs and closing seven of the city's 35 fire stations. About 65 jobs at the city garage could also be cut, subject to union competition for the city's fleet maintenance contract.

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